An audit that uncovered instances of nepotism and conflicts of interest at Quest Preparatory Academy has brought the school’s previous business practices under investigation by the state Attorney General’s office and State Ethics Commission.
Meanwhile, the new state-appointed leader of the school is embroiled in a rental agreement dispute in Clark County District Court, arguing that the lease for the Torrey Pines campus overcharged annual rental payments — by at least $240,000 — to the benefit of one member of Quest’s nonprofit arm.
It’s the latest development in the Las Vegas charter school’s rocky history, which began three years ago when allegations of financial mismanagement completely overturned school leadership.
The issues are part of an overhaul that state-appointed receiver Joshua Kern, who now oversees Quest, has implemented as the State Public Charter School Authority tries to stabilize a school that once had a deficit in the millions of dollars.
The audit, presented to the state Public Charter School Authority, found that a number of Chartered for Excellence Foundation members were also affiliates of Quest when the school paid rent to the foundation for its Bridger Campus property in 2014.
Though the foundation was charged $27,066 for the property at 1300 E. Bridger Avenue by the landlord, it sub-leased the property to Quest for $41,778 — a difference of $14,771, according to the audit.
The report also concluded that Olive was able to use his influence as board president to have Quest hire his mother, uncle and father as employees in the school for salaries higher than what the human resources manager would have recommended.
The audit has been referred to the state Attorney General’s office and State Ethics Commission for further investigation.
A spokeswoman for the Attorney General’s office said the document is still being reviewed. The ethics commission neither confirmed nor denied the existence of any complaints on the matter, citing state law.
But Olive, who left the board before the state took over Quest, said the audit was “completely unfair” and left out significant information.
“It only mentions me,” he said of the nepotism claims. “It doesn’t mention that there were approximately 11 family members of board members at the school at the time.”
Olive said he did not hire his family members, but that the superintendent at the time did. He also argued that the foundation was going to use the $14,771 profit from the sub-lease agreement to build new classrooms and improve the building.
But the nonprofit never ended up doing that, Olive said, because the school stopped paying rent.
Olive denied that having Quest affiliates also serve on the excellence foundation was a conflict of interest, noting that both boards were voluntary and unpaid.
“None of us ever voted on anything that had to do with each other, ever,” he said of Quest employees serving on both groups. “I never received a dime from anybody either way.”
And as part of a new board that took over after allegations of shady spending from the school’s previous principal in 2013, Olive said he and his fellow board members had to work to rebuild the school’s image.
In a rebuttal to the state sent in May, Olive explained that the school had many challenges during his time on the Quest board — including a complete overhaul of administration and policies.
“This overhaul resulted in discovery of actions made by employees and former governing board members that were detrimental to the school,” he wrote in a letter. “A few of the accusations falsely leveled against me are, in fact, fueled by members of the previous Quest Board.”
Olive had urged the school administration to hire a chief financial officer because of accounting concerns, but said the school failed to do so. He ultimately resigned as a result, he said.
CURRENT RENTAL ISSUES
The latest drama in the school’s tumultuous timeline stems from a dispute over a rental agreement for its Torrey Pines Campus with the landlord, Tower Distribution Center.
Now under the state leadership of Kern, Quest has argued in district court that the lease overcharged the school based on industry standards.
Additionally, the complaint states it was negotiated by Lavar Winsor, who was both a manager of Tower and a foundation board member. The agreement occurred before Kern took charge.
As a board member of the foundation, Quest argues that Winsor had a “fiduciary duty” to act in the best interests of the school.
“In attempting to charge this rent to Quest, Winsor abused his position of trust with Quest to divert tax payer money and line his own pockets and those of the landlord to the detriment of the children of Nevada for whom the money was intended,” the complaint states.
Though Quest and Tower discussed expanding the space so the school could grow its student body, that expansion never started, Quest argues.
To cope with the school’s growth, Quest signed an agreement with Tower for portable classrooms at $29,058 per month — a deal that was roughly $197,148 more per year than what Tower agreed to pay the owner of the portables, according to the complaint.
Neither Winsor nor his attorneys could be reached for comment, though he has denied the allegations in a court filing.
Meanwhile, Tower has placed a counterclaim against the school, arguing that the agreement required Quest to relinquish the lease if a receiver was ever appointed.
“To date, the Receiver continues to not pay rent and yet remains in possession and control over (Quest’s) assets, including its interest in the Lease, and has damaged Tower by failing to relinquish possession to Tower as required by the lease,” the counter-claim states.
Quest had a settlement conference with Tower on Thursday, although it has since paid roughly $357,279 in past rent at a rate the school believes is more reasonable.
Kern said he was optimistic that the school would be able to reach a settlement with Tower.
Meanwhile, the rental agreement for the school’s Bridger campus — highlighted in the 2015 audit — has also been under litigation.
Contact Amelia Pak-Harvey at 702-383-4630 or email@example.com. Follow @AmeliaPakHarvey on Twitter.
Timeline of Quest Academy troubles
December 2012: State Public Charter School Authority threatens to revoke school’s contract after allegations of improper payment of bonuses, other issues
Feb. 2013: Audit finds suspicious spending by Principal Connie Jordan, who agrees to pay back $15,000 bonus. School board members and staff leaders depart.
April 2015: Forensic audit of school commissioned by SPCSA
June 2015: Quest Board President David Olive, who came on board after 2013 board turnover, resigns from role. He says he was among the last board members to do so after the school failed to hire a CFO, despite recommendations from the board.
October 2015: Joshua Kern appointed as state receiver by SPCSA, responsible for all aspects of school management in lieu of school board