ST. PAUL, Minn. (WCCO) -- A state auditor's investigation concluded that Hmong College Prep Academy didn't follow Minnesota law when it invested $5 million into a hedge fund.
The St. Paul school was only able to get back about $700,000. Despite an attempt to recover its losses through a lawsuit against Woodstock Capitol, the school is out $4.3 million.
The auditor's report says the school invested in Woodstock Capital, a U.K.-based hedge fund. State law does not allow schools to invest in hedge funds or European government bonds.
"Our kids are too important to take a big risk, this is why public entities need to stick to the law when they're investing public dollars,: said State Auditor Julie Blaha.
Blaha said not only did the charter school fail to follow state law, it did not follow its own investment policies. She believes the $5 million investment was supposed to help pay for a new middle school.
"We absolutely understand that in schools resources are tight," Blaha said. "That's actually the reason why you actually have to pick safe investments. This isn't the kind of money that you can risk on this. We know the resources our kids need for a good education are just too important."
The school's authorizer, Bethel University, has recommended that the Hmong College Prep Board fire superintendent Christianna Hang and hire an outside attorney to investigate the investment.
Since Bethel's corrective action plan and recommendations, Hang has stepped down as chief financial officer. However, Hang is still currently the superintendent.
In a statement to WCCO, Hmong College Prep Academy said it has taken several steps to address Bethel's recommendations:
Hmong College Prep Academy is a vibrant school dedicated to our mission to provide a great education, cultivate a rich school community and engage students with a college readiness focused curriculum. The HCPA board is currently reviewing the findings of the State Auditors report and is committed to continuing work to strengthen our school governance and administration.
We are currently working directly with HCPA's charter school authorizer, Bethel University, to actively address aspects of our school administration through a corrective action plan. We have made considerable progress addressing the required actions of the plan since we received it on August 30th. Some of the actions our board has taken include:
• Electing a new board chair
• Hired and actively working with a board consultant with expertise in charter school governance
• Hired and actively working with an external investigator addressing HCPA's investment with Woodstock Capital.
• Begin process to hire a chief financial officer and financial consultant to support the school's work to enhance processes and procedures going forward.
• We also continue to pursue legal actions against Woodstock Capital
The Hmong College Prep Academy board will continue to work with the regulatory authorities who provide oversight to our school. We believe our work together will ensure HCPA remains a strong community where our students, our teachers and our families can thrive today and for many years to come.
The state auditor's report is now in the hands of the Ramsey County Attorney's Office. For the full investigative report click here.
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