Monarch closure leads to lawsuit

Heron’s Monarch School may have abruptly closed its doors, sending students home early last fall, but there is still plenty of business requiring immediate attention.

Parents and guardians of former students have recently filed a lawsuit against the school, Monarch founders and directors Patrick and Michelle McKenna, and employee Dawn Bristol; whose role is unclear as allegations state she was a business partner while she claims to have only served as an assistant to the McKenna’s. All are facing legal accountability for alleged adversities and damages associated with the sudden closure of the private, scholastic and therapeutic school last September.

The lawsuit holds all defendants responsible for fraudulently enrolling students for the 2017-2018 school year. The complaint states, “Defendants failed to advise parents and students of, or deliberately concealed any financial difficulty the school was having and the fact that the schooled faced closure due to financial problems.”

Collectively, 27 plaintiffs stated that in August 2017 they were encouraged by defendants to prepay for the 2018 spring semester’s tuition, and did so, as it resulted in a 5 percent discount. They claim these non-refundable tuition fees, which were subject to an 18 percent per annum late fee, amounted to $68,000 for some parents, excluding enrollment processing fees reaching up to $6,500.

The plaintiffs also allege the defendants continued to re-enroll students and accept new enrollees for the upcoming school year through August. They claim the school represented it would remain operational at least through the spring semester of 2018 or longer, even though they had known at that point future school operations were uncertain.

On September 13, 2017, a few weeks into the school year, Monarch contacted parents and guardians of students via email stating the school would be closing and students were to be removed from the facility within the next two days.

The defendants deny allegations of knowingly withholding information pertaining to the “precarious financial situation” while they continued to represent the business as a stable, long-term boarding school, able to operate for the 2017-2018 school year at a minimum.

Filed responses from the McKenna’s stated that they “never explicitly nor implicitly misrepresented the status of the school. Unfortunately, a number of expected students did not show up for enrollment, some families pulled their students, and some families were behind in payments,” all leading to financial mishaps and quick school closure.

The defendants also deny the claim that they solicited advanced tuition prepayment, as well as receiving $68,000 for a single tuition in August 2017.

In all, the plaintiffs have filed 14 counts against the defendants.

These counts stem from malpractice, misrepresentation and fraud for failing to provide services to the plaintiff’s students and for misrepresenting the capability of Monarch to provide continued service. They feel the defendants knew that the school’s financial situation rendered it incapable of providing services and used these final tuition payments for personal financial gain purposes.

The plaintiffs believe that Monarch, Inc. was used as an “alter ego entity” for the McKenna’s and Bristol to financially benefit from Monarch funds.

According to the complaint, the defendants “made transfers or incurred obligations, or otherwise engaged in transactions, with the intent to hinder, delay or defraud the plaintiffs,” and “engaged in insider transactions, retained possession or control of property purportedly transferred to others, absconded with assets of Monarch or the plaintiffs, and/or removed or concealed assets” and “the funds and advanced and enrollment fees were used to acquire property, real and personal by the defendants and/or held as cash or invested in other business or personal investments.”

A Breach of Contract count is included as Monarch representatives received prepaid advances for services they never delivered. Similarly, a count enforcing the Consumer Protection Act is in place. Plaintiffs claim the defendants engaged in “unfair or deceptive practices in the conduct of trade or commerce” and “unlawful conduct prohibited by the Montana Consumer Protection Act.”

The defendants have responded by stating they deny the school closure impeded damages upon the plaintiffs. They also deny using Monarch funds to acquire any personal or real property as well as contributing any funds to additional businesses, cash holdings or investment interests with intent to fraudulently take advantage of the plaintiffs.

The defendants did admit to Breach of Contract and lost tuition fees. But they deny that they are personally responsible for claimed damages related to all other counts stating they “genuinely believed that Monarch would remain operational throughout the 2017-2018 school year, and hopefully further into the foreseeable future.”

Monarch School began from the McKenna’s Idaho home in September 2000. The school was relocated to Heron late in the year 2001.