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Failed Pasco charter school drops claim over grant

Deerwood Academy charter school founder Dr. Hank Johnson takes the stand during the civil trial.

BRENDAN FITTERER | Times

Deerwood Academy charter school founder Dr. Hank Johnson takes the stand during the civil trial.

NEW PORT RICHEY — Deerwood Academy, the charter school cleaned out by a con man, is long gone.

But its name lives on — in litigation.

The Deerwood Educational Foundation Inc. and the Pasco County School District have sued and countersued each other over the school's 2003 demise.

Both sides await a judge's ruling. But after three years of litigation and a contentious two-day trial in April, Deerwood has given up its strongest claim against the school district: that Pasco County breached its contract by withholding grant funds.

"It was surprising that after we go through the exercise of a trial that they abandon that claim," said School Board attorney Dennis Alfonso.

"The curious part is how they could claim damages when we knew the evidence would show the district paid every single penny of the grant."

• • •

Deerwood founder Hank Johnson said during the trial that he personally took out a $25,000 line of credit from Mercantile Bank to cover bills he said the school district wouldn't pay. Deerwood said the loan paid the school's bills in July and August 2002.

But Deerwood attorney Charles Gerdes conceded in his written closing argument, filed April 29, that the school district's own records show that those months' expenses were paid for with grant money.

And Deerwood has also given up on its argument that the district denied it funds at a critical time. Gerdes now agrees with the district that those grant dollars couldn't have been legally used by Deerwood anyway. The funds were meant for the coming school year, and could not pay the expenses of the previous year.

"These proofs establish, and Deerwood admittedly has no rebuttal evidence, that the Line of Credit funds that Deerwood drew upon were not used to cover July and August 2002 expenses as alleged in the complaint," Gerdes wrote. "These undisputed record proofs defeat the grounds for Deerwood's damage claim. It would be disingenuous to attempt to argue otherwise. This Deerwood and its counsel will not do."

In his closing, Gerdes said that his side did "not identify" the key documents disproving his side's claim, which were among the "voluminous" amount of boxes of Deerwood records stored by the district.

"I'm not going to make an argument to the court … that doesn't have any evidentiary basis," Gerdes told the St. Petersburg Times. "The way I practice law is, if the evidence shows you're wrong, you're wrong."

What's at stake

Johnson was ousted from the Deerwood board in 2002 but later regained control of the foundation.

He filed suit in 2005 against the school district for breach of contract. He accused the district of crippling Deerwood, and demanded reimbursement and damages.

But if Deerwood now agrees that the district paid all the grant money it was supposed to, then what exactly is the foundation suing Pasco's taxpayers over?

The fate and value of about 100 computers once donated to the charter school are contested. Deerwood said the school district wrongly took control of that property.

"Deerwood asserts that by retaining the donated computers and failing to return them … after the school closed and ceased its operations," Gerdes wrote in his closing, "the District has breached the Contract, and that Deerwood was damaged by the breach."

Gerdes estimated that the district owes Deerwood anywhere from $37,000 to $100,000 for the computers — plus damages.

"The contract says if the school closed and there's property of the school not acquired by public funds," Gerdes said, "that property goes back to the people who ran the school for them to do what they want."

But Deerwood's last remaining legal argument also mystifies the school district.

That's because the Deerwood board itself voted to donate the computers to another charter school before it closed down. A former board member testified to that during the trial. The vote took place while Johnson was no longer on the board.

"I think (Johnson) believes that the subsequent Deerwood board didn't have the power to give away that stuff," said Alfonso, the school district's lawyer.

"I'm still scratching my head as to how this guy thinks we have to give it back."

Who's at fault

Deerwood was closed in 2003, the same year the source of its fiscal problems — Jeffrey Ryan Alcantara — landed in jail.

He went to prison in 2006 for scamming taxpayers out of $115,000 meant for the Port Richey school.

It was Johnson, the school's founder, who hired Alcantara at the school. And at the trial it was Johnson who denied the school's demise had anything to do with Alcantara, a career criminal who later pleaded guilty to racketeering for what happened at Deerwood.

Who does blame Alcantara? The school district.

"We didn't pay (Johnson) as quickly as he needed it because he was hemorrhaging from internal theft and fraud," Alfonso said.

The school district countersued Deerwood to collect the tens of thousands of dollars it says it lost when the charter school collapsed.

Alfonso filed the school district's written responses to Deerwood's closing argument in May. Circuit Judge Stanley Mills has yet to rule.

The lawyer has always believed that Johnson's suit isn't about the money or the law, but about reputation.

"I think he initiated the lawsuit in part to clear his name and to vindicate himself," Alfonso said, "to say he was not responsible for the closing, that it had to be someone else's fault."

Gerdes, of course, disputed that. "The media seemed to think this case was about why Deerwood failed," he said. "This lawsuit was about trying to make both sides, the district and the school, accountable for some of the obligations when the school closed and to get to the bottom of who owed what."

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

Failed Pasco charter school drops claim over grant 06/08/08 [Last modified: Sunday, June 8, 2008 9:11pm]
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