Former Epic Charter Schools CFO testifies against co-founders in racketeering case

The former chief financial officer of Epic Charter Schools began testifying Friday against his longtime bosses in their racketeering case after making a deal with prosecutors.

Joshua Brock confirmed he agreed to cooperate with prosecutors in exchange for 15 years on probation. He also will pay restitution.

His testimony came on the fifth day of the preliminary hearing for Ben Harris and David Chaney, the co-founders of the virtual charter school that opened in 2011.

The enrollment exceeded more than 60,000 students after the start of the pandemic. It is now around 27,000.

Harris, 48, Chaney, 44, and Brock, 42, are charged with racketeering, conspiracy, embezzlement, money laundering and other offenses. Prosecutors alleged the men cheated students out of millions of dollars through a number of schemes.

More: Epic Charter Schools co-founders arrested on charges of financial crimes

Much of the testimony at the preliminary hearing has focused on accusations surrounding the school's Learning Fund. Harris and Chaney are accused of using taxpayer dollars put in Learning Fund bank accounts on themselves, political contributions and expansion efforts, primarily in California.

Brock has waived his preliminary hearing. He will not plead guilty until after testifying again against Harris and Chaney if they go to trial, his defense attorney said.

The deal is for a type of probation known as a suspended sentence. That means Brock will be a convicted felon but not serve time in prison. The amount of restitution has not been determined.

"It hasn't been fine-tuned yet," his defense attorney, Irven Box, said of the deal.

Auditors testify on tax dollar use in racketeering case against Epic Charter Schools co-founders

Oklahoma County District Attorney David Prater filed an 11-count felony case in 2022, months before leaving office. Attorney General Gentner Drummond took over the case in 2023 on his first full day in office and has since added four more counts.

Oklahoma County Special Judge Jason Glidewell has heard eight witnesses so far. He will decide after testimony ends if the evidence is sufficient against Harris and Chaney for a trial.

Harris and Chaney established a private company, Epic Youth Services, to operate the school system. The company was paid 10% of all taxpayer dollars appropriated to the school system in management fees.

An auditor for the state testified Thursday that Harris has been paid more than $24 million from those management fees since 2013. Chaney got $23 million and Brock got $8.7 million, according to the testimony.

Their private company, Epic Youth Services, also controlled the Learning Fund bank accounts. The Learning Fund was created to give each enrolled student a credit for education-related expenses such as laptops and microscopes. The credit was $800 a year but now is at $1,000.

Another auditor for the state testified Wednesday that $144 million in taxpayer dollars went into those Learning Fund bank accounts.

Brock acted as CFO for both the company and the school system until after the state auditor released an investigative audit on Oct. 1, 2020.

He acknowledged Friday that he would send the company's invoices for management fees to the school system and then pay those bills himself for the school system. "That's void of internal control," he testified.

He also acknowledged sending inaccurate bills after legislation in 2019 required the company to itemize their invoices. He said Harris helped come up with a template of categories for the invoices. One category was for managing food services, which was not offered to virtual students.

He agreed with a prosecutor that there was a "theme" of diverting costs to the school system. Asked why, he said, "Minimize costs. Maximize profits."

Epic severed all ties with the co-founders, Brock and their business in May 2021.

Prosecutors allege Epic co-founders controlled school board with friends

Prosecutors allege Harris and Chaney controlled the Epic school board because they recruited friends and acquaintances to serve on it. "We very rarely saw any denial of any agenda items," Brock testified, adding definitely not in the beginning.

The co-founders hired the first board chairman as their lobbyist at the state Capitol on Jan. 31, 2014, the day he stepped down, according to Brock's testimony. Bobby Stem was paid a total of $520,000 for his lobbying services.

The judge has heard conflicting testimony about whether the taxpayer dollars put in the Learning Fund became private once moved into Epic Youth Services bank accounts.

Prosecutors alleged the state-appropriated dollars were "entrusted" to Epic Youth Services and remained public funds. Defense attorneys contend the money became private and, therefore, could not be considered embezzled.

Defense attorney Joe White also has repeatedly pointed out that Harris and Chaney had help from "legal eagles" in setting up their private company and how the money was handled.

"How can these guys have criminal intent when they relied on lawyers in the creation of these entities?" White asked on Monday.

The defense attorney has brought up over and over that one of those lawyers was Brad Clark, who later became the general counsel at the Oklahoma State Department of Education and is now an assistant attorney general.

Brock testified for more than four hours and did not finish. He will testify further when the preliminary hearing resumes May 7.

He was matter of fact in all his answers and never seemed to be nervous. He sipped from a bottle of water and at times swiveled slightly in the witness chair.

This article originally appeared on Oklahoman: Epic Charter Schools CFO turns against co-founders in criminal case