School Director Took $343,000 -- IRS Says Money From Special-Ed Academy Went For Resort Condos, Ranch

COPYRIGHT 1995, SEATTLE TIMES CO.

KENT - The director of the region's largest school for learning-disabled children has used hundreds of thousands of dollars of the school's money to buy and maintain condominiums in Sun Valley, renovate a 400-acre Idaho ranch she owns and pay personal expenses such as her divorce bill, government documents show.

Darlene Jevne, who founded the private, nonprofit St. Christopher Academy for children with dyslexia and attention-deficit disorder, siphoned off $343,627 of the school's money for her personal use in the past five years, according to the results of an Internal Revenue Service audit obtained by The Seattle Times.

Jevne, 55, drew checks from St. Christopher to pay her personal-property taxes, boost her income by routing payments through a consulting company, and support her growing real-estate holdings in and around Sun Valley, Idaho, according to the audit and records compiled from the school and public agencies.

The IRS audit and other documents show:

-- St. Christopher spent $27,537 since 1990 on dues and upkeep for two ski-resort condos in Sun Valley that were owned solely by Jevne.

-- The school itself bought two condos, also in Sun Valley, in 1987 and 1988.

-- A back tuition payment from a parent was used to cancel out a $33,699 loan Jevne owed the school.

-- Jevne signed a $12,809 check from the school's bank account in 1993 to pay her divorce attorneys, the Seattle firm Short, Cressman and Burgess.

-- The school poured $215,331 over the course of two years into renovating Jevne's Idaho ranch.

Jevne did not respond to repeated requests for an interview. She has reportedly told teachers that any financial problems were due to accounting and bookkeeping errors.

Jevne has worked tirelessly for children with learning disabilities and has done nothing wrong, said the school's psychologist, Charlotte Hoskins, who helped start St. Christopher in 1982.

"What happened was this particular bookkeeper decides the director has embezzled money," Hoskins said. "I believed it for a while. But then you think, `This isn't possible.' "

The bookkeeper, Judy Colson, said she first notified the IRS of financial problems at the school as early as five years ago. Jevne fired Colson in April.

No criminal charges have been filed against Jevne. Sources close to the school director say the IRS has only examined the school's books and is currently auditing Jevne's personal tax history.

Findings forwarded to state

Kent police this week finished a three-week probe of the school and concluded state laws governing nonprofit organizations may have been broken, but that local police have no basis or jurisdiction to pursue criminal charges. The department is forwarding its findings to the state attorney general's office, according to Detective Steve McVicar.

"We have no power here, but somebody in a state agency really should take a look at this school," McVicar said. He added that even parents who knew about the allegations of fiscal wrongdoing had nothing but praise for the education offered by St. Christopher.

In an agreement with the IRS, Jevne agreed to pay back $343,627 to the school's Board of Directors, according to board President Richard McDermott, a Bellevue attorney. The board reduced Jevne's $88,000 salary this year to $60,000.

Jevne also agreed to pay about $40,000 more, for a total of $383,000, in exchange for complete ownership of the school, which she will run as a for-profit enterprise, McDermott said.

The board will give away the $383,000, most likely to charities or other schools, McDermott said. None of the money will be returned to Jevne's for-profit school, he said.

The unusual plan to essentially sell St. Christopher to Jevne, even though the IRS concluded she improperly spent the school's money, was devised as a way to "save the school for the kids," McDermott said.

"Above all, we wanted to do whatever we could to keep the school in existence," McDermott said. "Our bottom line was that the school has its best chance of surviving if Darlene's running it."

The board made the arrangement with Jevne so that the IRS would not force the previously tax-exempt school to pay back taxes and penalties. That could have bankrupted the school and forced it to close before the end of the school year June 9, the board concluded.

Still, the financial scandal has caused chaos at the highly regarded special-education school, currently home to 135 learning-disabled children from first grade through high school.

New school being formed

Many of the school's teachers and parents say they are leaving to help start a new school, called New Horizon School, that's expected to open next fall in Renton. Last week, Jevne filed lawsuits in federal court and King County Superior Court against Colson and the school's former secretary. The suit claims the employees defamed her and illegally aided the formation of the new school while still employed by St. Christopher. The suit also named New Horizon School.

Colson and former secretary Pixie Julian, who also was fired in April, are expected to work at New Horizon School in the fall.

Some parents, who pay $6,900 to $7,900 a year tuition for each child, are demanding that Jevne be investigated further - even while they have nothing but praise for St. Christopher Academy.

