INDIANAPOLIS — Five people from Indiana were indicted in federal court after lying to the Indiana Department of Education about enrollment numbers to receive millions of dollars in additional funding.
According to court documents, Thomas Stoughton, Phillip Holden, Percy Clark, Christopher King and one other unnamed individual inaccurately received over $44 million from the Indiana Department of Education (IDOE).
The men operated both Indiana Virtual School (IVS) and Indiana Virtual Pathways Academy (IVPA). IVS received an F grade from IDOE, so administrators created IVPA to prevent losing its charter with Daleville Community Schools.
IDOE determines the amount of funding charter schools receive based on the number of students enrolled.
Court documents say the men falsely claimed “thousands of students” were enrolled at the schools at get additional funding from the state.
IDOE requires schools to withdraw the enrollment of students who do not participate in online educational activity for a period of time. According to court documents, the schools’ operators did not withdraw those students.
Also, the operators pushed incomplete student applications through the enrollment process, court documents allege. Most students enrolled with incomplete applications never attended the school.
Documents say the operators told the school’s teachers that they would be paid based on how many students attended online learning sessions, not the enrollment numbers reported to IDOE.
According to court documents, the funding the schools received was transferred to for-profit companies. Per Indiana law, money award to non-profit organizations cannot be used for for-profit endeavors.
After the money was transferred to the for-profit businesses, millions of dollars were paid out to the men.
Documents say an employee of the schools tried to inform IDOE of the fraudulent activity occurring at the schools in 2017. That employee was fired by IVS.
Daleville Community Schools later questioned the numbers and activity reported by the schools. IVS and IVPA were shut down in 2019.
The U.S. government is now ordering for the operators to pay back the money they received illegally from the State of Indiana. If they have already spent the money, they will need to forfeit other property in the money’s place.
