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The school also had failed to pay $257,280 for a year’s rent on a building it leased for the upper school.

Yet in a letter to the trustees, Walker & Co. noted “no matters involving the internal control over financial reporting that we consider to be material weaknesses.” The firm found “no instances of noncompliance” that were required to be reported.

A 2006 audit by Walker & Co. said the affiliated entities owed the school more than $1 million and that it again bypassed the charter board’s approval for two contracts exceeding $25,000. Again, the cover letter to the trustees found no weaknesses in the school’s financial reporting methods.

In 2007, SAIL continued to bypass the charter board on large contracts. In addition, an affiliated program established by Mr. Riccio called Arts Are Magic sold the property intended to house the upper school to pay off a debt to SAIL, but still came up $591,978 short, according to another Walker & Co. audit, which this time acknowledged problems with the school’s financial reporting methods.

Finally, in 2008, Walker & Co. informed SAIL’s trustees of “unsupported revenue and expenditures, problematic accounting for related party transactions and incorrectly recorded transactions.” The audit also found unrecorded bank accounts and a failure to comply with federal grant requirements.

The auditors said financial information given to the D.C. government “may contain misstatements” and warned of other potential violations of the federal False Claims Act.

“The cumbersome accounting and complicated nature of certain transactions should have served to alert the school that there was a need for improved oversight,” it said.

Not scot-free

When SAIL bought a building at 16th and L, Mr. Offner said, the seller set a condition that it also buy her apartment in Scotland.

Records obtained by The Times show that when Mr. Riccio was chief executive officer, he regularly traveled to Scotland, with SAIL or WVSA paying for his airfare, transportation and food. Mr. Riccio also maintained a bank account in Scotland, and the records show wire transfers of money from the school to the account in Scotland.

A financial statement obtained by The Times said that in 2004, WVSA paid a $4,854 credit card bill to cover Mr. Riccio’s travel-related expenses in Scotland.

The financial records also show that SAIL paid Mr. Riccio’s membership dues and dinner tabs at the University Club, one of the premier private clubs in the country. He traveled to Boston, Denver, Houston and New Orleans on the school’s credit card, records show, and he used it at grocery stores, drugstores, wine and liquor stores and flower shops.

Thousands of dollars in charges were recorded at cafes and restaurants, a salon and spa, Victoria’s Secret and at a glass, paint and wallpaper shop in France, where Mr. Riccio and his wife maintain a private residence listed on a website as a rental property.

From 1998 to 2008, when Mr. Riccio retired, his annual salary rose from $70,000 to $180,000, according to the records. The next highest salary at SAIL was $85,000, according to the records.

Mr. Riccio is now a professor of special education at Trinity University in Washington.

Story Continues →