Palmer school officials cited Fifth Amendment in charter revocation hearing - 77 times

Even in a school district with more than its share of charter-school controversies, the answers stood out. Questioned about billing practices, two officials of an embattled Philadelphia charter school cited their Fifth Amendment right to silence - 77 times.

At hearings on whether to revoke the Walter D. Palmer school's charter, the questions ranged from hard-nosed ("Isn't it true that you lied . . . about accurately submitting invoices?") to humdrum ("Do you have a master's degree?").

Daira Hinson, the Palmer school's director of administration, invoked the Fifth Amendment 22 times in the hearings, which ended last week. Richard Troutman, its controller, did so 55 times.

"It is the first time in anybody's knowledge that a witness has pleaded the Fifth in a charter hearing," said district spokesman Fernando Gallard. "It's very surprising that two high-level administrators decided to plead the Fifth when we are asking questions on issues of overpayment. We're talking about $1.5 million over one single fiscal year."

The Inquirer obtained a transcript of the hearings via a Right To Know Law request.

While last month's abrupt closing of the Palmer charter's high school in Frankford caused turmoil for students and staff, the transcript sheds new light on the scope of the school's problems - which also include an ongoing federal investigation. An agent from the U.S. Department of Education's inspector general's office sat in on portions of the hearings.

Another witness in the hearings was school founder Walter D. Palmer, who stressed that citing their Fifth Amendment right against self-incrimination did not make school officials "guilty of anything."

On Monday he also defended his school in an Inquirer interview, saying, "They could bring a U-Haul in, and they are not going to find any culpability."

During the hearings, spanning four days at the district's headquarters on North Broad Street, a consultant described the charter's precarious finances. A new chief executive, brought in to turn around academics, said low test scores had landed the charter in the bottom 10 percent of the schools in the state.

When the questioning turned to why the school had billed the district for students after they had withdrawn, the answers became limited.

Apart from giving their names, titles, and how long they had been employed by the Palmer school, Hinson, the school's $92,832-a-year director of administration, and Troutman, its $97,500-a-year controller, declined to answer.

The questioner was a lawyer retained by the school district, Michael A. Schwartz. A former federal prosecutor, Schwartz asked Hinson whether she was familiar with the Palmer school's overbilling of the district for students who had withdrawn. What were her qualifications for being an officer of the school? Had she ever been convicted of a federal crime? Had she disclosed that conviction when she was hired?

The transcript shows Hinson answered repeatedly: "On the advice of counsel, I'm asserting my Fifth Amendment privilege."

Federal court records show Hinson had a fraud conviction in the 1990s - in a case unrelated to any charter school - and that some of her Palmer salary had been garnished to pay the judgment.

Turning to Troutman, Schwartz asked about enrollment and billing practices. Had the controller been disciplined for submitting invoices to the district for students who were no longer attending Palmer? Had he intentionally billed for those students to get more taxpayer money for the school? Had Palmer officials told him to submit false billings?

To each question, Troutman replied: "On the advice of counsel, I'm exercising my Fifth Amendment right."

Exhibits the charter submitted for the hearing show that David Weathington, who was the school's chief executive last year, sent disciplinary letters to Troutman and set up corrective plans to make sure he submitted proper invoices and completed required reports.

Palmer, who is the founder and board president of the charter that bears his name, testified that he was not troubled by the administrators' actions. He appeared as one of the school's witnesses in defense of keeping its charter.

Allison Peterson, a district lawyer, asked him whether it was in the school's best interests that its controller had refused to answer questions.

"I think he was entitled to plead the Fifth," said Palmer, who has a law degree but said he had never practiced. "I certainly can't prejudge him. . . . The use of Fifth Amendment does not make him guilty of anything."

Palmer said he believed that the billing problems had been corrected and that he retained confidence in Troutman.

On Monday, Palmer told The Inquirer he did not think the witnesses' use of their Fifth Amendment right was connected to any ongoing federal scrutiny of the school. He said the school has cooperated and turned over reams of documents to federal authorities in response to a subpoena received more than two years ago.

An internal document sent to Palmer staffers two years ago said a federal probe had begun. The memo said a federal agency had contacted an employee in hopes of scheduling an interview.

"The federal government has been looking at charter schools for several years, and included our school earlier this year," said the memo, dated Oct. 9, 2012. "Our school has been cooperating since then."

The memo, which The Inquirer obtained from a former employee, said staffers were entitled to be accompanied to any interview by a lawyer paid by the school. They were told to contact Troutman if they had questions.

Patricia Hartman, a spokeswoman for the U.S. Attorney's Office in Philadelphia, declined comment this week on whether an investigation of the school was under way.

Billing the district for students who were no longer enrolled is one of the reasons the School Reform Commission cited in April when it voted to begin revoking the charter of the school, officially known as the Walter D. Palmer Leadership Learning Partners Charter School.

The hearings that ended last week had been scheduled to give the charter an opportunity to respond to the issues raised by district officials, and to make its case for staying open.

The school, which opened in 2000, has campuses in Northern Liberties and Frankford.

Enrollment - and the financial fallout from a long-running dispute over the number of students the school could serve - emerged at the hearing as a critical factor in Palmer's problems.

District officials contended for years that Palmer could enroll no more than 675 students in grades K to 8 - a limit set in an agreement it signed in 2005.

The charter maintained it was allowed to enroll as many as 1,300, including pupils at a high school it opened.

In May, the state Supreme Court unanimously sided with the district and said the school was not entitled to be paid for students above the 675 limit.

On Nov. 20, the SRC is expected to announce the beginning of a 30-day period for public comment on whether to revoke the Palmer school's charter.

The hearing officer will send a report to the SRC. The five-member commission will take a final vote on whether to revoke the school's charter.

Some of the questions to which top officials at the Walter D. Palmer Leadership Learning Partners Charter School invoked their Fifth Amendment rights against self-incrimination.

Daira Hinson, director of administration:

"Ms. Hinson, in December of 2009 were you the chief administrative officer of the Walter Palmer Charter School?"

"Ms. Hinson, from 2009 through 2014, were you considered an officer of the Walter Palmer Charter School?"

"Ms. Hinson, what are your qualifications to be an officer of the Walter Palmer Charter School?"

"Ms. Hinson, do you have a master's degree?"

"Ms. Hinson, are you currently employed by the Walter Palmer Charter School?"

Richard Troutman, controller:

"Are you an officer of the charter school?"

"Sir, what are your qualifications to be the controller of the Walter Palmer Charter School?"

"Sir, on July 10, 2013, did you participate in an interview with an attorney from Pepper Hamilton?"

"Sir, can you explain to the hearing officer, how, as the person responsible for complying with generally accepted audit and fiscal procedures, you're not able to answer any of our questions here today?"

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