Native American Student Files Class-Action Lawsuit in Education Scandal

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May 19, 2016; KELO-TV

A Native American college student in South Dakota has filed a class action lawsuit against Mid-Central Educational Cooperative, a local public education agency serving 13 rural school districts. Alyssa Black Bear alleges that Mid-Central failed to honor its contract with the South Dakota Department of Education as it administered two federal grants intended to help Native American and other low-income youth in the state prepare for and be successful in college. The lawsuit does not request a specific amount in damages and does not name any additional plaintiffs, though more aggrieved former and current students may join the suit at a later time.

NPQ readers may remember allegations that Mid-Central’s administration of up to $62 million in federal GEAR UP program grants was riddled with waste, fraud, poor record-keeping, and countless conflicts of interest. Black Bear’s 13-page complaint identifies state agencies, several nonprofit organizations, and several individuals that had some role in administering and/or evaluating the grant funded program. Mid-Central has 30 days to respond to the complaint.

Meanwhile, Mid-Central is suing one of its former nonprofit partners, the American Indian Institute for Innovation (AIII), for unspecified damages for “breach of contract, as well as fraud and deceit and taking Mid-Central’s property for its own use,” according to the story reporting the lawsuit. AIII’s founder and chief financial officer was Scott Westerhuis, who was also the longtime senior finance official at Mid-Central. Last September, Westerhuis murdered his wife and four children, burned the family home to the ground, and committed suicide less than a day after being told that the state had suddenly cancelled Mid-Central’s GEAR UP management contract. Mid-Central had previously sued the Westerhuis estate for more than $2 million related to GEAR UP, alleging that there was a “reasonable chance” that he has misappropriated funds from Mid-Central. AIII, for its part, is also suing the Westerhuis estate in an attempt to recover GEAR UP funds it says were misappropriated.

In the wake of the scandal and as a consequence of the state education department’s decision to terminate all contractual agreements with it, Mid-Central has decided to dissolve in 2017. Its member school districts will align with other educational cooperatives in the state to share costs and curriculum for special education, related services, and professional development provided to their students and employees.

Will Mid-Central have any money left for Black Bear and other plaintiffs to collect? Can they sue the school districts that make up Mid-Central, or the state education department that failed to exercise proper oversight as it promised to the federal government, or will sovereign immunity protect these governmental entitles from responsibility to the students who were shortchanged?—Michael Wyland