Special Audit of Cleveland Charter School Racks Up $1.3 Million in Findings
Columbus – Employees’ illegal relationships with vendors and shoddy bookkeeping led to more than $1.3 million in findings for recovery issued in the special audit of the Cleveland Academy of Scholarship, Technology, and Leadership Enterprise (CASTLE) released today by Auditor of State Dave Yost.
“The rules are clear -- you can’t be on both sides of the transaction,” Auditor Yost said. “In our schools, the top priority should be the children, not the pocketbooks of the administrators.”
The audit reviewed records from July 1, 2004 through June 14, 2010, and auditors sought to determine whether payments to selected vendors were proper. Auditors also examined any unexplained or unusual bank activity to determine whether transactions were related to school operations.
The review of payments to 134 vendors found numerous occasions where CASTLE failed to provide appropriate documentation to support expenditures and even paid for goods or services for other community schools. There were also instances where board members or employees did not disclose relationships with private companies that conducted business with the school.
A total of 18 findings for recovery were issued in the special audit, totaling $1,352,501. The individuals below are liable for the following amounts (including joint and several liability):
- Former CEO William Peterson: $857,963
- Partial owner of CASTLE’s management company Dennis Stewart: $367,344
- Former Board Member Stanley Jackson: $200,000
- Former Treasurer Carl Shye: $144,905
- Current CEO Rolando Peterson: $8,829
Additional findings for recovery totaling $135,829 were issued against various vendors due to the inability to confirm that the vendors actually provided goods or services to CASTLE.
The audit findings have been turned over to the Cuyahoga County Prosecutor. In 2012, former CASTLE treasurer Carl Shye was sentenced to two years in prison and ordered to pay restitution for embezzlement related to his work in numerous Ohio community schools.
A full copy of this special audit, including specifics on the findings for recovery, may be accessed online at www.ohioauditor.gov.
The Auditor of State’s office, one of five independently elected statewide offices in Ohio, is responsible for auditing more than 5,600 state and local government agencies. Under the direction of Auditor Dave Yost, the office also provides financial services to local governments, investigates and prevents fraud in public agencies and promotes transparency in government.