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Deerwood founder owns pile of debt after spurning settlement

Deerwood Academy founder Dr. Hank Johnson takes the stand during the trial he lost to the Pasco County School Board.

BRENDAN FITTERER | Times

Deerwood Academy founder Dr. Hank Johnson takes the stand during the trial he lost to the Pasco County School Board.

NEW PORT RICHEY — The Pasco County School District was willing to pay Hank Johnson $4,500 to make his lawsuit against the district go away.

Johnson declined the offer — and lost.

Not only that, but a judge last month ruled that his Deerwood Educational Foundation Inc. could end up owing the school district more than $190,000.

But it's $190,000 the district will never see.

Deerwood has no money and no assets. Johnson dug into his own pockets to pay for the lawsuit: He's on the hook for $78,000 for his own attorney's fees.

So if Deerwood had nothing, why wouldn't he choose to at least walk away with something?

Johnson gave two reasons:

The first was principle. Johnson said he was right then and — despite the judge's ruling — he's right now.

The second reason is more pragmatic: Johnson didn't settle because he couldn't afford to.

Taxpayers lost a lot of money when Deerwood Academy went under in 2003.

But then, so did Johnson.

• • •

Deerwood's story is one about loss.

Before taxpayers lost their money, families lost their school and teachers lost their jobs when Deerwood financially imploded in 2003.

The publicly funded, privately run Port Richey charter school had two strikes against it: poor fiscal controls and career criminal Jeffrey Ryan Alcantara.

He went to prison in 2006 for racketeering, convicted of spending the school's grant money on fancy dinners and strippers.

But Johnson also blamed the school district for the academy's demise. In 2005 he sued Pasco County for breaching its contract by improperly withholding funds. The district denied that and countersued for the money it lost in the charter school.

The $4,500 settlement offer came and went in January. The case went to trial in April.

Circuit Judge Stanley Mills ruled in June that Deerwood must repay $93,499.96 to the school district.

But the foundation was also ordered to pay interest and the district's court costs and attorneys' fees. The total bill, according to school board attorney Dennis Alfonso, is adding up to $190,000.

• • •

But Deerwood doesn't have a cent. Nor can the district go after Johnson, whom state records identify as the nonprofit's sole officer.

The settlement offer, Alfonso said, was simply a standard litigation practice. The district believed it would prevail. But it also believed it would be cheaper to settle than go to trial.

"It was essentially saying 'If you walk away from your claims, we'll make a contribution to your attorney's fees,' " Alfonso said.

That's not how Johnson saw the offer.

"I personally felt that the settlement was an insult," he said.

But that's not the only reason he wouldn't settle.

When he was in charge of the school, Johnson said he co-signed for a $25,000 loan from Mercantile Bank to help cover teacher salaries. Johnson testified that a district official verbally agreed to cover the loan.

But Alfonso said the district never agreed to that.

Mercantile sued Johnson and the Deerwood Foundation in 2004. They settled in 2006 — sort of.

According to Johnson's attorney, the bank agreed to wait for the outcome of the foundation's suit against the school district and take what it was owed from Deerwood's winnings.

But Deerwood lost. Johnson said that, including interest, he now personally owes $32,000.

If the district's settlement offer would have covered what he owed to Mercantile, Johnson said he would have taken it.

That was unlikely. Alfonso said he could barely get Superintendent Heather Fiorentino to agree to a $4,500 settlement.

• • •

Now Johnson has to pay back Mercantile Bank himself.

He also said he also owes $5,000 for a copier he signed for. Then there's his attorney's fees, though Johnson believes he and his attorney can work out a deal.

Altogether, Deerwood's collapse cost its founder more than $115,000.

The educator said he works at Everest University and teaches business classes and workshops — but at two-thirds of his old salary.

"Let's face it, it was very difficult to get a job after Deerwood Academy because my reputation was destroyed," said Johnson, 57, "and in education, reputation is just everything.

"I'm going to do everything I can to repay this bill. I've got no other choice."

But $4,500 could have helped to chip away at that debt. Knowing what he knows now, would Johnson have chosen differently?

"I would do it again the exact same way."

Jamal Thalji can be reached at thalji@sptimes.com or (727) 869-6236.

Deerwood founder owns pile of debt after spurning settlement 07/12/08 [Last modified: Monday, July 14, 2008 7:37pm]
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