Guess what? Another massive scandal involving virtual charter schools. Not ho-hum because the money skimmed off is a lot: $44 million. The U.S. Attorney for the Southern District of Indiana said it was the biggest fraud case he had handled.
If you recall, the biggest virtual charter school fraud case ever happened in California, where the A3 charter chain skimmed off hundreds of millions of dollars. In Pennsylvania, Nick Trombetta, founder of the Pennsylvania Cyber Charter School, was sent to prison in 2018 for 20 months for fraud. Steven Ingersoll, the optometrist who founded four virtual charter schools in Bay City, Michigan, received a prison sentence of 40 months. And who can forget Ohio’s ECOT Man (Electronic Classroom of Tomorrow), who collected $1 billion from the state over 20 years, gave lots of campaign donations, but declared bankruptcy when the state auditor asked him to refund millions for phantom students?
We know all this. We know that students in virtual charter schools get low scores, have low graduation rates, collect generous public funding, but the money keeps flowing. Why?
New story: Indiana.
A federal grand jury returned indictments against the operators of two online charter schools in Indiana, the Indiana Virtual School (IVS) and the Indiana Virtual Pathways Academy (IVPA). The operators inflated their enrollments to collect state monies. Each defendant faces 10-20 years in federal prison for each count if convicted. The charges are conspiracy to commit wire fraud, wire fraud, and money laundering. The group received over $44 million from the state. Most of the students either never attended the schools or left but remained on the rolls.
FOX 59 in Indianapolis reported:
INDIANAPOLIS — Officials with the U.S. Attorney’s Office for the Southern District of Indiana released more information about a recent indictment brought forward in a multi-million dollar education-related fraud scheme.
According to the office, three men were officially indicted in relation to the scheme, including:
- Tom Stoughton, 74, a Carmel resident who was indicted on 16 counts of wire fraud, 57 counts of money laundering and one count of conspiracy to commit wire fraud
- Phillip Holden, 62, a Middletown resident who was indicted on 16 counts of wire fraud and one count of conspiracy to commit wire fraud
- Percy Clark, 81, a Carmel resident and the former superintendent of Lawrence Township schools, who was indicted on 16 counts of wire fraud, 11 counts of money laundering and one count of conspiracy to commit wire fraud.
In addition, officials said that 61-year-old Christopher King, a Green Fork resident, pleaded guilty to one count of conspiracy to commit wire fraud.
According to previous reports, officials allege that the individuals named in the indictment received more than $44 million in funding from the Indiana Department of Education to operate two online charter schools: the Indiana Virtual School and the Indiana Virtual Pathways Academy.
Officials said that IVPA was an offshoot of IVS that was created in 2017 so IVS could avoid losing its charter with Daleville Community Schools. This comes after IVS reportedly received an F grade from the Indiana Department of Education.
The individuals listed in the indictment reportedly used fraudulent enrollment reporting methods to receive funding from the state that they were not owed nor supposed to be eligible for.
Between 2016 through 2019, the defendants submitted false numbers for more than 4,500 students they knew were not attending either school in order to receive state tuition reimbursement.
”The members of the conspiracy falsely claimed thousands of students were enrolled even though those students were not attending classes or receiving services,” Zachary Myers, the U.S. Attorney for the Southern District of Indiana, said.
The court documents state that the school did not unenroll students even if they were inactive, and reportedly pushed incomplete student applications through the enrollment process, both of which increased the enrollment numbers. This included students who had dropped out or those who never completed their application process, as well as students who never logged in for classes. It also included students who never knew they were reenrolled….
The two schools reportedly paid the state funds to fraudulent for-profit companies, the U.S. Attorney’s Office for the Southern District of Indiana claims. The companies were reportedly controlled and/or operated by Stoughton and the money was funneled through the companies to pay millions of dollars to Stoughton, Clark, King and others.
Myers said the defendants used the funds to purchase vehicles and boats, as well as pay for private school tuition.
Herbert Stapleton, a special agent in charge with the FBI in Indianapolis, said that the cooperation with other agencies, including the State Board of Accounts in Indiana, was integral in starting this investigation and uncovering the potential fraud.
Stapleton said that this case was “extremely complex,” including hundreds of thousands of records potentially relevant to the case that were analyzed and categorized. This included hundreds of interviews with fraudulently enrolled students and their parents, including an interview with parents whose student died but was still fraudulently enrolled at the school.
Diane Ravitch's blog 
“We” know all this…
“We” know all that..
BUT, the (fill in) keeps flowing.
WHY?
