DENVER — A parent group is accusing Denver Public Schools of defrauding taxpayers, misleading them about the purpose of voter-approved bonds, and violating the Colorado Organized Crime Control Act.
The lawsuit filed this week by Mamás de DPS accuses the district of using complicated financial practices to conceal debts.
DPS spokesperson Scott Pribble sent Denver7 a statement in response to the lawsuit, saying:
“The use of the Colorado Organized Crime Control Act (COCCA) against a standard and widely accepted method of public finance used by school districts and other government agencies across Colorado is an overly aggressive legal tactic designed solely to create headlines. Colorado courts have repeatedly upheld the constitutionality of certificates of participation and we look forward to our opportunity to defend ourselves against another frivolous lawsuit.”
The lawsuit lays out a detailed financial picture that begins with DPS taking out mortgages for 33 school buildings through a nonprofit it created, the Denver School Facilities Leasing Corporation.
The nonprofit leases the buildings back to DPS through a complicated financial tool called “certificates of participation,” a type of security sold to investors to generate debt proceeds for the trust.
Attorney for Mamás de DPS, Lisi Owen, claims the Denver School Facilities Leasing Corporation serves as a shell company that conceals the mortgages to evade liability for violating laws that prohibit public entities from taking out loans or incurring debt.
“Denver Public Schools is engaged in debt-related behavior that is not honest and not in the best interest of taxpayers, voters or parents in Denver,” Owen said.
DPS asked voters for several bonds over the years to pay for updating outdated school buildings, installing air conditioning in schools and providing early-childhood education opportunities.
The lawsuit alleges that DPS never told voters that some of the $1 billion in bond proceeds generated by taxpayers would be used to pay off their lease-related debts.
“They're drowning in debt,” Owen said. “It has been since 1997 that issuance of debt through what we call the leasing scheme has actually yielded any cash to the district.”
The allegations in the lawsuit filed this week are also among those in a 2024 lawsuit Mamás de DPS filed against the district, seeking to prevent DPS from closing schools due to declining enrollment.
Owen says they discovered the district’s financial situation while looking into the rationale for which schools the district was choosing to close.
“The mortgages prohibit DPS from closing schools that are mortgaged,” Owen said.
The lawsuit filed last week asks that the leases and mortgages be voided and the school buildings be returned to the District's ownership.
