Parents adopt bankrupt school when owner flees

Parents knew things were amiss the day they saw the headmaster and owner of their kids' private school carting off boxes of financial records to his Saab.

With a few hours notice, he laid off teachers, closed bank accounts and declared the 120-student Normandy Park Academy was no more. Educators often talk about getting parents involved in their school, and parents responded to the Jan. 21 abandonment with force. The next day, three dozen parents showed up to keep the school open, and volunteers have been running it since.

After an initial drop-off in students, enrollment is on the rebound. Nearly all of the 14-member teaching staff stayed, even though their health insurance hadn't been paid in months. "It's been a very wonderful and very strange experience," said Wayne Widdis, the school's acting administrator and a parent of two students at the school, now called Three Tree Montessori. "Our kids thrived in this environment, and we didn't want to let it go."

But the parents' enthusiasm for their own accomplishment is tempered by growing dismay since they have learned more about the previous owner and administrator, Hugh Wallenfels.

They discovered only after he left that the Department of Social and Health Services had investigated complaints and at one point temporarily restricted his ability to admit new students. He had accumulated a series of violations of state licensing standards over the last decade, including driving a school bus without a license and without seat belts.

The state conducted a financial audit in 1997 but found insufficient grounds to close the school.

Parents also learned that earlier in Wallenfels' career, during an effort to expand a private school he owned near Littleton, Colo., in 1984, a group of homeowners discovered he had falsely claimed postgraduate degrees, including a doctorate. "I am sincerely sorry for having misled the community," Wallenfels told a local reporter.

Within a week he had left the school to a group of confused parents, the facility saddled with a $100,000 debt.

In February, about two weeks after he left the Normandy Park Academy, Wallenfels and his wife, Marcia, declared personal and corporate bankruptcy.

Wallenfels declined to be interviewed, saying only, "I feel badly I lost my school. I wasn't smart."

A court-appointed corporate bankruptcy trustee is now sifting through the school's financial records. Questions have been raised by parents about how thousands of dollars of prepaid tuition and PTA funds were spent, said bankruptcy trustee Bruce Kriegman.

Among transactions being examined are accounting ledgers showing deposits totaling $66,000 to an account labeled "Swiss bank account." Wallenfels said during a recent creditor's hearing that the offshore bank reference was strictly a joke, and Kriegman said he is inclined to believe him

"If you didn't want someone to know you have an account, would you list it in your records as Swiss bank account?" Kriegman asked. "Stranger things have happened, but over the years, when I've seen fraud committed, it's not done like that."

Dan Satterburg, chief of staff for the King County prosecutor and parent of two children at the school, thinks a recent school expansion, not wrongdoing, was to blame for the academy's demise.

"What you had was a business under tremendous strain to make all ends meet, and in the end wasn't able to," said Satterburg. "There have been no criminal investigations, and I don't see anything that would warrant one."

Satterburg, like the other parents, faced a tough decision when Wallenfels left: Resuscitate a bankrupt school without paid administration? Or throw in the towel and find another school?

The decision for Widdis and his wife was more simple than for other parents. He'd agreed last year to relocate the school by buying and remodeling a new, larger building for Wallenfels, investing $1.6 million.

But Wallenfels began missing rent payments when the new building opened last fall, and Widdis, in a move that angered other parents, sued Normandy Park Academy for back rent. Widdis said he hoped the lawsuit would force Wallenfels to get his books in order, but instead Wallenfels left a few weeks later.

"I've told my boys, 'You'd better appreciate your education because it's the most expensive in the world, and you're only 9 and 6,' " said Widdis, who owns an international management consulting business.

Parents are frantically trying to raise thousands of dollars to buy back the schools' desks from the bankruptcy and to meet a $16,000-a-month operating debt.

That debt was supposed to be covered by prepaid tuition money, but Widdis said the school's accounts were empty or frozen when the parents took over. The students are even chipping in, creating the "Not Lousy" coffee stand for parents dropping off and picking up kids.

The school's tuition is $650 a month. The Montessori day care for children under kindergarten age is $850 a month.

Parents had to fend off creditors and got help from DSHS, the agency that had investigated complaints against Wallenfels.

A state child-care license that normally takes months to get was granted in a few days, said Judy Matthias, a DSHS official in Seattle. "We've never had this kind of thing happen, with him disappearing and leaving them in the lurch," said Matthias.

But many parents are frustrated they never learned of the DSHS investigations in the late 1990s and said they'd never have enrolled their children if they'd been told of them.

Matthias said she couldn't talk about Wallenfels' history without his permission.

"I think it's a disgrace," said Widdis. "Why did Hugh (Wallenfels) continue to get licensed after his false (academic) credentials were proven and his history exposed?"

Parents say they were at first euphoric at keeping the school open. As the dishwasher and coffeemaker were repossessed, Mia Gregorson-Dahle recalls fending off other creditors with the parents' "sob story."

"Then you go out a few months, and we're tired," said Gregerson-Dahle, mother of a 9-year-old student. Parents are donating hundreds of hours each month, to patch the roof or write required fire plans.

But Gregerson-Dahle said the last two months have been an education.

"I realized how powerful the parents in a school are," she said. "There's a lot of positive energy now in the school. The teachers had been told that parents were the enemy, and that's obviously changed. Now we're asking for their wish lists of supplies."

"But that means we have to raise money for those things, too."

Jonathan Martin: 206-464-2605 or jonathanmartin@seattletimes.com