A state board voted to begin the process of revoking the status of a Phoenix charter school.
"This is probably one of the most egregious, most outrageous things I've ever read about a charter school," Kathy Senseman, President of the Arizona State Board for Charter Schools, said in a special session Tuesday.
The board was made aware of an investigation by a bankruptcy court and U.S. Department of Justice into potential fraud at the Starshine Academy. Investigators allege founder Trish McCarty used taxpayer money for personal expenses. Recent records show the school nearly $3 million in debt.
"I've done absolutely everything that I can do in every single case to do everything right," McCarty told ABC15 by phone.
Investigators questioned a cash advance made at a Sante Fe casino, car rentals and Walmart purchases paid for by the school. McCarty said the purchases were legitimate because Starshine had a location there. Still, the state board said many financial records were missing or incomplete.
According to the most recent overall academic rating in 2014 by the charter school board, Starshine ranked 48.96 on a 100-point scale, classifying it "does not meet standard." The school fell from a 70 out of the 100-point ranking in 2012.
McCarty said around half of the school's 90 students are refugees and Starshine faced dropping enrollment, accounting for the low rating.
Starshine filed for bankruptcy protection in 2016 after failing to keep up with payments on a $12-million expansion.
This case "is the poster child of basically what's wrong with charter schools in Arizona," said Jim Hall, Founder of Arizonans for Charter School Accountability.
Hall said 17 charter schools, including Starshine, spend more money per student on administration and facilities than in the classroom.
"The charter board should've been aware that these problems were going on" and acted sooner, he said.
The school will remain open through at least June.