Mocobizscene- This week, three former administrators were arrested for their involvement in an alleged scheme to defraud the Indiana Education Department. The scheme revolved around inflating enrollment numbers at two troubled virtual schools.
The U.S. Attorney’s Office for the Southern District of Indiana announced the arrests at a press conference in Indianapolis on Thursday. Thomas Stoughton, Percy Clark, and Phillip Holden were released after their court appearances this week.
The defendants played a role in the administration of Indiana Virtual School and Indiana Virtual Pathways Academy, two online schools that unexpectedly shut down in 2019 due to allegations of inflating enrollment.
Indiana funds schools based on enrollment, so officials had a motivation to report as many students as possible to the state education department.
According to U.S. Attorney Zachary Myers, the defendants knowingly reported over 4,500 students to the state who were not actually attending the schools from the summer of 2016 to 2018.
At the press conference, Myers revealed that the members of the conspiracy had made false claims about thousands of students being enrolled, despite the fact that these students were not attending classes or receiving any services.
If the defendants are convicted, they could potentially be sentenced to 10 to 20 years in federal prison for each count, according to Myers.
Stoughton faced charges of conspiring to commit wire fraud, along with 16 counts of wire fraud and 57 counts of money laundering. Clark, on the other hand, was charged with conspiracy to commit wire fraud, as well as 16 counts of wire fraud and 11 counts of money laundering. Lastly, Holden was accused of conspiracy to commit wire fraud and 16 counts of wire fraud.
The defendants’ attorneys have not yet responded to requests for comment.
Christopher King, the former manager of school operations for AlphaCom, has pleaded guilty to conspiracy to commit wire fraud. This comes as another development in the scheme that AlphaCom, a for-profit company hired to manage the schools, was involved in. While Myers, the spokesperson for the case, did not disclose whether King is cooperating with the prosecution, it is evident that his involvement in the scheme has been acknowledged. This information has been reported by Chalkbeat.
According to the prosecutors, the schools allegedly received approximately $44 million more in state funding than they were supposed to due to the fraud. Myers mentioned that if the defendants are found guilty, the government might pursue the recovery of the funds.
According to Myers, the federal government can utilize similar collection tools to recover as much money as possible and allocate it towards restitution.
The schools were charter schools, meaning they were publicly funded but privately managed. Daleville Community Schools, a public school district, authorized and oversaw these schools.
Untangling the fraud was an incredibly complex task, according to Special Agent Herbert Stapleton, who heads the Indianapolis office of the Federal Bureau of Investigation.
According to Stapleton, conducting hundreds of interviews was necessary, and some of these interviews involved fraudulently enrolled students or their parents. He highlighted one specific instance where they interviewed the parents of a student who had been enrolled after the student’s passing.
Back in 2017, Chalkbeat shed light on the issues plaguing Indiana Virtual School. The investigation exposed the school’s alarming teacher-to-student ratio of 1:222, highlighting the severe lack of instructional resources despite the funding received.
In a 2020 investigation conducted by the State Board of Accounts, it was discovered that public schools had been reporting students as enrolled in virtual classes, even though there was no evidence to support their attendance.
In 2021, Todd Rokita, the Attorney General of Indiana, filed a lawsuit against the schools, various vendors who offered services to them, and 14 individuals associated with either the schools or the companies that received improper payments.
The spokesperson for Indiana Attorney General Todd Rokita’s office expressed satisfaction over the filing of criminal charges against individuals involved in the misappropriation of tuition support. The wrongdoing took place through the misuse of Indiana Virtual School and Indiana Virtual Pathways Academy.
The ongoing state lawsuit is seeking over $154 million.
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