"The school is wonderful," said Laura Billington, whose son Danny, 8, has attention-deficit disorder. "But it's run by a woman who has made a killing off of disabled children. It's sick.

"I can't imagine she could get away with all this and end up owning the school."

Though St. Christopher Academy, as a nonprofit, technically has not been "owned" by anyone, the driving force and sole director of the school for its 13 years has been Darlene Jevne.

Frustrated in 1982 because she believed Kent public schools were ill-equipped to help her son's severe dyslexia, Jevne, a part-time flight attendant for Northwest Airlines, asked William Dussault, a Seattle attorney specializing in special education, about the prospects of starting a private school focused exclusively on learning disabilities.

"I wouldn't give her any kind of opinion as to whether it would be likely to make her a millionaire or not, but I said that clearly I thought there was a need," Dussault said in 1986 as part of testimony given for Jevne's divorce.

The school opened in the fall of 1982 in a classroom at St. Anthony's Catholic Church in Kent. Nine students attended, their parents paying $2,000 a year tuition.

So many parents with learning-disabled kids were dissatisfied with the public schools that St. Christopher grew to 75 students in just the first five years. It has nearly doubled in size since then, adding a high-school program and taking in about $600,000 in tuition yearly.

"St. Christopher has had a positive reputation. It seems like it's been a needed program," said Mick Moore, special-services director of the Puget Sound Educational Service District.

Though Jevne drew almost no formal salary during the school's early years, she did begin using the school's resources to supplement her income as well as buy and sell real estate in Idaho, according to property records and ledgers from the school.

Records in Sun Valley show she bought property there in the 1980s in the name of the St. Christopher board, though Kent police and sources at the school say St. Christopher had no functioning board at the time to oversee Jevne's spending. As a check and balance, most nonprofits have a separate board to regulate the budget.

"The director appears to have been acting as both the board and the director," Detective McVicar said.

Three of the four members of the 1995 board - McDermott, Jan Sayers and Pat Johnson - were appointed last summer, more than a year after the IRS audit began in 1993. Only one current board member, Gary McLean, who for years has prepared the school's yearly financial statements to the IRS, served on the board during the four-year period in which the IRS found Jevne was improperly spending the school's money.

McLean, a certified public accountant, could not be reached for comment this week.

The IRS concluded Jevne supplemented her income via a consulting company called Special Education Consultants. Jevne incorporated the company in 1986, state records show, and its business address was listed as Jevne's Kent home. Through this company, Jevne would draw up to $3,000 a month from St. Christopher, records show, though current and former staff say the company did little to no work at the school.

The IRS audit, which covered the years 1990 to 1994, found Special Education Consultants improperly received $21,000 from St. Christopher in 1990. The IRS required all of it be repaid. The company never received another payment from the school after 1990 and dissolved in 1992.

In 1987, Jevne had St. Christopher buy its first condominium at Elkhorn Village, a resort in Sun Valley, according to Idaho property records. A year later, the school bought another condo in the same complex.

Director signed deeds

Both times, the school borrowed money using as collateral a house on Kent's West Hill that Jevne owns, records show. Both deeds were signed by Jevne, acting on behalf of the school.

Staff at the school say the condominiums were not used for school business.

But the school's income-tax returns in recent years list expenses and depreciation for one of the condominiums, calling it a "conference center." The school sold one condo in 1990, the other in 1993, but between 1988 and 1990 owned and operated both units.

In 1992, Jevne bought a ranch about 40 miles southeast of Sun Valley near Carey, Idaho.

Deeds in the Blaine County, Idaho, recorder's office show that Jevne is the sole owner of the ranch, but the IRS determined that St. Christopher Academy spent $215,331 renovating the 388-acre homestead, including building a new house there.

Expenses charged to the school included wages for Jevne's son, Lance, who worked on the ranch in 1992.

Jevne has established a summer program for learning-disabled children at the Idaho ranch, but the IRS determined it was improper for her to use the school's money to upgrade a property not owned by the school, according to the audit and sources close to Jevne.

Jevne also signed checks from the school to buy cashier checks from Seafirst Bank that were used to pay property tax bills on some of her homes in King County, according to copies of the checks obtained from the county's Department of Finance.

Property records from King County, where Jevne owns four homes, and Idaho, where she now owns the ranch and one Sun Valley condominium, indicate that Jevne's real-estate holdings are valued at more than $1 million.

Seattle Times South bureau reporter Nancy Montgomery contributed to this report.