Education Fraud – Ripping off K

The war on fraud has expanded this week with new allegations backed up by evidence, according to the State Financial Officers Foundation (SFOF). A new report, completed in conjunction with Open the Books, a federal spending watchdog, unearthed disturbing, widespread education fraud across the nation. What this comes down to is that money set for the education of American students is being stolen by bad actors in many states.

CEO of the Financial Officers Foundation, OJ Oleka, was quoted by Fox Digital as saying, “All fraud is harmful, but defrauding education dollars meant to help kids learn and succeed is especially hideous.”

The report reveals a variety of scams that funnel millions of dollars into the hands of fraudsters rather than the schools. The mechanisms they used included bribery, fake tutoring, bid rigging, and embezzlement. According to Open the Books, the Inspector General of the Department of Education “documented more than $225 million in alleged fraud since 2019, across more than 90 cases, in state after state. From California to West Virginia and even Puerto Rico, schemers were rigging bids, billing for supplies they never purchased, embezzling and more.”

Fraud Alert!

Among the schemes was a plan that stole the identities of private school students and enrolled them in “fake virtual public schools.” This resulted in various districts that ended up paying to educate no one. Another scam involved a school maintenance director in West Virginia who made off with $3.4 million by falsifying documents. He pleaded guilty to cooking the books to make it seem like the school district was ordering a boatload of soap, trash can liners, and other supplies. Yet another way to bilk government funds from public school students involved an LA County school executive director who admitted to stealing over a third of the school’s federal funding – more than $3 million in five years. Reportedly:

“She used the cash for personal travel, restaurants, internet shopping, and private school tuition for her children, prosecutors said. She also pleaded guilty to spending more than $220,600 on Disney cruise line vacations, theme park admissions, and other Disney-related expenses.” 

This extensive investigation into education spending over the last six years revealed that Indiana ranked first in K-12 student fraud. The Hoosier State scam involved inflating the number of students supposedly attending two “virtual” online charter schools, allowing them to get $44 million more in federal funding.

Kids Are the Losers

Open the Books and the State Financial Officers make the point that this type of fraud takes money that was supposed to be invested in educating our children and instead uses it to no good end. Certainly, a higher level of oversight is warranted. They also suggest “[r]obust auditing, transparent procurement processes, and swift prosecution of bad actors” are the key to eliminating – or at least limiting – such widespread inappropriate use of government funds.

The fraud study is part of an ongoing project designed to identify and eliminate the misuse of government funds. President Donald Trump made this a public priority following the health care scams discovered in Minnesota. A White House memo issued in May announced a “Full-Scale War on Fraud.” The memo went on to say they “are unleashing an unrelenting, full-scale assault on the fraudsters, scammers, and corrupt operators” who have been taking advantage of American taxpayer dollars.

This is obviously a result of that initiative, and of course it’s good to get to the bottom of things. But the question remains: How on earth did we get here? Perhaps we should go back to the drawing board and take into account how much the school districts really need to educate our young people.