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Children's University closes after money troubles, state investigations

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This is an updated version of a story that was originally posted on the Indy's Triangulator blog on Friday, April 16.

Seven former teachers of the Children's University, a five-star preschool in Chapel Hill, showed up at an Orange County courtroom Tuesday in hopes of confronting the school's owner, who allegedly owes them thousands of dollars in back pay.

However, Lisa McEntyre, owner of the Children's University, didn't show up—much like, as teachers contend, she was often a no-show at the preschool.

McEntyre abruptly closed Children's University March 18 after a series of investigations by the N.C. Employment Security Commission and the state Division of Child Development.

After trying unsuccessfully for several weeks to find McEntyre, Orange County Sheriff's deputies finally were able to serve her several warrants for the civil lawsuits early Monday morning at her home. She has until Friday to prepare her response, and thus didn't appear in court. Her lawyer, Greg DeWitt of Durham, had no comment.

According to Orange County court documents, McEntyre, who has an extensive history of financial and credit problems—including issues at another day care—had not paid teachers since at least early February, even though parents continued to pay tuition, some several months in advance.

The school at 1702 Legion Road enrolled about 70 children ranging from infants to 5 years old. Tuition ranged from $900 to $1,200 per month per child. In addition, some parents qualified for a child-care subsidy, meaning area social services departments helped pay for their tuition, a guaranteed source of income for McEntyre. According to Fay Lewis of the N.C. Division of Child Development subsidy section, from June 2009 to February 2010 the Children's University received more than $313,000 in public money for students to attend—$290,000 from Orange County and the balance from Chatham County.

Seven teachers have filed suit in small claims court; however, they told the Indy all the teachers were shorted pay, many of whom could not afford to sue. In addition, several Bhuthan immigrants who worked at the preschool were reportedly not paid. After Tuesday's court hearing, Naina Kadariya and Rita Rai, two of the immigrants, filed worthless check charges against McEntyre. Kadariya and Rai worked at the daycare from October to February after being placed there by Church World Services, which sponsored them. Each is reportedly owed $1,400 plus bank fees for McEntyre's bad checks.

"We did our job and we should get paid for that," said Rai, who cared for babies between six months and 1 year old.

Drusylla Strickland, a volunteer who is helping the two get settled in America, says the ordeal has complicated their adjustment to the U.S. "They're not trying to live off of the government. They are trying to do a job," she said. "I warned them about other things to be careful of, but I didn't warn them about this job."

The pair now works as housekeepers at a hotel in Research Triangle Park.

Teachers say they had been encountering problems with their paychecks bouncing for at least a year. The most recent—and final—such incident occurred in January.

At the end of February, several teachers said that McEntyre told them in a meeting that she would pay them half the money she owed them and the balance on March 1. However, that money was never paid. "We were all standing around and waiting for paychecks," said Sadie Dula, who is owed nearly $3,000. "She always paid us in a white envelope. She gave the envelopes to a co-worker and said 'pass this out, I'm leaving for a doctor's appointment.' I saw the paperwork but there was no paycheck. No one had paychecks, and she was gone."

Sharon Phillips, a teacher for more than two years, is owed $5,553, according to court documents. The last check she received was on Feb. 5; a previous check for more than $1,000 was returned to her because of insufficient funds in McEntyre's account.

"It was nerve-wracking on payday," said Phillips, who earned $16 an hour. "You thought that maybe there was no money in the [McEntryre's] account."

Phillips said that some teachers received checks written on BB&T bank accounts; others, on Bank of America accounts.

"[Lisa] kept changing pay dates or banks, or said she couldn't do direct deposit that week," said Dorian McLean, who worked for McEntyre for nearly three years. McLean is owed about $3,000.

Then on March 18, teachers and parents arrived at the school to find a letter posted on the door stating the facility had closed. According to state records, the letter also said, "If parents did not retrieve all of their children's property that day, they should contact the owner and she would mail the property to the family."

However, McEntyre's voicemail does not accept messages; the school is padlocked and no one answers the phone there.

Dula told the Indy that McEntyre did not warn the staff she planned to close the school. "She just told everybody to get off the premises that day," she said. "She said the money was not coming in so she couldn't pay us, but it was my understanding money was coming in."

