A north Minneapolis charter school has sued the nonprofit run by its ousted founder’s wife over a lease dispute.
Harvest Best Academy estimates that Seed Daycare, its landlord, has overcharged the school by more than $400,000 over the past three years, according to court documents and correspondence with the Minnesota Department of Education. The current lease began in 2018 and goes through June 2036.
In the lawsuit, filed Tuesday in Hennepin County District Court, Harvest Best claims that Seed has breached the lease by failing to provide documentation for its charges to the school, failing to make timely repairs to the leaking roof and allowing unauthorized third parties access to the school. The lawsuit seeks damages and a court-ordered accounting.
Harvest Best Academy was founded by Eric Mahmoud, who ran the school until March 20. His wife, Ella Mahmoud, is the executive director of Seed Daycare, which owns the Harvest Best building. The Harvest Best school board voted to fire Eric Mahmoud this spring after two lawsuits from former students alleging sexual abuse by teachers.
Emily Peterson, the executive director of Harvest Best Academy, told Sahan Journal the school does not comment on pending litigation. Representatives for Seed Daycare did not immediately respond to requests for comment.
Nearly 800 students attended Harvest Best Academy in the 2024-2025 school year, 95% of whom are Black.
Since Eric Mahmoud’s ouster, Harvest Best leaders have been reconciling the school’s finances — including clarifying any outstanding balance between Harvest Best and Seed. In a March 25 letter to the Minnesota Department of Education, Peterson detailed steps the school was taking.
“This close familial relationship raises potential conflicts of interest and necessitates rigorous scrutiny of the financial transactions between the two entities,” Peterson wrote. “Over the years, the authorizer has raised concerns regarding the accounting of transactions between the landlord and tenant, suggesting a pattern of questionable billing practices. … Initial findings suggest that the authorizer’s concerns regarding overbilling were valid.”
Erin Anderson, the director of charter school authorizing for Osprey Wilds Environmental Learning Center, the authorizer for Harvest Best, said in an email that Osprey Wilds was “carefully monitoring the situation.” She declined further comment, citing the legal action.
In her letter, Peterson noted that Seed appeared to be charging the school for its “own operational overhead,” including printing, copying, and accounting expenses, and said that the Seed was charging an amount “significantly exceeding the reasonable range” for management costs.
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Harvest Best school board chair Ezra Hyland detailed further concerns in an April email to Ella Mahmoud.
“Upon detailed review it appears certain costs are included twice, there are formula concerns, and SEED [has] flat out changed the historical practice of paying for a shared percentage of operating cost,” he wrote.
In his email, Hyland stressed the need for a “detailed general ledger” along with “clarifying invoices and supporting documentation.”
During a June 24 Harvest Best school board meeting, Scott Brown of EdFinMN, the school’s newly appointed chief financial officer, said that he was trying to apply for additional lease aid from the state — but the lack of invoices presented an obstacle.
“The landlord is not ready at this point in time to give us copies of the invoices, which is unfortunate, because the [Minnesota Department of Education] wants copies of the invoices,” Brown said.
“Just so the board is aware, MDE, that I’ve seen, has requested these invoices at least twice, and I know that we requested these invoices at least three times,” Hyland told the board. “And there seems to be a problem.”
Seed’s primary source of revenue is rental income from Harvest Best. Its nonprofit description to the IRS says that it is a “nonprofit entity that consist[s] of renting space to charter schools and providing childcare and enrichment.”
Records show that in 2024, nearly 90% of Seed’s $1.9 million in revenue came from Harvest Best rent.
