NEW PORT RICHEY — The Deerwood Educational Foundation Inc. lost its lawsuit against the Pasco County School District — and lost big.
In a ruling filed Thursday, Circuit Judge Stanley Mills ruled Deerwood must repay $93,499.96 to the school district — taxpayer money the district lost when it paid for more students than the academy had when it closed down in 2003.
The judge also ordered the foundation to pay interest on that money and cover the school district's costs — and attorneys fees haven't even come up yet.
All told, the ruling could cost Deerwood more than $160,000.
Mills also rejected the foundation's argument that the school district breached its contract with the defunct Deerwood Academy charter school.
"We're really delighted that we won," said schools superintendent Heather Fiorentino. "We always thought we were correct."
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Deerwood Academy disappeared in a cloud of financial impropriety in 2003, leaving behind abandoned students, angry parents and unemployed teachers.
The publicly-funded, privately-run Port Richey school fell victim to poor fiscal management and career criminal Jeffrey Ryan Alcantara. In 2006, he went to prison for racketeering, having spent public monies meant for students on strippers and a Rolex watch.
Hank Johnson is the educator who founded Deerwood Academy, and according to state records he is the foundation's sole member. He was ousted from Deerwood's board amid the school's financial woes in 2003 but later sued to regain control.
In 2005 Deerwood and Johnson filed suit against the school district, alleging that Pasco County breached the contract by improperly withholding funds, hastening Deerwood's demise.
The district countered that it paid Deerwood everything that it was owed and blamed Alcantara and poor fiscal controls for the school's collapse.
Both sides went to trial in April. But weeks later, Deerwood dropped the strongest part of its suit: that the district wrongly withheld funds. Deerwood attorney Charles Gerdes admitted the district had proved its case.
All that remained was the Deerwood claim that the school district wrongly took control of dozens of old computers when the school shut its doors. The school district's worst-case scenario was that Deerwood could collect as much as $230,000, including damages, if the charter school prevailed.
Instead, it is the Deerwood Educational Foundation that now faces a worst-case scenario.
The judge ruled that Deerwood failed to prove the value of those computers and failed to prove the district breached its contract by not returning them.
In fact, during the trial, a former Deerwood board member testified that the board voted to donate the computers to another charter school.
The judge ordered Deerwood to pay the district $93,499.96, plus 11 percent annual interest going back to 2003. And the district could ask to be reimbursed for the more than $25,000 it spent on the case.
But the school district doesn't even know if there's anything to collect from Deerwood, a nonprofit foundation that has long outlived its own charter school.
Johnson was Deerwood's star witness during the trial and remains a harsh critic of the school district.
He said the district shouldn't have kept Deerwood open that final year, which is why it paid for more students than went to the school. The district countered that it kept the school open because there was nowhere else to send the kids in the middle of the school year.
But Johnson's larger argument is that the school district is to blame for Deerwood's woes, since it took over the school before it shut down for good.
"I'm very, very disappointed in Judge Mills' decision considering … we had nothing to do with that decision-making process," Johnson said. "That's going to set a horrible precedent for charter schools going forward.
"Who would want to open a charter school knowing they're not just responsible for their own errors, but the errors of any institution supporting them? That's just absurd."
School board attorney Dennis Alfonso shot back that Johnson's management is to blame for Deerwood's fall.
Said Alfonso: "It's sad if he's accusing us of mismanaging the school after his mismanagement."
Jamal Thalji can be reached at email@example.com or (727) 869-6236.