NJ appeals court upholds comptroller subpoena in College Achieve charter school investigation

Ruling says Comptroller can subpoena records from private companies that manage publicly funded charter schools

A New Jersey appeals court has ruled that the Office of the State Comptroller can require the private company that manages the College Achieve charter school network to turn over records as part of an investigation into how public money was spent.

The decision, issued Thursday, less than a month after a hearing, is a major victory for the comptroller’s office, which has been investigating allegations that officials at College Achieve Greater Asbury Park Charter School misused public funds.

A three-judge Appellate Division panel rejected arguments from College Achieve Public Schools Inc., known as CAPS, that it is a private nonprofit beyond the comptroller’s subpoena power.

Instead, the court said the state can subpoena records from private vendors when investigating possible fraud, waste, or abuse involving public funds.

“The OSC can exercise its power … to issue a subpoena as part of an investigation, even if the subpoena is to a vendor,” the court wrote.

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The court upheld a lower court’s decision refusing to throw out the subpoena, although it agreed that the request should remain narrowed to records involving College Achieve Greater Asbury Park Charter School dating back to Jan. 1, 2019. It also lifted a stay that had prevented enforcement of the subpoena while the appeal was pending.

The dispute behind the subpoenas

College Achieve Public Schools Inc. is a Tinton Falls-based nonprofit that manages three New Jersey charter school networks across 11 campuses, including College Achieve Greater Asbury Park Charter School.

The legal battle began in late 2024 after the Office of the State Comptroller launched an investigation into allegations that public money at the Asbury Park charter school had been improperly spent. Investigators subpoenaed the charter school and later the management company, seeking financial records, contracts, internal policies, and the findings of an internal investigation the organization had commissioned about the allegations.

Rather than produce the records, College Achieve Public Schools and the charter school filed lawsuits seeking to block the subpoenas. Laywers for the charter school management company argued the comptroller’s office had exceeded its authority because the management company is a private nonprofit rather than a government agency. They also contended that many of the requested records were protected by attorney-client privilege and that the subpoenas amounted to an overly broad fishing expedition.

A Superior Court judge largely rejected those arguments last year, ruling that because College Achieve manages publicly funded charter schools and receives taxpayer dollars through those contracts, it is subject to the comptroller’s investigative authority. The judge narrowed the subpoena, limiting it to records involving the Asbury Park charter school dating back to 2019, but otherwise allowed it to proceed. College Achieve appealed instead of producing the records.

The subpoenas are tied to a broader comptroller investigation that alleged widespread procurement violations, conflicts of interest, nepotism, and weak financial oversight at College Achieve Greater Asbury Park Charter School.

In a preliminary report released Jan. 12, then-Acting State Comptroller Kevin Walsh said the investigation found what appeared to be a pattern of illegal purchasing practices, cash mishandling, nepotism, and a management structure that stripped the charter school’s governing board of meaningful oversight.

The comptroller’s office said the management company collected about $57 million in public funds across its charter school network between 2016 and 2023.

College Achieve has said the problems identified were isolated, involved only a small portion of school spending, and have since been corrected. The organization has argued that the comptroller ignored the network’s academic success while attempting to improperly expand its authority over the internal operations of a private nonprofit.

Why the appeals court ruled against College Achieve

On appeal, lawyers for College Achieve argued that the comptroller has broad subpoena powers only when investigating fraud, but more limited authority when auditing private vendors doing business with the state. They also argued that the subpoena sought years of records that were irrelevant to the state’s review of the charter school.

The Appellate Division disagreed.

The judges concluded that New Jersey law gives the Office of the State Comptroller the authority to subpoena records from vendors like College Achieve when conducting investigations into possible fraud, waste or abuse involving public funds.

The court also said that audits and investigations are different under state law. While audits generally review finances and compliance, investigations are broader inquiries into possible misconduct. The Legislature preserved those separate powers when it transferred the authority of the former Office of the Inspector General to the comptroller in 2010, the judges wrote.

“It is abundantly clear from the facts and the record that the OSC was operating in its investigative capacity,” the court wrote.

The judges agreed, however, that the subpoena should not be as broad as originally written.

Instead of requiring records for every charter school managed by College Achieve, the subpoena will remain limited to documents involving College Achieve Greater Asbury Park Charter School from Jan. 1, 2019, forward. The court said those limits make the subpoena reasonable while still allowing investigators to obtain the records they need.

The appeals court did not decide whether documents created during the charter school’s internal investigation by the law firm Gibbons are protected by attorney-client privilege or the work-product doctrine. Instead, those issues were remanded to the trial court, where a judge will determine whether the investigative report must be disclosed or can remain confidential.

The opinion also noted that while the appeals were pending, the comptroller’s office completed much of its investigation and released its preliminary public report in January.

The investigation remains ongoing.