Prestigious South Carolina Private School Hit With Federal Lawsuit

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Last year, this news outlet published a series of reports related to numerous scandals at Charleston Day – one of the state of South Carolina’s most exclusive private schools. The most galling of these scandals? Allegations that Charleston Day leaders lied to state and federal officials when they claimed 50.78 percent of the prestigious school’s students hailed from “low-income families.”

School leaders allegedly lied about this number – and details of Charleston Day’s finances – so the school could receive Covid-19 money it didn’t need and wasn’t entitled to receive.

Founded in 1937, Charleston Day caters to the Holy City’s elite – with wealthy parents shelling out nearly $25,000 per year, per child on its kindergarten programs and nearly $28,000 per year, per child for students to attend first through eighth grade, according to its tuition page.

Is that expensive? Yes. Although in fairness, South Carolina’s government-run schools are spending nearly $18,000 per year, per child in the current fiscal year to produce vastly inferior outcomes – and not just compared to the state’s elite private academies.

Anyway, are we really to believe half of Charleston Day’s students come from “low-income” families? Of course not. Nonetheless, this utterly outlandish assertion enabled Charleston Day to collect nearly $80,000 from the S.C. Department of Education (SCDE) as part of the federal government’s Emergency Assistance to Non-Public Schools (EANS) program.

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In addition to suspected EANS fraud, questions were also raised about various Charleston Day disbursements tied to the nearly $600,000 the school received from the federal Paycheck Protection Program (PPP).

Prior to my reporting on Charleston Day’s questionable finances, I filed a story on how school leaders had removed a trustee (and kicked his three children out of school) after the trustee and his wife raised questions about its shifting Covid-19 policies.

The trustee in question – Charleston, S.C. attorney Matt Austin – formerly worked for the office of the U.S. attorney in South Carolina. His wife, Francie Austin, currently serves as deputy city attorney for North Charleston, S.C.

In addition to questioning Charleston Day’s handling of Covid-19, the Austins also voiced concerns about whether CDS was entitled to receive the hundreds of thousands of dollars it obtained from the federal government during the pandemic. In fact, Matt Austin attempted to facilitate an internal audit of the school’s receipt and disbursement of these Covid-19 related monies to ensure compliance with the law.

To read my exclusive report on Austin’s unceremonious dismissal from the school’s board – and Charleston Day’s decision to visit the alleged “sins of the father” on his three children – click here.

Last week, Austin fired back at the school in federal court.

On Wednesday (June 21, 2023), the veteran lawyer was listed as plaintiff in a lawsuit filed in U.S. District Court in Charleston, S.C. The suit named Charleston Day, board member (and former board chairwoman) Emmie G. Hershey and head of school Judith Foley Arnstein as defendants. It seeks a jury trial – along with damages, attorneys’ fees and any other relief the court “deems proper.”

(Click to View)

Representing Austin is former U.S. attorney Bill Nettles, whose private practice specializes in white collar crime and false claims cases. That expertise will likely come in handy in this case, as anti-retaliatory protections are a key part of federal false claims act.

Nettles declined to comment on the lawsuit, referring me to a copy of the pleading.

News of Austin’s lawsuit – which deals extensively with issues addressed in our exclusive coverage last year – was first reported by Drew Tripp of WCIV TV-4 (ABC – Charleston, S.C.).

According to the lawsuit, the three defendants engaged in “retaliatory actions against (Austin) and his family after he engaged in protected activity by attempting to ascertain the scope of — and curtail — (the school’s) misappropriation and misuse of federal funds.”

These “retaliatory actions” allegedly included removing Austin from his board seat, kicking his three children out of school, and conspiring with leaders at other schools to keep the children from being able to enroll at those institutions.

That’s right … according to the lawsuit, Arnstein and others “actively interfered with (Austin)’s ability to find another suitable school for his children.” In fact, the enrollment director at another local private school, Mason Prep, told Austin and his wife on March 11, 2022 that their children were being denied admission “due to pressure from CDS.”

Most significantly, though, the lawsuit details Arnstein and Hershey’s alleged misuse of federal Covid-19 funds – which it contends was the basis for the alleged retaliatory actions taken against the former board member.

(Click to View)

“CDS’s representations in its applications for PPP funding and forgiveness were not true,” the lawsuit alleged. “CDS knowingly made false statements and certifications in its application for PPP funds and request for PPP forgiveness.”

As for the EANS funding, the filing claimed CDS did “grossly and artificially inflate the percentage of low-income families on its application.”

“(CDS) knowingly made false statements and certifications in its application for EANS funding,” the lawsuit alleged, claiming the school’s insistence it would be unable to operate during the 2020-2021 school year without federal assistance was “false and fraudulent.”

According to the lawsuit, the school had a surplus of nearly $730,000 that year.

As I noted in my original reporting on this scandal over a year ago, the Charleston Day drama has turned the Holy City on its ear – and turned some of the state’s most venerable families against each other.

“There’s an entire network of individuals who are done with the status quo of the good ole boy system running the ins and outs of Charleston, including institutions like CDS,” one of our original sources on the Charleston Day saga told me this week. “What happened to the Austins is the fate of anyone who dares to challenge the beast that is ‘Old Charleston’. But it is in the whispers of those fed up with the way it was that the change will happen and an institution riddled with controversy and incest will be dismantled, brick by (crumbling) brick.”

According to the lawsuit, Austin “reported his concerns to the United States Attorney’s Office” on February 5, 2022 – a month before we reported that federal prosecutors had been made aware of the issues.

“Multiple documents related to the school’s finances have been placed in the hands of investigators – who are said to be reviewing the materials they were provided,” I noted at the time.

While this civil lawsuit is troubling, the criminal investigation is the real concern for CDS and its leaders …

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THE LAWSUIT …

(Via: U.S. District Court/ Charleston, S.C.)

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ABOUT THE AUTHOR …

Will Folks is the founding editor of the news outlet you are currently reading. Prior to founding FITSNews, he served as press secretary to the governor of South Carolina. He lives in the Midlands region of the state with his wife and seven children.

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