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Monday, May 18, 2020
Class Action Lawsuit Brought by Parents of St. Bernard’s School Updated Today to Include New Charges of Financial Crimes by Board of Trustees
St. Bernard’s boys’ school, where a headmaster’s removal caused
backlash from parents.
Credit...Brittainy Newman/The New York Times
On March 18, 2020 I posted the story of parents at St. Bernard's School Filing a class action lawsuit against the Board of Trustees after the Headmaster was fired.
UPDATE: new charges of financial crimes have been filed against the Board of Trustees
Class Action Lawsuit Brought by Parents of St. Bernard’s School Updated Today to Include New Charges of Financial Crimes by Board of Trustees
Complaints against school board members allege obstruction of justice in NYAG investigation, securities violations and arbitrary firing of Headmaster
New York, NY, May 18, 2020 — Today, a group of concerned parents of St. Bernard’s School has updated a class action lawsuit, originally filed in March, against the members of the Executive Committee of the school’s Board of Trustees over the removal of the school’s headmaster of 35 years. In the new complaint, the parents detail how a small group of board members systematically sought to financially enrich themselves with improper, self-dealing investments of school funds, and then sought to cover up their misconduct by hiring teams of lawyers and public relations spin doctors to mislead other parents and the school community. These board members also repeatedly pursued a personal agenda to advance the interests of their own children at the expense of the larger student body.
Attorneys for the parents have filed complaints with the New York Attorney General’s Office, asking for a thorough and complete investigation of potential financial crimes.
New allegations against members of the school board in today’s amended lawsuit include:
—Alleged securities violations involving routine manipulation of St. Bernard’s investment portfolio by a Trustee and Chair of the school’s Investment Committee based on material, non-public inside information about a publicly traded firm listed on the New York Stock Exchange.
—Alleged violations of New York’s General Business Law through solicitation of donations from consumers — the school parents — for the purposes of educational, need-based scholarships and diversity efforts, without disclosing that these funds would actually go toward self-interested transactions benefiting Trustees personally, including wasteful and improper payments to exorbitantly priced law firms of Patterson Belknap Webb & Tyler and Cravath, Swaine & Moore, and the public relations firm Rubenstein.
—Alleged violations of New York’s General Business Law in the form of false advertising by school board members who solicited charitable donations to the school while falsely advertising Johnson as the ongoing headmaster, but knowing full well that he was being forced to leave.
—Deception of parents who chose St. Bernard’s and committed their children to attend the school based on a 10-year educational program under Johnson’s academic leadership that had been clearly advertised to them.
—Usurpation of the full school board’s authority through the hasty, coerced and unilateral dismissal of Headmaster Johnson.
—Failure of the full school board to take an informed vote in deciding whether to terminate Headmaster Johnson, and whether to “ratify” the severance and non-disclosure agreements that Headmaster Johnson signed under false pretenses.
Jim Walden, the founder and Managing Partner of Walden Macht & Haran, represents the families. He states, “As we peel away the layers of financial malfeasance and unethical practices of a school board charged with safeguarding a treasured and historic environment of childhood learning, we are saddened to uncover further signs of a leadership cohort that is rotten at its core. The parents of St. Bernard’s School are seeking justice in the preservation of educational paths of their own children, and of one of the nation’s most cherished institutions of classical learning that they all hold very dearly. It is our hope that in the face of newly uncovered facts, the members of the Executive Committee will alleviate the school community of the burden of litigation by resigning and allowing a newly elected board to implement an organizational course correction that authentically serves the interests of the students and the St. Bernard’s community.”
The purpose of this announcement is to ensure St. Bernard’s parents, faculty and alumni are aware that a class action has been filed on their behalf and encourage them to contact Class Counsel Jim Walden at StBernardsLegal@gmail.com, to be advised of their rights. Any communications between parents and the lawyers will be treated as privileged and confidential in anticipation of potential participation in the litigation.
The Headmaster
Since 1985, Stuart H. Johnson III has served the St. Bernard’s community with integrity, academic vision and grace. He has presided over two generations of students, during which time he diversified and modernized the school, expanded its commitment to social consciousness and diversity, all while maintaining rich traditions of rigorous instruction, hard work and citizenship. Parents chose the school because of the healthy academic and social environment it offered under Mr. Johnson’s leadership. They enrolled their children at St. Bernard’s with the understanding that he would oversee their development and the curriculum.
The Executive Committee of the Board of Trustees
In May 2019, the Executive Committee of the St. Bernard’s Board of Trustees unilaterally removed the headmaster from his position without cause or explanation. They forced him to announce his “departure,” leading the Board of Trustees and the parent community to believe he was voluntarily retiring. He was not. Instead, the Executive Committee acted — without the necessary consent of the full board — because, our clients believe, they wanted preferential treatment for certain children in the post-Bernard’s placement process, they sought to admit the children of their friends, and they wanted control over the St. Bernard’s substantial endowment and investments, all of which Johnson had steadfastly fought against.
After news of the termination broke, parents revolted en masse, with more than 600 parents signing a letter asking Mr. Johnson to stay on as headmaster. Immediately following these events, the Executive Committee is further alleged to have breached its fiduciary duties by using school funds (estimated at more than $1 million) to hire an army of lawyers and public relations consultants to obfuscate its misconduct.
The current expense of lawyers and public relations firms engaged by the Executive Committee for the purpose of masking the crisis is estimated at between $30,000 to $50,000 per day, equal to the cost of a full tuition scholarship for a single student for one year, or to substantial raises for teachers. The parent plaintiffs seek to stem this unconscionable outpouring of funds, which now totals hundreds of thousands of dollars and has directly compromised the curricular budget of the school.
After various intermediaries attempted to broker a resolution of the impasse between the Executive Committee and every other part of the St. Bernard’s community, the Executive Committee refused to compromise. Without any further recourse available to them, the parents of St. Bernard’s engaged Walden’s firm to represent them in this action.
Remedy
The plaintiff parents are seeking to restore Mr. Johnson as Headmaster of St. Bernard’s, a court order enjoining and preventing the removal of Johnson as Headmaster. The parents also seek the nullification of the nondisclosure agreement between Johnson and the school, and modification of the clause in Johnson’s employment agreement improperly requiring his early retirement in 2021. Additionally, the Petitioners seek full discovery of the communications between members of the school board regarding Stuart Johnson’s employment, and discovery from Stuart Johnson himself, in order to reveal the nature of the school boards secretive actions, including the unfair tactics that the Executive Committee used to intimidate and coerce Stuart Johnson to leave his position of 35 years.
The parents also ask the court for removal of the Executive Committee members from the school’s Board of Trustees.
Parents and school staff have filed whistleblower complaints with the New York Attorney General’s Office, asking for a thorough and complete investigation of the allegations contained in the complaint.
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