Suit charges charter school defrauded builder

BY LAYLI WHYTE
Staff Writer

The Red Bank Charter School has until Jan. 30 to respond to a lawsuit claiming it has attempted to defraud the construction company that performed the renovation work on the school campus.

Attorneys for Patock Construction Co., Tinton Falls, are requesting that the charter school’s Oakland Street property be sold in order to pay the nearly $500,000 still owed to the company.

The suit, filed in the N.J. Superior Court Law Division, Freehold, names the Red Bank Charter School and the Red Bank Charter School Foundation as defendants.

Ted Parsons of Parsons and Nardelli, Bodman Place, is representing the charter school in the suit and was retained by the board in November.

Parsons said Tuesday that the school would be filing an answer to the complaint within the next few weeks. He said his client has 35 days to respond to the complaint, which was filed last month.

The Oakland Street property was purchased by the Red Bank Charter School Foundation in September 2003 and conveyed to the charter school for the price of $1 that October. That conveyance also transferred all debts and obligations pertaining to the property to the school.

The complaint contends that the foundation and the school are one entity, which was the conclusion reached by investigators for the state Department of Education’s Office of Compliance Investigation (OCI) last May.

The investigation took place after several members of the charter school’s board of trustees contacted the DOE about concerns relating to the financial status of the charter school.

According to the complaint, because the school and the foundation are actually one entity, they are both equally responsible for the money owed to Patock.

“The defendant foundation,” according to the complaint, “conveyed the property to the defendant charter school with the actual intent to hinder, delay or defraud its then existing and future creditors, including plaintiff Patock,” the complaint states.

“The defendant charter school received the property with intent to assist the defendant foundation in its fraudulent act.”

Patock Construction, represented in the case by Fred Klatsky of Klatsky, Sciarrabone & DeFillippo, Broad Street, performed work on the school buildings in 2003 and 2004. The final cost of the work amounted to more than $2.2 million.

According to the complaint, Patock has been paid about $1.73 million, which includes a $1.69 million payment made by the Red Bank Charter School Foundation, the school’s main fundraising entity, and a $45,000 payment made by the school.

At the time Parsons was retained, trustee Ellen Herman said that he was brought in to help resolve debt issues surrounding the school and represent the school in any possible future litigation concerning that debt.

The debt of the school, Herman said at last November’s board meeting, results from the work done on the school by Patock Construction.

In the complaint filed last month, Patock Construction is requesting that the school and foundation pay the remaining money owed, plus interest, costs and attorney’s fees.

As a way of resolving the debt, the complaint also requests that as part of the judgment, the conveyance of the Oakland Street property be voided and the property be sold.

A copy of the summons and complaint could not be delivered to the foundation because every member of the Red Bank Charter School Foundation board resigned in July 5 as a result of a struggle for control by two factions of the school’s board of trustees.

Currently, the charter school has taken over paying the $3,000 monthly mortgage payment to Commerce Bank for the property, although it had been previously paid by the foundation, according to a resolution read at the board meeting on Jan. 11.

The work performed by Patock Construction on the Oakland Street property, according to the complaint, includes but is not limited to: the renovation and addition of the Century House, construction of an addition, completion of the renovation of the existing Oakland Street School building, and construction of a link to connect the Oakland Street School and the Century House.

The complaint states that the original cost estimate for construction, renovations and site work was $1.8 million. The final actual cost of the work, according to the complaint, was $2.2 million for work done and materials used.