Children's University owner sentenced over failure to pay state

Posted by Lisa Sorg on Thu, May 6, 2010 at 12:48 PM

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Lisa McEntyre finally showed up.

The owner of Children’s University, a five-star preschool in Chapel Hill, arrived breathless and an hour late to her criminal trial this morning in Orange County Superior Court—and a lot of people were waiting for her: Representatives from the state Employment Security Commission, the plaintiff in today’s case, whom she owes $9,400 in back payroll taxes; and eight seven teachers at the now defunct school whom she owes tens of thousands of dollars in back pay.

Read the previous Indy stories from April 21 and April 27.

When the trial ended, McEntyre was crying, the ESC was only incrementally closer to getting it money and the employees were still upset.

McEntyre was a no-show at a civil hearing last month during which several employees successfully sued her for failing to pay them earlier this year. A magistrate ruled in favor of the employees, some of whom are owed as much as $5,000. But they may never see the money because McEntyre is reportedly deeply in debt. The employees attended today because they are considering filing criminal charges against her for allegedly knowingly issuing them bad checks.

Today’s criminal case focused on the 18 months’ worth of unpaid payroll taxes and the worthless $464 check McEntyre wrote to the ESC last year. Ming Tran, the ESC investigator in the case, told the court that McEntyre wrote a $464 check as part of a payment plan the state and McEntyre agreed to—and that the check bounced.

McEntyre and her attorney, Scott Russ of Durham, did not dispute the ESC’s claim, but noted that McEntyre wrote the check before the Internal Revenue Service seized funds to cover unpaid income taxes from her account.

“I’m looking for assets,” Judge Lunsford Long said as he weighed the sentence. “Can she pay back the money?”

“Quickly, no,” Russ said, “but eventually, definitely.”

Orange County District Attorney Jim Woodall Assistant District Attorney Steven Motta told the court that McEntyre has had five previous worthless check convictions, one each in 1994, 2000 and 2003 and two in 2002.

As the Indy previously reported, McEntyre had an extensive history of financial troubles, including an eviction in 2006 from a building in Carrboro where she operated a day care, Second Home. The landlord sued her for more than $20,000 in unpaid rent.

Russ asked the judge for leniency, noting “the business had problems since it opened" in 2007. The preschool closed abruptly in mid-March, even though some parents had paid tuition months in advance.
“She has lost everything at this point. She is trying to find a job,” Ross said.

Long suspended a 120-day jail sentence, but ordered her to spend five weekends in jail, put her on three years supervised probation, required her to pay restitution and placed a secured judgment lien on the business property, which means the ESC would get its money from a sale.

McEntyre is trying to sell the property, which is owned by her husband, Corey, and his parents. Her sprawling home—also in the name of her husband and in-laws—is also for sale; the asking price is $994,000. McEntyre told the court Corey is also unemployed.

“You’ve dug a large hole for yourself,” Long told McEntyre. “I hope you can dig yourself out because a lot of people have been hurt.”

The teachers say they will not be satisfied until they receive the money they are owed. “This is not the end,” said Sharon Phillips, a plaintiff in the civil case whom McEntyre owes $5,000. “I want to know where all the money went.”

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