Attorney General Todd Rokita has filed a lawsuit against a consortium of virtual schools and affiliated entities seeking more than $154 million in monies misappropriated from the State of Indiana.
Indiana’s lawsuit targets Indiana Virtual School (IVS); Indiana Virtual Pathways Academy (IVPA); Indiana Virtual Educational Foundation (IVEF); and other related entities and individuals.
“This lawsuit is historic because it represents the largest amount of monetary damages ever sought by our office following a State Board of Accounts investigation,” Attorney General Rokita said. “This massive attempt to defraud Hoosier taxpayers through complex schemes truly boggles the mind. This case demonstrates once again that public servants must remain ever vigilant in our work to safeguard the public treasury from opportunists.”
IVS and IVPA operated online charter schools that were sponsored by the Daleville Community School Corp. from July 22, 2015, to Aug. 26, 2019, when Daleville officials revoked the charters. Daleville officials revoked their sponsorship of the schools because IVS and IVPA failed to meet minimum academic standards and failed to comply with accounting and related provisions required by Indiana law, among other reasons.
The State Board of Accounts (SBOA) conducted a special investigation and concluded that public funds were misappropriated through malfeasance, misfeasance, and/or nonfeasance.
“The State Board of Accounts is committed to creating a culture of accountability where public officials and institutions are held to the highest standards,” said State Examiner Paul Joyce. “We appreciate the Attorney General for bringing this action on behalf of all the citizens of the State of Indiana.”
Because the virtual schools misrepresented the number of enrolled and attending students, the SBOA found that the schools wrongfully received more than $68 million collectively from the State of Indiana.
The audit also uncovered that the schools wrongfully disbursed more than $85 million collectively in public funds to vendors with related individuals in situations where there was no invoice or no itemized information on the invoice.
Attorney General Rokita is also seeking recovery of the audit costs SBOA incurred to conduct the investigation along with other penalties and punitive relief (amounting to three times the actual loss by the state). Attorney General Rokita also is seeking an order that the defendants disgorge any other ill-gotten gains unjustly and wrongfully received and diverted.
This matter has also been referred to federal and state criminal investigative agencies.
The lawsuit is attached.