The know-how to know-that ratio is revealed
in the results. LOW
Using the same strategy, over and over again,
doesn’t bring meaningful change.
It’s NOT the lack of know-that,
it’s the lack of know-how.
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Ah, the opportunities afforded by Charter Schools! They certainly function as a strong magnet, as ongoing employment, for those who have honed their shady skills in former LEAs. Check out the backgrounds of the names mentioned. Charters also provide training ground to other employees , to hone these skills with mentors. Such an investment of corrupt conscience.
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Percy Clark has been a superintendent in other districts, including Pasadena.
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Yes
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$44 million is just the beginning. A website called The Indiana Lawyer reported yesterday that a “state audit released in 2020 found the two schools inappropriately spent more than $85 million in public funding on companies connected to school officials. Of that amount, more than $68 million was improperly collected by the schools, the audit reported. Additionally, the state attorney general sued the charter schools in 2021 to recoup $154 million in state funds. That case is still ongoing, per court records.”
Following are statements about the indictment submitted by Democratic Indiana State Representative Ed Delaney, if you care to read some. This guy’s clearly good.
“To add insult to injury, the indictment alleges that while these corporate operators of the schools were getting funding based on fraudulent attendance numbers, the real and lower attendance numbers were used when it came time to pay their teachers,” DeLaney said. “The most intriguing allegation is, they kept a record of the actual student attendance and only paid the teachers per the students that actually attended, but they charged the state for people who didn’t attend.”
“As is demonstrated in this indictment, we have created education policies that are subject to abuse. Instead of depending upon elected school officials, the state has decided to depend on charter schools that use outside contractors who are not under close supervision and lack public accountability. We export our management and oversight responsibilities to people who choose not to perform the function. In the end, the taxpayers lose out.”
“What this indictment doesn’t tell us is the impact of such mismanagement on the students at this school. Our children deserve better.”
“Charter school authorizers do not always monitor the conduct of the schools they are authorizing,” DeLaney said. “Our current charter school management system, or lack thereof, not only creates the opportunity for fraud but has reportedly cost the state at least $85 million of taxpayer money in this one case.”
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“The most intriguing allegation is, they kept a record of the actual student attendance and only paid the teachers per the students that actually attended, but they charged the state for people who didn’t attend.”
!!!!!
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The rest of this quote went into moderation.
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CHARTER SCHOOL FINANCIAL FRAUD: The impartial, non-political watchdog Office of Inspector General of the U.S. Department of Education issued a report warning that so much taxpayer money is being skimmed away from America’s genuine public schools and pocketed by private corporate charter school operators that the IG investigation declared that: “Charter schools and their management organizations pose a potential risk to federal funds even as they threaten to fall short of meeting goals.” It is billionaire hedge fund managers who are behind the charter school scam — they are skimming hundreds of millions of dollars from public schools and are betraying America’s public schools and the children of America.
THERE’S NO SUCH THING as a “public charter school”. Charter school operators spend a lot of taxpayer money telling taxpayers that charter schools are “public” schools — but they are not. As the Supreme Courts of Washington State and New York State have ruled, charter schools are actually private schools because THEY FAIL TO PASS THE MINIMUM TEST for being genuine public schools; that is — They aren’t run by school boards who are elected by, and therefore under the control of and accountable to voting taxpayers, that is, THE PUBLIC. All — ALL — charter schools are corporations run by private parties or are religious organizations. Taxpayers have no say in how their tax dollars are spent in charter schools.
CHARTER STUDENTS LOSE GROUND: The Stanford University Center for Research on Education Outcomes (CREDO) — which is funded by pro-charter organizations — has reported that in the case of popular online charter schools, students actually lose ground in both reading and math — but online charter schools are the fastest-growing type of charter school because they make it easiest to skim away public tax dollars. CREDO has been conducting years-long research into the educational quality of charter schools and yet even this charter-school-funded research center’s findings are that in general charter schools don’t do any better academically than genuine public schools.
THE RACIAL RESEGREGATION of America’s school systems by the private charter school industry is so blatant and illegal that both the NAACP and ACLU have called for a stop to the formation of any more charter schools. The Civil Rights Project at UCLA summed it up, stating that charter schools are “a civil rights failure.” The catch-phrase “school choice” was concocted by racists following the U.S. Supreme Court’s 1954 Brown v. Board of Education ruling that required racial integration in public schools. After that, racist organizations used racist politicians to conduct a decades-long attack that underfunded public schools and crippled their ability to provide the full measure of education and to “prove” that public schools were “failing”. That public school “failure” is an issue manufactured by racists organizations and politicians is well-documented in the book “The Manufactured Crisis”.
