Epic Charter Schools is facing another investigation of its finances and governance, this one by the Internal Revenue Service, Oklahoma Watch has learned. 

The online charter school’s board chairman was notified of the inquiry in a letter dated Jan. 14, records show. 

In the letter, the IRS requested documents dating to 2015, about the same time period the state Auditor & Inspector examined. That audit, released in October 2020, found the school diverted tens of millions of taxpayer dollars into a for-profit company controlled by the school’s co-founders, David Chaney and Ben Harris, and its former chief financial officer, Josh Brock. 

State Auditor Cindy Byrd provided her findings to federal agencies, including the IRS and the FBI. The school has had to repay the state $20 million so far, but no criminal charges have been filed.

The IRS said it will be comparing documents it’s requesting to information provided on the annual tax forms for Community Strategies, Inc., the legal name for Epic Charter Schools’ board. The agency is looking for compliance in three areas: whether Epic has operated in ways allowed by its nonprofit tax status, whether it accurately reported revenue and expenses, and whether its governing board is adequate to “prevent and identify any loss of your organization’s assets.”

All Community Strategies revenue comes from public education funding. 

Epic has faced a multitude of investigations since it was founded in 2011 by Chaney and Harris. The Oklahoma State Bureau of Investigation spent years probing the school, beginning in 2013, and turned over its final report to the attorney general Jan. 28.

Last month, Attorney General John O’Connor handed the investigation back to Oklahoma County District Attorney David Prater, who originally oversaw the case. He will determine what, if any, charges are filed. 

Epic in 2021 severed ties with its Chaney and Harris and their management company. Epic completed a full turnover of its board in an effort to improve its governance. 

In December, the board’s vice chairperson resigned, alleging fraud, workplace intimidation and harassment, and violations of the Open Meetings Act. A state Department of Education investigation into the allegations is underway. 

Jennifer Palmer has been a reporter with Oklahoma Watch since 2016 and covers education. Contact her at (405) 761-0093 or jpalmer@oklahomawatch.org. Follow her on Twitter @jpalmerOKC.

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