Three former administrators of Indiana Virtual School and Indiana Virtual Pathways Academy were arrested this week for an alleged scheme to defraud the Indiana Education Department by inflating enrollment numbers. The U.S. Attorney’s Office for the Southern District of Indiana announced the arrests, stating that the defendants reported over 4,500 students to the state who were not attending the schools between 2016 and 2018.
If convicted, the defendants could face up to 10-20 years in federal prison for each count. The schools received about $44 million more in state funding than they were entitled to because of the fraud. The government could seek to recover the money if the defendants are convicted.
An additional person involved in the scheme pleaded guilty to conspiracy to commit wire fraud. The prosecutors allege that the schools reported students as enrolled when there was no evidence they attended the virtual classes. Problems at Indiana Virtual School were brought to light as far back as 2017, with a State Board of Accounts investigation in 2020 confirming fraudulent enrollment practices.
In 2021, Indiana Attorney General Todd Rokita sued the schools, vendors, and individuals tied to the schools for misappropriation of funds. The state lawsuit seeks over $154 million in damages and is ongoing. The complex investigation involved interviewing fraudulently enrolled students, including parents of a deceased student who was enrolled. The case highlights the challenges faced by charter schools, which are publicly funded and privately managed.
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