Fraud after fraud is associated with virtual charter schools, especially when they are created by entrepreneurs with the purpose of making money. They do make money, but they don’t educate students. Why do legislators and governors allow this scam to proliferate? Every educator should shout their outrage at the ripoffs, happening in state after state. Virtual charter schools are the epitome of “education reform” as hoax.

John Thompson of Oklahoma describes the Oklahoma scam here.

An Oklahoma State Bureau of Investigation affidavit alleges that Epic Charter Schools’ co-founders, David Chaney and Ben Harris, split at least $10 million in profits from 2013 to 2018. The Epic scandal offers some unique insights into both the for-profit charter’s culture and the nature of the school privatization movement, as well as the downsides of online instruction in an age of corporate school reform.

Chaney and Harris allegedly recruited “ghost students” from homeschools and sectarian, private schools “for the purpose of unlawfully diverting State Appropriated Funds to their own personal use.” Epic established a $800 to $1000 per student learning fund for students who were not on the State Department of Education (SDE) “conflict list,” meaning that they were not enrolled in a public school; the state would have known of the illegal dual enrollment had names appeared in both lists. Those students were known as “members of the $800 club,” and their supposed instructors were known as “straw teachers.”

Affidavit: Epic Charter Schools used ‘ghost students’ to embezzle state funds

The following are details that reveal crucial facts relevant to online charters across the nation.

First, the OSBI search warrant cited a case which apparently reveals intent to defraud. A convicted felon, identified as LDW, saw Epic as an opportunity for an “economic windfall.” LDW and her uncertified staff did not require students to work the hours required by the state to earn credit for a full school day. And then there was an interesting twist to the LDW story.

LDW’s research told her that dual enrollment was illegal. So, she converted her school into a“learning center” under the “Epic Model.” LDW made a “‘vague reference” and “implied” that she “‘may have” learned about the Epic model from the Epic website.” Apparently, she justified the acceptance of the $800 per student learning fund money not as “tuition,” but as “before and after care” and “tutoring fees.” Parents didn’t necessarily know or consent to the new model, but LDW sent a document entitled “General Assurance” to David Chaney asserting that she “was not doing anything ‘illegal.’”

The OSBI thus seems to be presenting the case that Epic was illegally draining money from the state, and that Chaney and Harris helped choreograph the illegalities.

Second, Epic’s state funding expanded dramatically, up to $112 million annually, as public schools endured huge budget cuts. Epic also used, or misused, the state’s charter conversion law to take over rural school districts through what one superintendent calls “predatory marketing,” using misleading advertising in “aggressive attempts to attract students and teachers from surrounding school districts even in the middle of the academic year.” And it planned to expand further. Epic had sought to take over the troubled Swink district, but that and the plan to expand in Texas and Arkansas have been put on hold.

Public School’s Switch to Charter Allows Epic to Operate Rural District

Probe threatens Oklahoma virtual school expansion into Texas

So, Oklahoma was on the path towards even larger online charter scandals, such as in California, Ohio, Florida, and Indiana. And the investigation of the $180 million Florida school and the $40 Indiana fraud might be especially pertinent. It’s not just the way that their virtual school operators “shrug off blame.” More importantly, Florida and Indiana privatizers have the ears of many Oklahoma “reformers.”
Two Indiana virtual schools face swift closure as they shrug off blame for enrollment scandal

Two Indiana virtual schools face swift closure as they shrug off blame for enrollment scandal

And, third, that brings us to the Oklahoma Council for Public Affairs, Governor Stitt, and legislators who see choice as the panacea which could make Oklahoma a “Top Ten” state. Earlier this summer, the OCPA was bragging about the agenda they would push next year. It then touted Stitt’s support for vouchers and Florida’s education reform plan. In addition to claiming that reforming the state’s funding formula could produce transformative gains, it praised Indiana’s reforms. The OCPA’s claims that fixing Oklahoma’s imperfect but basically good funding formula could fix our schools on the cheap are completely divorced from reality.

Oklahomans paying to educate ‘ghost students’ in numerous districts

Fourth, After Epic’s scandal became public, however, it’s taken alt truth to a new level. It first doubled-down on the politics of personalized vilification of educators and opponents.
Epic quickly replied to Jennifer Palmer’s journalism in Education Watch with insults but without facts. It claimed that the Oklahoma Watch article “implies that ALL Epic’s administrators are evil, skanky people hell bent on destruction of Oklahoma’s public education system.” Epic also argued that Palmer’s work linking such gamesmanship with incentives tied to accountability metrics is “more fiction than a Steven King novel.” They also called it “nefarious.”
After the OSBI’s search warrant was revealed, however, Epic’s responses have become completely bizarre. Whether you believe it needs some updating or not, Oklahoma’s funding formula is based on solid evidence and logic. But the OCPA and Sen. Gary Stanislawski, the Chair of the Senate Education Committee, say that the “weighted average” for funding different types of students in different grades is a system that funds “ghost students.” Equally absurd, the American Legislative Exchange Council, the OCPA, and Sen. Stanislawski claim that the “daily membership” formula funds “ghost students.” Worst of all, the Education Chair buys into the spin about Oklahoma’s formula, “It’s a legal way to rob other school districts.”
It must be stressed that the tactic of answering fact-based charges about “ghost students” with made-up attacks on solid, established funding systems for being schemes to fund made-up “ghost students” is not new and preceded the Oklahoma scandal. The OCPA drew on ALEC’s “Report Card on Education,” praising the way “Indiana Seizes the Hammer, Enacts Comprehensive Reform.” Not surprisingly, it promoted vouchers, charter expansion, undermining teachers’ rights, A-F Grade Cards, and “The Way of the Future: Digital Learning.” If the governor or legislative leaders would bother to follow the OCPA link to the 2012 ALEC report, they would learn that included no evidence that ghost students existed or that improvements resulted from their changes.

Fifth, in fact those “reforms” failed. During the four years after reforms were implemented, the four key tests on the reliable NAEP test scores showed gains of .25 points per year, meaning that student performance remained basically flat. Since they were supposed to be a civil rights campaign against the “low expectations” perpetrated by bad teachers, who were poorly trained and not held accountable by school systems, and defended by bad teachers unions, it is especially important to remember that Indiana’s economic achievement gap increased from 2013 to 2017.

NAEP State Profiles

NAEP State Profiles

Sixth, these alt facts lead to one of the worst aspects of ideology-driven, market-driven reform. Online charters like Epic inflict financial harm on schools. They help some students but hurt many more. Some of the worst damage, however, is inflicted on the principles of public education and our democracy.

Epic have undermined public schools by slandering educators and education advocates. Their statistical and financial gamesmanship has been bad enough. It is their willingness to say anything and to falsely demonize opponents that has most corrupted our constitutional democracy. And that may be the saddest truth about the tragic results of the school privatization era.