INDOCTRINATION: Charter schools provide the perfect environment for subtly (or not so subtly) weaving a political and/or social view into every lesson. Instead of a nationally shared perspective, America ends up with a fragmented view of what our nation is all about.
https://www.forbes.com/sites/petergreene/2019/03/29/report-the-department-of-education-has-spent-1-billion-on-charter-school-waste-and-fraud/#ab1fbdb27b64
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Thank you for the good summation, Quickwrit.
There is no such thing as a “public charter school.” If its run by a private board, it’s not public.
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Ms. Ravitch:
I understand that, on this site, someone who has been involved in charter schools is in the distinct minority and runs the risk of being overwhelmed, even an apostate such as myself. To avoid that type of discussion, I’d like to limit my contribution to an accountability issue that led to this debacle.
As someone with a long and deep background in Indiana’s school-choice environment, there can be no exaggeration in describing this horrible situation. The perpetrators are ultimately responsible and deserve what the justice system metes out to them.
That said, there is a crucial point missing in all the comments and articles, and that is the egregious, irresponsible, and complete abdication of the offending schools’ sponsor from their responsibility to monitor and discipline it.
The public-school district that authorized these schools, Daleville, and was tasked with protecting Indiana taxpayers’ money, was totally AWOL the entire time the schools existed. Even a hint of such actions should have led to an immediate closure.
So, yes, the operators were to blame for their actions, clearly. But an established public-school entity was so incompetent or irresponsible or something to have missed their only two authorized charter schools illegally enrolling THOUSANDS of students and ripping off MILLIONS of dollars of state monies. This wasn’t someone raiding the PTA cash box.
Perhaps that something is the unfortunate mechanism used to fund the authorizers’ charter-school offices — revenue from the schools they are overseeing themselves. No potential conflict there.
This is a wide hole in charter school accountability in Indiana and elsewhere, an $85 million-dollar hole in this case. There are no teeth in the oversight mechanisms, no consequences for those watching the coop. Nothing will happen to Daleville.
And in Indiana, you have to be a complete train wreck, usually because of governance and/or finances, to be shut down.
Until there is true, independent oversight of charter schools that has high standards and true power, this type of situation will continue to occur. It’s human nature, not a good side of human nature, but, then, neither is the complicity, active or passive, of the people who avoid their moral and ethical responsibilities.
BTW, some credentials: https://www.indystar.com/story/opinion/2015/07/17/pulliam-case-closing-charter-schools/30292851/
I know of what I speak, because I saw what happened in a charter school I founded.
Blaming the criminals isn’t enough. The people who set up a system that allows such behavior to go unnoticed and uncorrected should also have to answer.
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Thank you, Tim. No one on this blog will disparage you for wanting genuine oversight and accountability for charter schools. I was once a charter advocate. I turned against them when I realized that lack of accountability and transparency is a feature, not a bug. As you point out, the charter sponsors get a cut—usually 3% of tuition—for doing nothing. They have no incentive to police the golden goose. The charter lobby fights accountability—and they wrote the charter laws.
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In Indiana, Catholics publicly take credit for the initiation and passage of school choice laws.
In media, a taboo exists or, writers protecting the Church selectively report. If the truth is to get out, so that the enemy can be confronted, it will have to be a grassroots effort.
Four days ago, Politico wrote about James Uthmeier (DeSantis’ chief of staff and former campaign manager). The article cited the college he attended but, omitted his JD from Catholic Georgetown University.
The Federalist Society posted that Uthmeier had been with the Jones Day law firm and that he teaches religious education classes at St. Thomas More Cathedral.
The Jones Day law firm had 12 lawyers in the trump administration, including Don McGahn. Similar to McGahn’a role at the federal level, Uthmeier’s job at the state level was/is to direct the judicial nomination process.
Uthmeier was General Counsel in Trump’s Dept of Commerce (Wilbur Ross). The former and current managing partners of Jones Day were formerly, respectively, on the Notre Dame board and an advisory council to the law school.
It’s not accidental that SCOTUS has a substantial majority that is right wing Catholic. There will be huge regret and consequence if the nation doesn’t stop right wing religion which includes GOP Catholics and Christian evangelicals.
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How democracy dies-
The Catholic assault on democracy in Ohio, specifically in regard to public schools, began 24 years ago. (Akron Beacon Journal reporting in 1999)
Dioceses have vast reservoirs of money to spend advancing the Republican party’s agenda as evidenced by the latest $900,000 spent on the GOP’s Issue 1 against referendums, in Aug. 2023, a ballot issue that the bishops admitted had no moral content. The archdioceses were among the top 5 spenders on the issue.
