We understand there is a lot of misinformation and unanswered questions in circulation about what is going on with Newpoint Education Partners. We've done our best to answer these questions and provide information below.
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What is a grand jury indictment?"The role of the grand jury is to either confirm or dispel the prosecutor's claim of probable cause. Grand Jury proceedings are secretive and grand jurors are much like trial jurors—they're chosen from the community—unlike at trial though there's no jury selection. In fact, defense council plays no role and in fact, there's no judge before the grand jury. It's the prosecutor, the witness, the grand jurors and a court reporter.
The prosecutor can present whatever evidence he/she wants. There's no duty to present exculpatory evidence [evidence that shows or declares that someone is not guilty of wrongdoing]—even if someone else confessed to the crime, the prosecutor wouldn't have to present that. There's no cross-examination. Hearsay, although it can't be presented at trial, it can be admitted before the grand jury. The exclusionary rule doesn't apply. Statements taken in violation of Miranda or without a search warrant, evidence that is seized can be introduced.
So, basically the theory is the grand jury is supposed to be a check against overreaching by the prosecutor, the problem is, in modern times, it's not really effective at all for many of the reasons I discussed before [above].
In 98–99% of cases, grand jurors return what's known as a 'true bill' that leads to the indictment and allows the case to proceed to trial. ... The classic quote on this comes from Judge Sol Wachtler, he was in New York and he was quoted famously in The Bonfire of the Vanities as saying, 'a grand jury would indict a ham sandwich' and that's pretty much how these things work. It's pretty much a low hurdle the prosecution has to jump over and it's secretive, not really a guard against the excesses of prosecutors. It's pretty much a rubber stamp that allows almost any defendant to be indicted."
Colin Miller, Associate Law Professor at the University of South Carolina School of Law
What has Newpoint been charged with?Newpoint has not been convicted of any crime. A prosecutor used a grand jury to obtain an indictment. Newpoint is innocent of any and all alleged crimes.
The charges are very vague, but are described using generic terms for alleged mishandling of funds.
Is Newpoint guilty?No. Newpoint is innocent of these charges. A grand jury indictment simply means a prosecutor convinced a grand jury (without any evidence or input from Newpoint) that there is enough probable cause to take a case to trial.
It is the prosecutor’s burden to present evidence at trial that proves beyond a reasonable doubt that Newpoint is guilty.
What is the relationship between Newpoint and the other indicted companies?The only relationship between Newpoint and the other indicted companies is that they are vendors of the schools Newpoint manages. Neither Newpoint nor its founder have any ownership interest in any of these vendors.
What spurred the investigation?Newpoint believes misleading and erroneous information reported by the press forced the school district's hand to investigate reports made by a disgruntled former employee.
Newpoint Pensacola temporarily borrowed items from other, nearby, Newpoint schools until the permanent furniture and equipment were delivered to Newpoint Pensacola. Newpoint subsequently conducted audits of all the schools it manages and provided the results of the audits to the respective schools districts. No material discrepancies were found.
School-level employees with good intentions were responsible for the transfer of the borrowed materials to the Pensacola schools. The area schools were trying to help each other without realizing these transfers were not authorized under the terms of the grants the schools received. Because they were unaware of the grant terms, the school administrators did not properly track the borrowed/loaned items. As a result of this unintentional mistake, these items did not make it back to their schools of origin.
Newpoint has since taken action to ensure that does not happen in the future. We are confident that this was an isolated incident and we have fully cooperated with the FLDOE and have provided all documentation to verify that.
Newpoint School Loans/Debt
“Bogus” Consulting Fees?The so-called “bogus Consulting Fees” are actually the management fees charged by Newpoint for operating the schools. The press is working hard to create juicy stories about these fees. Many people—members of the press included - often don’t understand how charter schools operate.
Each school's board hired Newpoint to manage the schools. The board provides governance to ensure the management company is doing its job. If at any point the board decides the management company is not doing its job, the board can fire the management company.
