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A MUST READ - How Did Lewis Become Pencader's Registered Agent?

Pencader Charter School recently published its "amended" and "restated" bylaws.  The new document, available here, raised some eyebrows over Kilroys as it named the former school leader the corporation's Registered Agent.

What is a registered agent?   (from wikipedia)
A registered agent, also known as a resident agent[1] or statutory agent,[2] in United States business law, is a business or individual designated to receive service of process (SOP) when a business entity is a party in a legal action such as a lawsuit or summons.[3] The registered agent's address may also be where the state will send the paperwork for the yearly renewal of the business entity's charter. The registered agent for a business entity may be an individual member of the company, or (more often) a third party, such as the organization's lawyer or a service company. Failure to properly maintain a registered agent can affect a company negatively.[3]

The State of Delaware provides a portal to research resident agents via its "entity search" option.
The entity search for Pencader Education Association provides this information:

Entity Details
THIS IS NOT A STATEMENT OF GOOD STANDING
File Number: 3699458 Incorporation Date / Formation Date: 09/04/2003
(mm/dd/yyyy)
Entity Name: PENCADER EDUCATION ASSOCIATION
Entity Kind: CORPORATION Entity Type: NON-PROFIT OR RELIGIOUS
Residency: DOMESTIC State: DE
REGISTERED AGENT INFORMATION
Name: ANN E. LEWIS
Address: 27 TREMONT COURT COTSWOLD HILLS
City: NEWARK County: NEW CASTLE
State: DE Postal Code: 19711
Phone:
Additional Information is available for a fee. You can retrieve Status for a fee of $10.00 or
more detailed information including current franchise tax assessment, current filing history
and more for a fee of $20.00.

Would you like Status Status,Tax & History Information
Now, I'm not going to spend $10 or $20 to learn anything else about this entity, but you could.  Instead, I'm going to take you through the process that resulted in this outcome.  Isn't the more meaningful question:  How did Ann Lewis Become Pencader's Registered Agent? Ancillary to that - Is it common for the school leader employed by a charter school corporation to be the registered agent?

A. These "amended" and "restated" bylaws were adopted by the Pencader Board of Directors on November 12, 2012 as reflected in the document itself and confirmed in the BOD meeting minutes for the same date:
Motion to accept the amended and restated By-Laws of the Pencader Education Association. Mr. Evans yes, Mrs. Clemmons yes, Ms. Kennedy yes, Mr. Anderson yes, Mrs. Davis yes, Dr. Young yes, Mr. McIntosh yes. Motion passed unanimously.
 
This action was witnessed by  
·         Steve Quimby- Interim School Leader
·         Tami Koss- Temporary School Leader
·         Barry Willoughby- School Counsel
·         Adria Martinelli- YCST (School Counsel)
·         Debbie Doordan- E.D. Innovative Schools
·         Don Liberati- Innovative Schools
·         Chuck Taylor- DCSN
·         Kendall Massett- DCSN
·         Ron Prettyman- Parent

 
The above mentioned information confirms that the statement in the document that Ann Lewis is the registered agent is not a mere ERROR. BOD members Evans, Clemmons, Kennedy, Anderson, Davis, Young and McIntosh affirmed her position.  There can be no disputing this fact.

B. By what process did Lewis achieve this distinction?

Corporations can't simply amend their bylaws to change their agent.  The State of Delaware has established a process, including the submission of various forms, found here: http://corp.delaware.gov/coa09.shtml  For those of you who are non-searchers, here's the gist:
 
A corporation must apply for a "Certificate of Change of Registered Agent and/or Office to be filed in accordance with Section 133 of the General Corporation Law of the State of Delaware.
The fee to file the Certificate is $50.00 ($5.00 for non-profit corporations). If your document is more than 1 page, please include $9.00 for each additional page. You will receive a stamped “Filed” copy of your submitted document. A certified copy may be requested for an additional $50."
 
A corporation needs to provide the following information:
1. The current name of the corporation exactly as it appears in the state's records.
2. The new name and address of the registered agent you are appointing to accept service of process for the corporation.
 
Easy Peasy.
 
Not Quite:
 
The forms contain an execution block:
"The document must be signed by an authorized officer of the corporation pursuent to Section 103 of Title 8.  The name of the person must be typed or written legibly underneath the signature.
 
And then there's good 'ole #3:  
3. The foregoing change to the registered office/agent was adopted by a resolution of the Board of Directors of the corporation.
 
And that answers B - The Pencader Education Association's Board of Directors adopted a resolution decreeing Ann Lewis as the incoming registered agent.  Following this action item, the BOD's authorized agent submitted the required forms and paid the $5.00 non-profit filing fee (assuming the submission was only one page) to have Ann Lewis recognized as the Registered Agent. 
 
