Lawsuit seeks $150M from Indiana online schools fraud claims - Associated Press

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INDIANAPOLIS (AP) — The leaders of 2 now-closed Indiana online charter schools are accused successful a caller suit of defrauding the authorities of much than $150 cardinal by padding their pupil enrollments and inappropriately paying wealth to a web of related businesses.

The suit announced Monday by the Indiana lawyer general’s bureau comes astir 2 years aft Indiana Virtual School and Indiana Virtual Pathways Academy shut down amid a authorities investigation that recovered the 2 online schools improperly claimed astir 14,000 students arsenic enrolled betwixt 2011 and 2019, adjacent though they had nary online people activity.

The lawsuit seeks repayment of astir $69 cardinal it claims the schools wrongly received successful authorities pupil enrollment payments. It besides seeks $86 cardinal that officials accidental the schools improperly paid to much than a twelve companies linked to them by communal concern officers oregon relatives and did truthful with small oregon nary documentation.

“This monolithic effort to defraud Hoosier taxpayers done analyzable schemes genuinely boggles the mind,” authorities Attorney General Todd Rokita, a Republican, said successful a statement.

A authorities audit linked overmuch of the misspending to Thomas Stoughton, who headed the online schools from 2011 to 2017, and who owned oregon had concern associates that operated astir a twelve companies that received schoolhouse payments. An lawyer for Stoughton, BJ Brinkerhoff, declined to remark connected the lawsuit.

It is unclear however overmuch of the wealth the authorities could recover. Shortly aft the 2 schools, which had a shared administration, closed successful August 2019, a announcement from their then-attorney to creditors taped to the Indianapolis bureau doorway for the schools said they had “no funds and nary assets.”

The lawsuit, however, casts a wide nett with a full of 13 venders and 14 radical who were officials astatine the schools named arsenic defendants.

“The State’s claims originate from systematic violations of a presumption of spot ... misappropriation and diversion of nationalist funds,” the suit said.

The lawyer general’s bureau said it had referred the lawsuit to national and authorities agencies for imaginable transgression violations. A national expansive assemblage subpoena to the schools was included successful documents released successful 2019, but FBI spokeswoman said Monday she could not comment. The U.S. attorney’s bureau successful Indianapolis didn’t instantly reply to a petition for comment.

Indiana Virtual School was formed successful 2011 soon aft a Republican-driven authorities acquisition overhaul that expanded the availability of charter schools, which are privately operated but person payer funding, and launched the state’s backstage schoolhouse voucher program.

Republicans who predominate the authorities Legislature rejected complaints from Democrats aft the fraud allegations emerged that work rested with lax authorities regulations. GOP leaders argued it was hard to legislate against “criminal intent.”

Democratic Rep. Ed DeLaney of Indianapolis said helium was lone amazed by the standard of the evident fraud and that helium had small anticipation of the authorities recovering overmuch money. He said the authorities had provided “flimsy” supervision.

“We request to larn from this,” DeLaney said. “You cognize if you springiness immense sums of wealth to radical who are allowed to enactment extracurricular of nationalist view, they mightiness instrumentality vantage of it.”

The schools reported an enrollment of astir 7,200 students earlier authorities acquisition officials chopped disconnected backing successful 2019 based connected preliminary audit findings of the enrollment padding.

Officials successful Indiana person disagreed astir oversight responsibilities betwixt the State Board of Education, the authorities Department of Education and the Daleville Community Schools, a territory of astir 1,000 students adjacent Muncie, which was the charter authorizer for the 2 online schools.

State auditors cited the Daleville territory for a deficiency of meaningful oversight and monitoring. District officials, however, maintained the territory played nary relation successful the erroneous enrollment reports and didn’t person entree to information astir the online schools’ students until 2018 due to the fact that of concerns astir national pupil privateness laws.

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