Lisa McEntyre finally showed up.
The owner of Children's University, a five-star preschool in Chapel Hill, arrived breathless and an hour late to her criminal trial last week in Orange County Superior Court—and a lot of people were waiting for her: representatives from the state Employment Security Commission, the plaintiff in the case, whom she owes $9,400 in back payroll taxes; and seven teachers at the now-defunct school, whom she owes tens of thousands of dollars in back pay.
When the trial ended, McEntyre was crying, the ESC was only incrementally closer to getting its money, and the former employees were still upset.
Today's criminal case focused on the 18 months' worth of unpaid payroll taxes and the worthless $464 check McEntyre wrote to the ESC last year. Ming Tran, the ESC investigator in the case, told the court that McEntyre wrote the check as part of a payment plan the state and McEntyre agreed to—and that the check bounced.
McEntyre and her attorney, Scott Russ of Durham, did not dispute the ESC's claim but noted that McEntyre wrote the check before the Internal Revenue Service seized funds from her account to cover a portion of the $74,000 in unpaid income taxes.
"I'm looking for assets," Judge Lunsford Long said as he weighed the sentence. "Can she pay back the money?"
"Quickly, no," Russ said, "but eventually, definitely."
Orange County Assistant District Attorney Steven Motta told the court that McEntyre has had five previous worthless check convictions, one each in 1994, 2000 and 2003 and two in 2002.
As the Indy previously reported, McEntyre had an extensive history of financial troubles, including an eviction in 2006 from a building in Carrboro where she operated a day care, Second Home. The landlord sued her for more than $20,000 in unpaid rent.
Russ asked the judge for leniency, noting Children's University "had problems since it opened" in 2007. The preschool closed abruptly in mid-March, even though some parents had paid tuition months in advance. "She has lost everything at this point. She is trying to find a job," Russ said.
Long suspended a 120-day jail sentence, but ordered her to spend five weekends in jail, put her on three years' supervised probation, required her to pay restitution and placed a secured judgment lien on the business property, which means the ESC would get its money from a sale. Other creditors, including the IRS and potentially the former employees, could also claim their portions.
"We're in line," Tran said after the hearing.
McEntyre is trying to sell the property, which is owned by her husband, Corey, and his parents. Her sprawling home—also in the name of her husband and in-laws—is for sale; the asking price is $994,000. McEntyre told the court Corey is also unemployed.
McEntyre was a no-show at a civil hearing last month during which several employees successfully sued her for failing to pay them earlier this year. A magistrate ruled in favor of the employees, some of whom are owed as much as $5,000. But they may never see the money because of McEntyre's signficant debt. The employees attended the criminal hearing because they are considering filing criminal charges against her for allegedly knowingly issuing them bad checks.
"You've dug a large hole for yourself," Long told McEntyre. "I hope you can dig yourself out because a lot of people have been hurt."
The teachers say they will not be satisfied until they receive the money they are owed. Money was coming into the preschool, according to Fay Lewis of the N.C. Division of Child Development subsidy section. From June 2009 to February 2010, Children's University received more than $313,000 in public money for students to attend.
"This is not the end," said Sharon Phillips, a plaintiff in the civil case whom McEntyre owes $5,000. "I want to know where all the money went."