Upset with 'slow process,' judge names independent receiver to close Erie Rise's finances (2024)

At Erie School District's request, Erie County Judge Marshall Piccinini appoints overseer to wind up finances of Erie Rise, which closed to students a year ago and has nearly $2 million in the bank.

A year after it closed to students, the publicly funded Erie Rise Leadership Academy Charter School has lost control of its operations during its drawn-out financial dissolution.

An Erie County judge has appointed an independent receiver to wind up Erie Rise's affairs and preserve its assets, which are to revert to the Erie School District. Erie Rise has about $1.9 million in the bank at the moment, according to evidence presented in court.

Judge Marshall Piccinini, clearly exasperated with the pace of Erie Rise's financial dissolution and Erie Rise's handling of the process, appointed the receiver in an order he issued at a court hearing on Friday morning.

"This is not just an issue of time," Piccinini said from the bench. "It is is an issue of confidence."

The order means that the receiver, William G. Krieger, of the Pittsburgh-based Gleason financial advisory firm, will take over the operations of Erie Rise from its staff and board of trustees.

Krieger, a certified public accountant and a managing director and vice president at Gleason, will report to Piccinini and get paid with funds from Erie Rise. The rate for a managing director and vice president at Gleason is $420 an hour, according to a rate sheet that Piccinini attached to his written order on the receivership filed after Friday's hearing.

Receiver appointed at request of Erie School District

Piccinini issued the order at the request of the Erie School District, which filed a petition in Erie County Common Pleas Court in January for the appointment of a receiver to oversee Erie Rise's financial dissolution. The district said the dissolution was moving too slowly under the control of Erie Rise's staff and the charter school's outside consultant.

Piccinini held off on ruling on the petition over several months as he convened a series of status conferences in his courtroom to monitor the dissolution of Erie Rise. He held the most recent status conference on May 29, where he renewed his dissatisfaction that Erie Rise was going to miss its self-appointed dissolution deadline of May 31.

The judge's dissatisfaction remained evident on Friday. Piccinini after the May 29 status conference said he would revisit the school district's request for a receiver, but he granted the request on Friday morning at the end of an emergency hearing he called over a box truck.

The Erie School District asked for the hearing out of concerns that Erie Rise planned to donate the box truck, valued at $20,000, to the private Community Country Day School without seeking approval from the Erie School District over the disposition of the asset. The lawyer for Erie Rise, Zainab Shields, of Philadelphia, said Erie Rise would not donate the box truck, which ended that dispute.

But Piccinini said he was upset that the episode over the box truck showed that Erie Rise still was in the process of evaluating its assets nearly a year after the charter school closed to students on June 30.

Piccinini said he had grown tired of Erie Rise's officials, including its Maryland-based consultant, Christian Anderson, "moving the goal posts on a regular basis" while continuing to spend public money to carry out a dissolution that Piccinini said should have been done months ago.

Piccinini said he was concerned that Erie Rise had agreed to pay Anderson $10,000 a month through as long as December to continue to oversee the dissolution. Erie Rise paid Anderson another $110,000 in 2023. The new contract, the episode with the box truck and other evidence showed Erie Rise is "intent on continuing the slow process of dissolution," Piccinini said on Friday.

At the status conferences, Piccinini had shared the Erie School District's concerns that Erie Rise continued to employ three regular employees, plus Anderson, even as the school had no students.

According to statements in court on Friday, the Erie Rise trustees ended the employment of the regular employees that day, but only after Piccinini on May 29 directed the school to do so. One of the employees, Aubrey Favors, Erie Rise's director of human resources, had been earning $90,000 a year.

Judge picks receiver from list that school district submitted

Shields, the lawyer for Erie Rise, had argued for months that the charter school was dissolving as fast as it could. She cited Pennsylvania Department of Education regulations, which impose no timeline for the dissolution of a charter school. Shields appeared by video at Friday's hearing, and did not immediately respond to an email seeking comment on Piccinini's appointment of a receiver.

The lead lawyer for the Erie School District in the case, Michael Musone, acknowledged that lack of statutory deadlines for the dissolution. But he argued the Pennsylvania law still authorizes a judge to appoint a receiver over a shuttered charter school under certain conditions.

Piccinini said he found no other case in which a judge had appointed a receiver for a charter school in Pennsylvania. But he said he agreed with the school district that such an appointment was warranted to help preserve the assets of Erie Rise — assets that are to devolve to the Erie School District — instead of those assets dissipating during the dissolution.

"Our main concern has been the preservation of public assets," the Erie School District's solicitor, Tim Wachter, said after Friday's hearing, which he attended with Musone. "The comments today showed the judge shared those concerns.

"We are confident the receiver who has been appointed will take the appropriate steps to preserve the assets that are remaining."

The school district included the name of the receiver, William Krieger, on a list of proposed receivers that Piccinini asked the district to submit. Wachter said Gleason, Krieger's financial advisory firm, has members who regularly serve as court-appointed receivers.

Wachter said the district became acquainted with the Gleason firm through its members' work in U.S. Bankruptcy Court. Piccinini said he had interviewed Krieger as he reviewed the district's petition for the appointment of a receiver.

Wachter said Krieger first must examine Erie Rise's finances to determine how long the dissolution will take under his watch. However long the process now lasts, Piccinini and the school district said, it is expected to cost less under a receiver than under Erie Rise.

Erie Rise facing two investigations as dissolution goes on

Erie Rise, with about 300 students in kindergarten through eighth grade, closed on June 30, after the Erie School Board revoked its charter due to poor academic performance and other issues. The school had operated at the former Emerson School building at West 10th and Cascade streets.

The bulk of Erie Rise's revenue came from the Erie School District. The district sent Erie Rise $3.4 million in 2023 to payits students' tuition.

The pace of Erie Rise's financial dissolution prompted the Erie School District to sue the charter school starting in December, when it sought court intervention to force Erie Rise to provide it financial documents and other records about its assets. Unsatisfied with the charter school's handling of the dissolution, the school district petitioned in January for the appointment of a receiver.

The receiver-led dissolution of Erie Rise will occur as the charter school remains enmeshed in two other unresolved matters.

A year ago, on June 7, 2023, the U.S. Department of Education searched the offices of Erie Rise. The department's Office of Inspector General was looking for records about a multimillion-dollar federal grant for after-school programs for students from low-income families, according to testimony at the status conferences before Piccinini.

The U.S. Department of Education has given no indication that the probe has ended.

And at an Erie Rise status conference on April 29, Shields told Piccinini that the Pennsylvania Ethics Commission is investigating Erie Rise. Shields said the commission had been looking at documents connected to the school and has interviewed Favors, its HR director, for information.

No matter how those investigations end, Piccinini's order on the receivership puts Erie Rise on a different path toward dissolution.

"We are pleased with the judge's decision," said Neal Brokman, the Erie School District's assistant superintendent for operations. He attended Friday's hearing as the district's liaison to charter schools.

Piccinini's order, Brokman said, allows the school district to "finally have a close to the charter school and its assets."

"And then we can move on," Brokman said.

Contact Ed Palattella atepalattella@timesnews.com or 814-870-1813. Follow him on X@ETNpalattella.