Bankruptcy hearing: Feds ask questions about grant funds used by Saint Augustine's University

The people owed money by Saint Augustine’s University had the opportunity to ask its leadership questions directly on Wednesday morning during a bankruptcy hearing.

Many of those questions came from an attorney representing multiple federal agencies, including the U.S. Department of Education and the Internal Revenue Service. The focus of those questions: How did the university spend millions of dollars in federal grant money?

Bankruptcy documents show that the university owes federal agencies more than $8 million.

Chairwoman Sophie Gibson responded similarly to most questions, saying she had “heard” or was “aware” but didn’t have details.  

Gibson said she did not believe the money was spent with malicious intentions, but instead to make payroll.

She also noted that she has only been on the board of trustees for less than two years and has worked to “stop the bleeding” since taking on her current role.

Gibson said both internal and external investigations have been underway since last year. However, she would not give any specifics.

WRAL Investigates reported the historically Black university filed for Chapter 11 bankruptcy about a month ago.

May 2026 graduates were the last students to receive accredited degrees. Other students transferred to other accredited institutions, according to Rogers.

During the administrative hearing, St. Augustine’s bankruptcy attorney Ciara Rogers said the school now believes it can pay back all secured creditors.

A secured debt backed by real or personal property is a “secured” debt. A creditor whose debt is “secured” has a legal right to take the property as full or partial satisfaction of the debt.

WRAL Investigates repeatedly requested enrollment numbers for the school year, but never heard back from the school’s spokesperson.

Rogers said the school has struggled with low enrollment. Gibson later expounded on that, saying St. Aug’s enrollment started slowing before the pandemic until it eventually dwindled to “just a handful” of students by the end of the 2025-26 school year.

Gibson said its deal with fair-lending advocate Self-Help allowed the school to stay open. The court allowed the school to borrow an additional $200,000 earlier this month, court documents show.

Gibson said the university still employs about 25 people and some contractors.  

Since mid-May, Rogers said the university is working with those contractors to beef up security on campus and put up fencing.

It comes after reports of property damage, a fire and stolen copper from campus within the last year.

During an afternoon hearing in front of a judge, bankruptcy administrator Brian Behr told the court he took a tour of the campus, saying it was in "much better shape."

Judge David Warren applauded Rogers and school leadership for their efforts to get the school back on track.

"It's important history be preserved and protected," he said. 

Rogers reaffirmed on Wednesday that the school plans to offer certification and apprenticeship programs as a revenue source. Gibson said leadership is exploring options with partners to get those started.

Bankruptcy administrator Brian Behr recommends all creditors file a claim in court.

The Eastern District of North Carolina U.S. Bankruptcy Court has a webpage dedicated to Saint Augustine’s bankruptcy.