For at least 24 years, the Catholic Church has been building a right wing political juggernaut in the central states while having no scrutiny. With the funding of Leonard Leo and, his/Koch’s judges in place, democracy’s fate may be sealed.
It’s unlikely that the lack of scrutiny for a quarter of a century was happenstance.
Each time, an article is written about Christian nationalism and it omits right wing Catholics, it should provoke thought.
Each time a right wing politician’s bio in media appears to be scrubbed of Catholic links in obvious omission, it should provoke thought. For example, the NYT profiled DeSantis’ time in public schools and his response based on the experience to his education at an elite university, no mention of his K-8 in Catholic schools.
Each time, there’s a media or think tank review of abortion bans and anti- LGBTQ activities and only ADF is mentioned not, Becket Law, thought should be provoked.
Some who are engaged in writing the narratives that exclude the right wing political activities linked to the Catholic Church may be Democrats. And, some may not be but, play a role in distraction.
We can speculate that not all of those who looked away at priest pedophilia were horrible people. Some would explain their actions as loyalty.
Before condemning me with insults, skim the SPLC’s Dec. 2023, lengthy research paper, “Anti-LGBTQ and pseudo science…. network…” Would an informed person have added a few obvious points?
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In the news:
Bubblegum sales fall in relation to stick gum
Of course, the similarities between stick gum laid upon the tongue and the Eucharist are obvious. Equally obvious is the utter media silence about the extent to which priests have given stick gum to altar boys. Is the stick gum industry complicit? Of course.
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gaslighting
“Whose choice? How school choice began in Ohio,” Dec. 14, 1999, Akron Beacon Journal
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Ah, the inevitable loosely related anti-Catholic screed posted in response to any news about any topic whatsoever, even though Catholic schools are not charter schools.
Bubblegum sales drop in favor of stick gum
The similarity between the placement of the stick gum in the mouth and the placement of the Eucharist is obvious–no one even tries to hide it–and should be noted. Clearly, this could be the end of women’s right to choose. And this is clearly an attempt to end democracy because Catholic Conferences. William Winky, who worked for the ad agency prompting Juicy Fruit, was a known Catholic, as were several of those whom he voted for {long, long, long list here]. See the evidence here and here and “Laicism in the Crosshairs” on the Scielo site.
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Bob,
It’s evident that no amount of information will change your mind and no repeat of your snark opinion will change my mind. You choose to believe the American Catholic Church’s political interest began and ended with the overturn of Roe and, that they have have no further ambitions for power? We’ll agree to disagree.
Stop reading what I write and don’t respond to what I consider a grave warning.
For others-
The state of Indiana initiated school choice, solely, BECAUSE of political action by an organized Catholic
effort. The effort was documented in a community Catholic publication which I footnoted at this site several times. The article included named individuals who took credit, touting the success as Catholic, for spearheading the effort.
Father Blum at Marquette University (Wisconsin) where Howard Fuller effectively promotes school choice, is given credit for the early advancement of school choice through political means.
The Akron Beacon article, referenced previously, documents school choice in Ohio as a Catholic effort, from initiation to passage of the law. In Colorado, the Catholic Conference’s executive director was, formerly, in top management at EdChoice (and, worked for the Koch network)
The article, “Illiberal Upstarts…”, at New Republic describes a portion of the national (filtering down to the state level), political planning related to furthering Catholic interests. The section where Nate Hochman is quoted provides some insight into the political process funded by right wing Catholics. Hochman, an alleged anti-Semite, was on Ron DeSantis presidential campaign team.
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We all sleep so much better because of your CONSTANT commentary against the nefarious Church That Is the Source of All Evils, Linda. So far, not a single auto-da-fé this year because of your vigilance!!! Keep up the great work.
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The public will know that the American Catholic Church has stopped its assault on democracy when it stops funding lobbyists in almost every sate to promote the right wing agenda, when it stops spending $14 mil on 3 GOP referendum ballot issues in states like Ohio and Kansas and, when the expansion of Catholic Conferences like the creation of one in Tennessee in Jan. 2023, stops.
Readers can decide whether your insults about what I write are detrimental to the cause. I assure you that they don’t stop me from a vigorous campaign to expose one of the most significant enemies against democracy.
As a courtesy and because I care about democracy, I won’t call you out in your fight against the right wing.
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