Appeals court weighs limits of comptroller’s subpoena powers in charter school case

Judges hear challenge to comptroller subpoenas in College Achieve Public Schools case

A three-judge panel of the Appellate Division of Superior Court heard oral arguments Thursday in a case that could determine how far the New Jersey Office of the State Comptroller can go when subpoenaing records from private organizations that receive public money.

The hearing focused on whether the comptroller’s office exceeded its authority while investigating the College Achieve Greater Asbury Park Charter School and its affiliated nonprofit management company, College Achieve Public Schools, which provides management services to the charter school’s network.

The legal dispute grew out of an Office of the State Comptroller investigation into the charter school and its management company. In a preliminary report released in January, investigators alleged a pattern of procurement violations, nepotism, mishandling of cash, and governance problems that they said weakened oversight of the publicly funded school.

According to the comptroller’s office, the management company received about $57 million in public funds across its network of charter schools between 2016 and 2023.

The subpoenas at the center of the case were issued in 2024 as investigators sought financial records, management documents, employment information, contracts, and the findings of an internal investigation related to the issues raised by the comptroller. The comptroller filed a complaint in November 2024 after the charter school failed to respond to the subpoena. The management company filed a lawsuit against the comptroller in December 2024. In April 2025, the management company and the charter school filed another lawsuit against the comptroller.

After the charter school and management company challenged the subpoenas, a Superior Court judge largely sided with the comptroller and ordered the production of records. The charter school and management company appealed rather than comply. Three related cases are now before the Appellate Division.

An attorney for the management company argued Thursday that the comptroller improperly blended two separate oversight functions, one governing audits and another governing investigations into fraud, waste, and abuse involving state funds. The attorney argued that the New Jersey Legislature intentionally kept audit and investigative functions separate and never granted the comptroller unlimited subpoena power.

“The comptroller possesses no inherent power. Every power exercised by the office derives exclusively from statute,” College Achieve attorney Robert Adams of McCarter & English told the court.

Adams argued that state law created two separate frameworks with different purposes and different powers. One, he said, authorizes audits and oversight reviews, while another authorizes investigations into fraud, waste, abuse, and mismanagement involving public funds.

“The Legislature did not merge them, did not repeal one statute, did not create a unified investigatory code,” Adams said.

He argued that the comptroller’s office improperly combined those authorities when it sought broad categories of records from the management company.

The panel—Judges Joseph Marczyk, Hany A. Mawla, and Avis Bishop-Thompson—questioned both sides about whether the subpoena should be treated as part of an audit or as part of an investigation.

Bishop-Thompson asked whether the management company would have objected if the comptroller had first sought information through its audit authority and later issued a subpoena based on what it learned.

“We are a vendor and would be subject to an audit request,” Adams said.

Adams said the subpoena sought financial documents, tax records, investment records, real estate agreements, employment information, and internal policies. He argued that many of those requests were “overly broad” and extended beyond what the comptroller is legally allowed to demand from a private nonprofit vendor.

A deputy attorney general representing the comptroller’s office said the Legislature consolidated powers in 2010 when it transferred the authority of the former Office of the Inspector General into the comptroller’s office, allowing broader and more coordinated oversight of public spending.

“The issue before this court is simple: whether the OSC (Office of the State Comptroller) has the authority to review the expenditure of public funds,” Deputy Attorney General Phoenix Meyers said. “It does.”

Meyers argued that lawmakers intentionally brought auditing and investigative functions under one agency to eliminate duplication and improve oversight.

She also argued that the distinction between an audit and an investigation was largely irrelevant in this case because the records sought by the comptroller would be obtainable under either legal framework.

“It really amounts to a distinction without a difference here,” Meyers said.

Bishop-Thompson said the subpoena appeared to be framed primarily as an investigation rather than an audit.

Meyers responded that the two functions often overlap.

“An investigation can become an audit, and an audit can become an investigation,” she said.

The hearing also touched on a separate dispute over attorney-client privilege. The comptroller’s office is seeking the findings of an investigation commissioned by the charter school and conducted by the law firm Gibbons P.C. that examined issues related to the allegations raised in the comptroller’s investigation, including procurement practices, nepotism, handling of public funds, and governance concerns.

The charter school has argued that the report is a work product that is protected by attorney-client privilege.

Jaryda Gonzalez, the attorney for the charter school, argued that the appeals court should not treat the various disputes as a single case. She argued that the privilege dispute should be sent back to the trial court because no factual record has been developed on the issue.

The judges did not issue a ruling from the bench and said they would return a decision as soon as possible.