The controversial Gloucester Community Arts Charter School (GCAS), which is in danger of having its charter revoked for poor performance before the end of its five-year cycle, received a $75,000 high interest personal loan last year from the headmaster of the Conservatory Lab Charter School who last month participated in a site review process of the Gloucester School. The site review will be used to help decide whether the state revokes GCAS’s charter.

Diana Lam, headmaster of the Boston-based Conservatory Charter School, charged the Gloucester Charter $2,500 for the personal loan for a three-week period. The loan was guaranteed by state funds.

By entering into this financial agreement both the school and Dr. Lam have raised a few eyebrows. The school did not appropriately go through its board and asked an unwitting teacher to sign off as a witness to the paperwork. And Dr. Lam’s service as a site participant as well as a money loaner creates a potential conflict of interest. What’s more, the high rate of return earned for her three-week loan has drawn attention from various quarters.

The Gloucester Charter School was the subject of much controversy three years ago. You may recall that prior to the charter’s creation, there was extended debate as to whether Gloucester needed — or wanted — a charter school. To buttress the case for granting the charter, Secretary of Education Paul Reville wrote a memo to state Education Commissioner Mitchell Chester strongly suggesting that the approval of the charter would go a long way towards validating the state’s “ed reform” efforts in the eyes of both the Globe and the Boston Foundation.

We’ll see what the commissioner recommends this month as the state decides whether or not to revoke the school’s charter. Here’s what the commissioner recently said about the school:

“I can’t overstate how concerned I am about where this school is at this point,” Chester said. “At this point in their development cycle, they’re at a place in the third year that we might expect to see in a first-year school.”

Stay tuned.

[The Gloucester Times broke this story a week ago Monday and has run a series of articles since then. All reports can be seen here; search for “nesin” at top right of page. All material in this report comes from theGloucester Times‘ reports.]