Since the Nov. 12, 2012 minutes fail to record any details regarding the action of "amending" and "restating" the bylaws, it could be assumed that this action occurred then.  Note, the changes were unanimously approved.  Even the highly experienced and invigorating new board members may have placed Ann Lewis, already dispatched by Nov. 12, into this role. 
 
Whether it happened Nov. 12 or sometime previous - one fact cannot be disputed: Not one Pencader board member voted NO on Nov. 12 to giving the former school a valid, legal role in the function of the Pencader Education Association corporation.  And that is a fantastic concern.
 
C.  So just how common is it for charter BODs to name current or former school leaders as their registered agent?
 
Family Foundations - Foundations Inc at 1101 Delaware St.
Academy of Dover - Academy of Dover, Saulsbury Rd.
CSW - PHS Corporate Services, Inc.
DAPSS - DAPSS Harmony Rd.
DCP - Anita Roberson (past principal)
Eastside Charter - Eastside Charter
DMA - Bancroft Service Corp
GLS - Pam Draper (School Leader)
Kuumba Academy - Kuumba Academy
Aspira of Delaware Charter Operations -  Jaime Rivera (former chairman and  president of Aspira)
MOT Charter - MOT Charter
NCS - NCS
Odyssey Charter School Inc. - George Righos (current BOD VP)
Postive Outcomes - Edward J. Emmet Jr. (Executive Director)
Prestive - Prestige
Reach - Reach
New Maurice Moyer - Agents and Corporations, Inc.
Sussex Academy of Arts and Sciences -  Sussex Academy of Arts and Sciences
Edison - Corporation Services Company
Campus Community School - Could Not Discern Entity
 
Pencader Education Association - Ann Lewis (former School Leader)
 
I think you can draw your own conclusions.





20 comments:

Harrie Ellen Minnehan said...

Holy s_ _ _ t!! Back on the Pencader bus....looks like Miss Ann filed to be the Registered Agent for PCHS on 8/8/2011. 8/1/2011 the state made effective new forms for doing so and the new forms REQUIRED proof shown that the corporations ByLaws were amended to show the change in agent and an "authorized officer" of the corporation signed the documents. Want to ask if any of this was done???? Come on, ask.....just one person, ask.....

Anonymous said...

It would be interesting to see a copy of the document to see whose signature as the "authorized officer" was on the paperwork. I am guessing Cindy Coyne. Pls. tell us any other information you have on this. Is there any way Lewis is still pulling money from the school because she is the registered agent? Is she legally responsible for things that go on at the school?

Anonymous said...

Who are authorized officers of the corporation?

Elizabeth Scheinberg said...

Authorized officers are those empowered to do business on behalf of the corporation.

For the purposes of a charter school - the school leader is usually performs as the authorized officer.

I do not have the document. I do not know who signed it. But, someone did, and whoever that was, he/she attested on a state/federal doc that the BOD had voted Ann Lewis into that designation.

Anonymous said...

Elizabeth - do you know who to contact to get a copy of the document? I am assuming it is available to the public.

Harrie Ellen Minnehan said...

An "authorized officer" would be one of the Board officers. Cindy Coyne was not a Board officer or member. I was the Board President on that date and I did NOT sign it. I did not even know about it until today, 12/30/2012!! I can also attest that the Board did NOT at any meeting in 2011 or until May, 2012 designate Ann Lewis to be the Registered Agent for the school. More of what Joe Biden would call "malarky!"

Harrie Ellen Minnehan said...

To answer Anonymous: I do not think that being the Registed Agent gives Lewis any access to school money. However, what it does give her is access to information regarding the legal status of the school, any lawsuits filed, any questions/concerns regarding the corporate status of the school, tax status etc. Papers, for example, responses from the IRS about the tax exempt status of the school would go to her listed Agent address, which by the way is her home, not the school. Hope this helps answer your question....

Mike O. said...

Why does a corporation with a fixed Delaware address even need a registered agent? I don't think it does.

Mike O. said...

Why does a Delaware corporation with a fixed business address in Delaware even need a registered agent? I don't believe they do.

Harrie Ellen Minnehan said...

Mike O: don't know the answer to that. We didn't specify one previously but it turns out that until Ann Lewis I believe it was Dave Jones. The new Board had the lawyer draw up proper By Laws and he inserted the information about requiring a "Registered Office" and "Registered Agent." He then went ahead and put in Ann Lewis as that person but the registered office as the school's address. However on the form she filed she has her home address listed and nowhere on that form does the Lukens Drive address appear. Somebody didn't read even the minimum sized print....

Harrie Ellen Minnehan said...