Yassine Ouchchy, a Morrocan immigrant, had paid for his 3-year-old son to attend Children's University through June. His son had been attending Children's University for two years. He learned of the school's closure on March 16. "She just closed it out of nowhere. She just disappeared. My son's stuff is still inside the day care, his clothes, his blanket, his toys."

Ouchchy said McEntyre owes him $2,700. He said he had to sell his gas station, Anna's Quick Shop, in Henderson because he doesn't have child care. "You can't drive to Henderson with a son at five in the morning," Ouchchy said. "And now I'm not working."

N.C. Division of Child Development inspectors had visited Children's University at least seven times since the beginning of the year and had cited the facility for several violations. On March 8, the violations included insufficient linens for the children, an unlatched gate leading to the playground and the presence of broken toys inside and outdoors.

Yet most of the violations, some of which were chronic, focused on inadequate staffing. Under state law, the maximum class size for children ages 2–5 is 18. That age group also requires one teacher for every nine students. However, on March 8, there were 30 children in one group with just two teachers—or a ratio of one teacher to 15 students.

Karen Meade, who is owed $2,883, said that the school was "out of ratio" in every room. In addition, Meade said, there were instances in which there was not enough food for the children. "We got two large pizzas for class, but no fruit or vegetables. We ran out of milk."

The state investigated a similar allegation in February but could not substantiate it.

One of the restrictions on the Children's University permit is that Nicholas McEntyre, Lisa McEntyre's son, is not allowed on the premises during business hours. McEntyre has several convictions for possession of marijuana and the anti-anxiety medication Lorazepam, also known as Ativan, a Schedule IV drug, according to court records. However, teacher Sharon Phillips told the Indy she saw Nicholas McEntyre at the school during that time delivering what appeared to be checks. McLean said she saw him numerous times, including in the classroom.

Meade confirmed Phillips' account, adding that McEntyre demanded that teachers and staff not disclose they had seen Nicholas. "She said to say Nick wasn't here," Meade said. "We lied for her because we needed our job."

The Employment Security Commission visited the facility last November, after which Ming Tran, a tax auditor with the ESC, reported a misdemeanor employment security violation to Chapel Hill police. According to the ESC, McEntyre allegedly had failed to pay more than $6,000 in payroll taxes. Court documents show that McEntyre also wrote at least three bad checks to the ESC, the most recent in December 2009.

Furthermore, Meade alleged that McEntyre told employees to file for unemployment—and that she would validate the claim—but to "have us volunteer at the school and then she would make it up to us in April." Several other teachers corroborated Meade's account.

Despite these problems, the Children's University had been classified as a five-star facility—the highest rating—in mid-January. A spokesperson for the Division of Child Development said that state regulators examine the previous 18 months of compliance history when rating a facility. Although state records show the compliance rate started to go downhill a year ago, the Children's University received its five stars in January because it had averaged a 94 percent compliance history since July 2008.

Before McEntyre's financial problems at the Children's University, she had been sued in small claims court for other personal and business debts. The situation at Children's University is similar to that of another McEntyre-owned business, Second Home Early Education. According to court documents, in October 2004 McEntyre and her husband, Corey McEntyre, signed a five-year lease on a building at 202 Greensboro St. in Carrboro, where they opened Second Home. However, court documents state that just two months after signing the lease, the McEntyres "failed to make any timely rent payments." They stopped paying rent in October 2005, four years before the lease expired and owed Ontjes Properties $20,000.

Ontjes Properties evicted the business, which closed abruptly in 2006.

Kimberly Mahaffey's son attended Second Home. She sued McEntyre for $600 after McEntrye closed the school but did not refund her tuition. "I had paid her on a Monday, and immediately after she accepted all of our money at the first of the month, she closed down."

Mahaffey finally got her $600—three years later.

A spokesperson for N.C. Child Care Development said that McEntyre was licensed to operate Second Home from December 2004 through May 2006, when the license was terminated. McEntyre received a new license in July 2007 when she purchased Children's University, formerly Wee Care.

The spokesperson said the state conducts criminal background checks on prospective day care and preschool owners and staff but does not examine their credit history or civil court cases.

"All I can say to parents and teachers is persevere," Mahaffey said. "I don't know how she opened up another business, and I hope she won't be able to now."

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