6 Alabama school officials accused of fraud and conspiracy in $ 7 million virtual school system

We’ve updated this story.

Six Alabama educators have been indicted in a years-long, lucrative fraud and conspiracy program that has affected virtual schools across the state.

According to federal prosecutors, officials from Athens city schools and Limestone County schools, including two former supervisors, conspired to gain more state support by enrolling full-time private students in the virtual schools of the systems. Federal officials said the two school districts were wrongly paid about $ 7 million in state education grants for the 2016-17 and 2017-18 school years.

“The money Alabama has set aside for public education should be used for just that – to educate students in our public schools,” said U.S. lawyer Louis Franklin. “Defendants in this case have prioritized their own profits over the educational needs of our students.”

Prosecutors said those named in the indictment received payments as a result of their participation. Allegedly, the private school officials concerned did not profit individually, although their schools and students received pay and access to educational facilities.

Federal officials said children in private schools who then unconsciously enrolled in public virtual schools as part of the system were unaware of the fraud. