Metro

School’s payments to leader’s trust raise questions

Middleborough 10/06/2016 : The Chamberlain International School campus at #1 Pleasant street in Middleborough. Photo by Debee Tlumacki for the Boston Globe (metro)
Debee Tlumacki for The Boston Globe
Chamberlain International School in Middleborough rented most of its campus facilities, including this building at 1 Pleasant St, from a trust overseen by Executive Director William Doherty.

A private residential school in Middleborough, which is facing allegations of student abuse, paid more than $800,000 to entities controlled by its executive director, raising questions of whether he uses the nonprofit for personal gain or misspends public funds, according to legal experts and a state lawmaker.

The Chamberlain International School, which enrolls many students with psychiatric histories, paid Executive Director William Doherty a salary of $325,880 in 2015, but also made substantial payments to a real estate trust he oversees and a Netherlands-based company he owns, according to the school’s financial reports to the state. Chamberlain, registered as a charitable organization with the state, also employs Doherty’s ex-wife, her sister and his brother in senior management and administrative positions.

The questions about Doherty’s financial arrangements come after The Eye and WBUR radio reported in August that the special education school has regularly violated state regulations in instances where students were harmed, including the death of a teen in a car driven by a speeding staff member and alleged cases of sexual misconduct. The non-profit Disability Law Center issued a report in August that found excessive use of force in restraints, abusive staff threats, and failures to prevent suicide attempts, runaways and self-harm at the school, which has about 114 students from ages 11 to 22.

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Chamberlain officials say they comply with state regulations, report most issues themselves and work with the state to resolve any problems. They described the center’s abuse report as “flawed” and “biased.”

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Doherty, who co-founded the school in the 1970s, is both trustee and beneficiary of a trust that received $722,622 in rent payments from Chamberlain in the year ended August 2015, according to the school’s state filings and attorney. The Dutch company owned by Doherty received $103,903 that year from Chamberlain to recruit international students and increase enrollment, school records show.

Doherty’s ex-wife Jeanne Edwards, also a co-founder of Chamberlain, was paid$210,592 in the 2015 fiscal year as its chief operating officer, records show. Sarah Norfleet, her sister, earned $156,612 as program development director. Doherty’s brother Paul earned $88,550 as the school’s technology administrator in 2013, according to Chamberlain’s latest filing with the Internal Revenue Service. Paul Doherty’s LinkedIn profile says he still works there.

“Are they using the charitable entity for their own benefit?” asked former Massachusetts Attorney General Scott Harshbarger, who reviewed Chamberlain’s financial filings at The Eye’s request. He said the “various income channels that funnel to the executive director and his family’’ raise issues that deserve more scrutiny by state regulators.

Rep. Alice Peisch, a Wellesley Democrat who co-chairs the state legislature’s Joint Committee on Education, said that Doherty’s salary and other income streams from the school raises the question of how public money is being spent at Chamberlain -- about a third of whose students have their tuitions paid by local school districts and the state under special education laws. Peisch said she plans to hold hearings on alleged abuse and neglect and other issues at special education schools.

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Doherty declined multiple requests for an interview through school representatives. Eric MacLeish, an attorney at the Boston firm of Clark, Hunt, Ahern & Embry who represents the school, said that Doherty’s business transactions with Chamberlain are publicly disclosed and legal.

“You would have to be pretty foolish in this environment right now to try to take advantage of a non-profit corporation,’’ he said. The transactions “have to be disclosed and they must be fair. They are fair.”

Doherty’s salary is the third highest among the top executives at 26 comparable Massachusetts residential, special-education schools qualified to receive taxpayer-paid tuitions, according to an Eye review of schools’ financial filings. Once benefits are added, Doherty’s total compensation ranked fourth at $343,732, including $17,852 to cover personal use of a Mercedes Benz.

A statement issued by the school and attributed to Doherty’s ex-wife Edwards said that she, Doherty and Norfleet were all founders and the fact that they are still at Chamberlain is “testament to their dedication and hard work.” She said Doherty’s brother Paul, as well as Daniel Vanderlip and Melissa Doherty, two other relatives who work at the school, are “important contributors” with fair salaries.

The Dutch company has never earned a profit and Doherty hasn’t received a salary payment from it, according to the statement.

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William Doherty’s total compensation has more than tripled since 1997, a period in which the school violated state regulations 33 times, mainly related to alleged abuse and neglect at the school. Chamberlain’s enrollment and revenues – now more than $13 million annually -- also expanded during the period.

Some parents have praised the school, others say their children were mistreated or neglected. Last year, two sets of parents filed suit alleging the school failed to protect their troubled teenage daughters, who were said to have suffered severe injuries in separate incidents of jumping from a second-story bathroom window.

Massachusetts students who board at Chamberlain are charged $120,176 a year; out-of-state students pay about $137,000. About 70 percent of its enrollment comes from other U.S. states or abroad, MacLeish said.

Chamberlain’s finances and transactions with its leader have been scrutinized by Massachusetts before. In 2008, the state auditor found the school was controlled by Doherty and other staffers “without the necessary independent oversight,” and recommended fewer insiders on its board, according to the audit report. The school responded by expanding its board and limiting inside directors, the report said.

Edwards said that Chamberlain in 2009 began training board members and is “continually looking to areas where it can improve” governance.

Chamberlain rented 34,622 square feet in eight properties – or “the majority of its campus facilities” -- from a trust overseen by Doherty in fiscal year 2015, according to the school’s financial filings. MacLeish confirmed that Doherty is one of two of the trust’s beneficiaries that are directors at the school; he declined to name the second.

Edwards said the school hired an independent appraiser to determine the rent does not exceed market price. The school has declined to release the appraisal.

Last week, the school released a 2013 appraisal finding rental values should be $617,000 that year and $648,200 in 2015, amounts considerably below the $722,622 paid to the trust. A school spokeswoman says Chamberlain pays a “premium” because many students “suffer from mental illness and have behaviors that can lead to being destructive.”

The appraisal counted a small tenth building on the properties not listed separately in town records.

However, several real estate agents in the Middleborough area said the rent Chamberlain pays Doherty’s trust appears to be above market prices.

Based on the average monthly rents for 55 Middleborough rentals surveyed by broker Kim Thomas of Realty One Group, the space leased by the school should go for about $527,600, or $195,000 less than what it is paying the trust.

And Kate Lanagan MacGregor, owner of Bold Moves Real Estate in nearby Mattapoisett that handles properties in Chamberlain’s region, said the rent that Doherty’s trust charges for nine individual buildings on campus far exceed the next highest rents in town. She said new three- to four- bedroom colonial houses typically bring in about $3,500 a month. Chamberlain is paying Doherty’s trust an average of $7,527 per month per property, or $6,690 for each of the nine buildings.

Numbers like those “don’t make sense,’’ MacGregor said

The Eye is the online news site of the New England Center for Investigative Reporting, a nonprofit based at Boston University, working at the offices of WGBH public radio. Eye intern Emily Hopkins also contributed to this report. Jenifer McKim can be reached at jenifer.mckim@necir.org. For more information on this story, please go to eye.necir.org.