It was a brutal legal week for the embattled St. Joseph, Mo., School District.
It was served with a third federal grand jury subpoena for documents, as staff welcomed back CFO Beau Musser after seven months on paid administrative leave after accusing him of sexual misconduct.
An outside investigation showed Musser did not act improperly. Musser sued the district and that lawsuit is still pending.
Now the district's liability insurance carrier has gone to federal court seeking to be released from covering the district in the Musser lawsuit.
Musser, in a state lawsuit, has charged with the district with slander, wrongful termination and violating Missouri whistleblower laws.
Catlin Indemnity Company, based in Atlanta, Ga., has asked the court to release it from defending the St. Joseph School District in court and to relieve it from paying any damages that might be associated with Musser's lawsuit.
Catlin says its policy with the district has several "exclusions." Among them, any claim that arises out of "any fraudulent, dishonest, malicious, criminal, or intentional wrongful act or omission" by the insured.
Musser sued the district in May charging that Superintendent Dr. Fred Czerwonka offered to drop the sexual misconduct charges and pay off Musser's contract if Musser agreed to resign. He refused to quit and was placed on paid administrative leave.
All this stems from revelations about $270,000 in stipends paid to 54 top administrators in the district without the approval of the school board.
Czerwonka has admitted to approving the $5,000 payments soon after he was hired last year. After the extra money was handed out Czerwonka picked up a nickname: The Candy Man.
Soon after those improper payments came to light the FBI launched its investigation. Sources say agents have conducted dozens of interviews with people inside and outside the district and have checked the bank accounts of multiple people.
Right now, the district is waiting for the results of a forensic audit from the Missouri State Auditor. Many in the district are prepared for a scathing report.
The district hasn't responded to an email seeking comment.