PROVIDENCE — A Rhode Island judge has ordered the beleaguered Croft School in Providence to remain open for the time being and appointed a special master to oversee the private school’s finances.
Superior Court Judge Brian Stern on Thursday named Mark Russo the special master of the Croft School’s Providence campus amid allegations of fraud by the school’s founder and former executive director, Scott Given.
The school serves about 220 students in Providence and another 370 at two locations in Boston, and court documents show it could run out of money as soon as next week.
The special master designation, which is for the Providence campus only, comes after parents petitioned Judge Stern to place the school in receivership, a state-level version of bankruptcy, as a last-ditch effort to keep the school open.
Stern has not taken a position on the receivership proposal, but he authorized Russo, a prominent attorney who oversees the finances of the cash-strapped Providence Place mall, to “open bank accounts and to receive funds from any source, including but not limited to tuition payments, donations, grants, or court-directed transfers from the special master’s bank account on behalf of and intended for the benefit of the Providence school, and to disburse those funds directly to vendors and service providers necessary for the Providence school’s operations,” according to the order.
Stern is also prohibiting the school from making any personnel decisions without five days’ notice to Russo or prior approval from Russo. The judge also blocked the school and its board from taking any action to close the school or alter the academic schedule while Russo is the special master.
A lawyer for the Croft School also didn’t immediately respond to a request for comment Thursday.
Earlier in the week, the board stated in court documents that it has $489,000 in cash on hand, which was reserved to make the March 31 payroll, and would need about $5 million to remain open for the rest of the school year at all three campuses.
The school has about $13 million in unsecured debt and another $2 million from “short-term, high-interest” financing companies, according to communications the board has sent families.
The board has told families they learned of the alleged fraud on March 6, when the owner of a South End building attempted to cash a $500,000 letter of credit from Given. The bank flagged it as fraudulent, according to a lawsuit filed by the Boston landlord.
Dan McGowan can be reached at dan.mcgowan@globe.com. Follow him @danmcgowan. Steph Machado can be reached at steph.machado@globe.com. Follow her @StephMachado.