Mike O: I just checked with my husband and he said that every corporation in Delaware is required to have a registered agent. Charter Schools, are hybrids of a sort: public schools and simultaneously corporations.

Elizabeth Scheinberg said...

Minnetonka is correct - The Registered Agent is part of the Delaware corporation law. However, EVERY state requires a corporation to have registered agent. The how and who may be different, but the requirement stems from the federal.

As far as getting a copy of the documents -
I recommend starting here at the Sec. of State, Division of Corporations: http://corp.delaware.gov/aboutagency.shtml

Pencadermom said...

Did I read it correctly? Does it say 2003? Is this current?

Elizabeth Scheinberg said...

2003 is the year that Pencader was incorporated - the date is when it officially became a corporation in Delaware - its own entity.

As far as Charter corporations go - it's not uncommon to find that they may have incorporated years before they actually open the doors to students.

Mike O. said...

It turns out that yes, every corporation must have a registered agent, but the agent may be the corporation itself at its regular business address ("Corporations are people, my friend!")

I don't know how unusual it is for a corporation with a fixed business address to have an individual at a home address as their registered agent.

Perhaps it is more common for charters because when they are approved they may not know their ultimate address.

From Delaware corporate code:

"(a) Every corporation shall have and maintain in this State a registered agent, which agent may be any of:

(1) The corporation itself;

(2) An individual resident in this State;"

Elizabeth Scheinberg said...

Mike O. You bring up such a great point - when charters first incorporate they likely don't have their permenant address. At that time, it makes sense to make the registered agent one of the people who are the driving power behind the charter. Another option would be to establish a relationship with an organization or division whose sole primary purpose is to be a "registered agent." Some of the charters listed above have chosen that route.

What does not make sense is this: Ann Lewis was assigned the Registered Agent role at Tremont Dr in August 2011. This charter school was not new, it did have an address. Not one of the big three charters (as in high performing)- NCS DMA CSW - designate their school leader into that role. Two have a third party. One names the corporation itself.

Thus, there as no reason for P's BOD to amend or restate Lewis into that role. In fact, when they opened the bylaws to revisions, that should have been one of the first things Willoughby would have said to change.

As of today - if PCS is sued or the goverment agencies such as the IRS send renewals or other formal documents to the school, the former school leader is likely receiving a copy addressed to her at 27 Tremont Dr.

Epic Failure.

Anonymous said...

I am searching for information about establishing a charter school and came across your article and comments. I am specifically looking for info about whether I should list myself as the RA or hire someone. For all of your detective work and innuendos, I am an outsider and cannot draw my own conclusions, and I don't know what you mean by "epic failure." Can you please spell out your conspiracy theory? Thanks!

Elizabeth Scheinberg said...

Anon,

We can't offer legal advice. We do suggest that you consult your own legal counsel as to the most appropriate manner of identifying your RA.

In regard to the post:
Epic Failure - the clear lack of oversight by any public body that approves bylaw changes, including a resolution to change the RA, that appoints a former school leader, dispatched in disgrace, as the body's RA. This is a general statement regarding public body's in general.

Should you seek more information regarding the specific situation above, I suggest clicking the links to Kilroys and visiting the delawareonline.com archives.

Anonymous said...

Thanks for responding. The school leader "dispatched in disgrace"--evidently still had some interest in the school if she was listed as the RA. The RA, as I understand it, is just a formality to receive any paperwork from the court and not in charge of anything. Why is that a problem? Was there a restraining order against her from having anything to do with the school?

Elizabeth Scheinberg said...

The governance and leadership in this case study paved a path that led to the authorizer revoking the school's charter resulting a closure.

The problem for the public is this: The SL was removed from her position by the board for several reasons, including falsifying credentials and participating/enabling pension fraud that benefitted select school staff, including her spouse.

The board removed her with cause in Sept/Oct 2012. In Nov. 2012 the board revised their bylaws and commenced the process of changing their RA to the now terminated school leader.
However, the minutes of the public meeting fail to record this. It is actually unclear if the board really read the documents provided and consciously knew they were enacting a process to change the RA. In fact, this board was subject to several FOIA filings - they lost each one, one by concession.

The demise of this school was very public. For 18 months, the governance rested in the hands of quorum of woefully un-educated and unprepared board members who worked deftly to put the personal interests of adults before the education of students. There is no place for such behavior in public education.

As far as the role of the RA - the RA is the body that takes possession of documents when the school is served in judicial process.

I would offer that you need to choose your RA wisely. You are mistaken if you believe he/she is "not in charge of anything." The RA you choose will receive confidential legal documents with deadlines for responses. You want one that you can trust to do that job. Your worst enemy is probably not the person you want...

Again, you need to talk to your own legal counsel.

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