Today, the District filed a lawsuit against three former managers of the Options Public Charter School—a non-profit charter school in Northeast that teaches more than 400 at-risk middle and high school students— alleging that during their tenure at the school, they operated it “not for the purpose of maximizing benefits for at-risk youth, but to maximize income, revenue, and profits for themselves and for two for-profit corporations that they began running while they still were employed by Options.”

The suit alleges that the three defendants—Dr. Donna D. Montgomery, Dr. David Cranford, and Paul S. Dalton—”engaged in a pattern of self-dealing,” which included funneling money into two for-profit companies that they formed and operated while working as managers of Options. According to the suit, Montgomery, Cranford, and Dalton funded their two for-profit companies, Exceptional Education Management Corporation and Exceptional Education Service, Inc., with more than $3 million in District funds in 2012 and 2013. Here’s a breakdown of where that money allegedly went:

• payments to EEMC totaling $1.45 million for services that had not yet been documented.
• payments to EES totaling $981,250 for student transportation services during the 2012-2013 school year, more than ten times what the school had paid directly to EES’s subcontractor for transportation services the year before;
• payments to EES totaling $449,000 for billing services that were provided by the school’s own employees;
• payments to EEMC totaling $242,816 to help cover start-up costs;
• a $159,000 loan to EES;

The District’s suit also names Jeremy L. Williams, the former chief financial officer of the D.C. Public Charter School Board, and Dr. J.C. Hayward, former chair of Options’ board of trustees and WUSA9 weekday noon anchor, for their alleged roles in helping Montgomery, Cranford, and Dalton maximize their earnings. Loose Lips reports that Hayward reportedly “signed off on a $159,000 load to EES,” later “allegedly agreed to a $981,250 transportation agreement between the school and EES,” and also signed off on a “$2,801,721 payment to EEMC as a ‘management fee.”

“We must take swift action to protect the District and its funds when the managers of a non-profit school, whose mission is to serve vulnerable D.C. youth, use the school as a cash-generating machine to enrich themselves and the for-profit companies they control,” Attorney General Irvin B. Nathan said in a press release.

The lawsuit alleges that, in addition to the large sums of money paid to the two corporations they started while running Options, Montgomery, Cranford, and Dalton each paid themselves unscheduled bonuses. “Montgomery’s bonuses totaled $185,000, on top of her annual base salary of about $240,000, while Cranford’s totaled $133,000 and Dalton’s totaled $50,000,” the release states. According to the suit, Montgomery alone “was paid more than $425,000 in a year in public funds, more than the salary of the President of the United States and the D.C. Mayor.”