Two months after a state audit alleged she siphoned $1 million from a program at N.C. Central University, Nan Coleman has yet to face criminal or civil charges. Meanwhile, public records obtained by the Independent Weekly show that the money Coleman is accused of skimming amounts to nearly 40 percent of $2.5 million in revenue from a federally funded tutoring program that she oversaw. More than a half-million dollars of that total came from Durham Public Schoolsthe district where Coleman had worked for 26 years before landing at NCCU. Another $240,000 came from four other school districts in the greater Triangle. None of the school districts is implicated in any wrongdoing. It is what happened to those payments that raised red flags in the state audit.

During her 10-year tenure at NCCU, Coleman worked for the Historically Minority Colleges and Universities Consortium, a partnership among the state’s historically black colleges designed to increase achievement in minority and low-income students in grades K–12. The consortium had several initiatives, including a leadership program for young black men. The efforts were largely funded by the state and grants from charitable organizations.

But the consortium also had another revenue sourceafter-school tutoring for specific groups of students in underperforming schools. Under federal law, schools that fail to meet certain academic standards must offer students alternatives, including the ability to transfer to another school, or to receive free tutoring to improve their test scores. Parents can choose from a list of service providerstypically for-profit education companiesand the school district pays the bill using federal money.

The supplemental education services are big business for education companies. In the 2009–10 school year, North Carolina districts spent $19.1 million in federal money on the services for 30,000 studentsjust 17 percent of the students who were eligible, according to a report from the N.C. Department of Public Instruction.

According to records the Indy requested from nearly 30 school districts, NCCU and fellow consortium members Bennett College, Livingstone College and Shaw University offered the tutoring services across the state. Although each institution managed their relationships with individual districts, NCCU served as the fiscal agent for the program, processing $2.5 million in revenue from 2004 to 2010, the audit showed. Coleman is accused of opening the secret account in 2004 and skimming money for nearly five years without detection. A lack of oversight and improper accounting practices, contributed to the money being funneled away for so many years, the audit said.

From the structure of the programs, it appears that the money Coleman is accused of pocketing was profit from the tutoring program that should have stayed in the consortium’s coffers. Instead, the audit found Coleman allegedly used money from her clandestine account to pay for personal items and services, and withdrew large amounts of cash. The audit also shows that former NCCU Provost Beverly Washington Jones and her private company received $62,000 without providing any services to students.

State Auditor Beth Wood would not release documents showing the sources of the revenue, stating that an auditor’s working papers are not public. The Indy has requested access to additional detailed records through NCCU.

Along with Coleman, Jones and others implicated in the audit could face criminal charges and civil litigation for the diverted funds. Meanwhile, Jones is running an education consulting business, Academic Enrichment Services and Systems (AESS) that is providing the same after-school tutoring services available to students at underperforming schools who qualify under federal law.

Last year, AESS took in at least $53,000 from four school districts, including $29,000 from Durham Public Schools, despite failing to obtain a privilege license from the city of Durham. Prompted by a July 21 story in the Indy, the city notified Jones of the lapse. AESS obtained a privilege license a week later, according to city records. The business may be subject to penalties for past earnings, said Paul Mason, billing and collections manager for the city’s finance department.