San Marcos Mercury | Local News from San Marcos and Hays County, Texas

July 16th, 2008
Master’s School sues its former board president over disputed funds

Managing Editor

San Marcos businessman Jeff Etheredge improperly diverted money from an elite Christian school to secure a personal bank loan, a lawsuit filed in state district court by The Master’s School of San Marcos alleges.

As president of the private school’s board of directors, Etheredge was authorized to oversee the sale of 40 acres on McCarty Lane, a transaction that was finalized in August 2007. Instead of transferring proceeds from the land sale to the school’s bank account, however, Etheredge diverted $281,000 to a certificate of deposit in his name at Broadway National Bank, the suit alleges. Etheredge then used the certificate of deposit as collateral on a $281,000 personal loan from the bank, the suit alleges.

When Kevin Brumley, the school’s board treasurer, pressed Etheredge for information on the sale, Etheredge provided a certificate of deposit that the suit alleges had been altered to show The Master’s School as a payee.

Jeff and Melissa Etheredge, San Antonio-based Broadway Bank and Houston-based Stewart Title Company are named as defendants in the suit, which seeks return of $301,354 — the disputed $281,000 plus another $20,354 that remains unaccounted for.

Etheredge denies the school’s accusations in an answer filed with 274th District Court Judge Gary Steel, who earlier this month enjoined the defendants from destroying evidence in the case or from issuing threats to Master’s School officials. Etheredge’s attorney, John C. Chunn of Hondo, could not be reached for comment this morning.

Neither San Marcos attorney Mark E. Cusack, who represents the Master’s School, nor David McCall, the school’s principal, immediately returned messages this morning. A woman who answered the phone at Cusack’s office said he was on vacation and could not be reached until Monday. A voice mail recording on the Master’s School’s main telephone line said the school’s administrative offices had been temporarily relocated but did not leave a forwarding number.

The Master’s School was founded in 1993 with nine students who took classes in Beth LeDoux’s garage apartment, according to the school’s Web site. Leasing part of the San Marcos Baptist Academy’s campus on Ranch Road 12, the Master’s school enrolled more than 100 students in Kindergarten through sixth grade during the 2007-2008 school year, the Web site states, including members of some of the city’s best known families.

In 2000, the school bought 40 acres on McCarty Lane from First Baptist Church as the site of their new campus. But school officials later decided developing the property would be too expensive because of its location in the Edwards Aquifer Recharge Zone, the lawsuit states. Instead, they intend to build a new campus on 17 acres on Centerpoint Road donated by Garland Warren, who owns the Sac-N-Pac chain of convenience stores.

Etheredge, whose father is former County Judge Eddy Etheredge, joined the school’s board in 2006 and became its president a year later, the lawsuit states.

CORRECTION: The story was edited to show that Gary Steel, not Charles Robison, is the 274th State District Judge.

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