Sequoia Pathway’s Edkey Underfire: Unpaid Bills Spark Fresh SEC Complaint

Arizona charter school Edkey, which operates K-12 institutions across Maricopa, has missed a scheduled interest payment to UMB Bank that was due on February 1. Previously, Edkey and the Kansas City-based lender had mutually agreed to pause those payments while Edkey reorganized its financial structure. However, recent securities documents filed with the Municipal Securities Rulemaking Board (MSRB) indicate that UMB had expected to receive the February payment.

Edkey’s financial situation has deteriorated significantly, as indicated by a recent lawsuit filed against the school system in New York by its lenders. Additionally, Edkey’s bond rating has plummeted to ‘D,’ and the institution has laid off 15% of its workforce in response to ongoing financial challenges.

This week, Jim Hall, a prominent critic of Edkey, filed formal complaints with both the Arizona Attorney General’s Office and the U.S. Securities and Exchange Commission. Hall’s complaints stem from discrepancies between enrollment figures reported to bondholders and those provided to state oversight groups. On January 23, Edkey claimed an enrollment of 6,042 students across its 31 schools, while the Arizona Department of Education reported a count of 404 fewer students during the same period.

This discrepancy could have significant financial implications. As state aid is set at $8,500 per student, the inflated figures could translate to an additional $3.4 million for Edkey. In response to the complaints, Edkey’s Chief Operating Officer, Dr. Yovhane Metcalfe, stated that she had not yet reviewed the allegations but emphasized the school’s intent to cooperate with any investigation initiated by the Attorney General.

Edkey manages 31 schools in Arizona, comprising approximately 3,600 K-8 students and 1,400 high school students. Among these, around 700 students are enrolled at the Sequoia Pathway, Sequoia Pathway Secondary, and Pathway Academy in Maricopa.