In most cases, the majority of the management fees (also known as consulting fees) billed to the schools were in fact never paid by the schools, as most schools were still in an early stage or in start-up mode. These fees represent 16% of the loans/debt referred to in the stories.
- Why do the schools need to pay management fees?
Newpoint is a vendor hired by the school's board primarily to (1) operate the schools, (2) hire and manage staff, (3) select and provide curricula, (4) identify and manage the school's building/location, and (5) coordinate and manage vendors that provide services to each school. Newpoint would sometimes provide additional services on an as-needed basis. The management fees cover Newpoint's time and effort to provide these services. This enables the schools' teachers and administrators to focus on the students and educating.
Newpoint charges the schools for its time, just like any other business that provides a service would. Newpoint calls this charge a "management fee" or "consulting fee."
“Fake” and “Undocumented” Loans?
There have been some complaints about loans from Newpoint to various schools. The loans are neither "fake" nor "undocumented." Rather, these were loans by Newpoint to fund the schools’ teacher and staff payroll and the management fees. Approximately 80% of the value of the loans were used fund the schools’ payroll.
Furthermore, in an effort to assist a number of schools, Newpoint reduced or waived repayment of these loans.
100% of these loans are fully documented in the following ways:
- Chase Bank account statements documenting cash withdrawals going to the payroll company (Ahola)
- Ahola payroll report documents listing the employees paid from the funds provided by Newpoint to Ahola
- Invoices sent to the schools by Newpoint for reimbursement of these payroll advances
- Board minutes recapping approval of the financial statements, which document the funds that were advanced by Newpoint and the promissory note documents
- Independent audits, which document the loans, conducted by a CPA firm hired by the board
- Were the loans approved by the board?
Yes. The loans are reflected in the budget that the board approved at their annual meeting. The purpose of the loans and any subsequent repayment of the loans is documented in the financial reports reviewed at each board meeting. The minutes reflect that the board has approved those financial reports at each meeting.
- Why are some of Newpoint's schools in debt?
The schools are or were running in a startup phase, so a deficit is expected until they are out of the startup phase and running efficiently. In our experience, it typically takes schools several years to get out of the startup phase, at which point they begin to operate at a surplus.
Newpoint first supported the schools first by providing cash to cover payroll and did so a second time by forgiving some or all of the debt when Newpoint voluntarily terminated its management contracts.
Newpoint voluntarily forgave over $2 million in loans made to the schools, which represented cash provided by Newpoint—almost 80% of which was provided by Newpoint to cover the schools’ payroll. This money was loaned to the schools so that the teachers and administrators were paid throughout the year when the schools could not afford it.
Furthermore, Newpoint held off on collecting its management fees during the start-up period so that the schools would have enough money for day-to-day operations. The management fees were deferred until such time that the school has the funds to pay them. In some instances, the management fees were waived or reduced.
The press was provided all of this information. However, because the information does not support their story it was ignored completely. Interestingly, the story which showed parental support for keeping the schools open was not in any way attributed to the fact that Newpoint runs excellent schools and has strong customer support.
- Why have the schools ended their contracts with Newpoint?
Most of the management contracts were voluntarily and mutually terminated to ensure the best chance of each school's survival. Newpoint and many of the schools were able to sever ties in an amicable and friendly manner.
Newpoint agreed to sever ties with many schools because Newpoint believed that this was in the best interest of the schools, the parents, and the students.
Read San Jose Academy's and San Jose Preparatory High School's statement here.
- Are the Pinellas schools closing?
The Pinellas County School Board gave the schools a 30-day termination notice. This means that the schools could close unless they can convince the Pinellas County School Board that the schools can turn the finances around.
Newpoint wants these schools to remain open, whether they are managed by Newpoint or not. Therefore, Newpoint waived ANY and ALL debts owed to Newpoint in the hopes that this will help the schools improve their financial situation and remain operational.
Our hearts go out to the families affected by this situation. We know this is stressful for you and we sincerely hope that with Newpoint out of the picture, the Pinellas County School Board will allow your school to stay open.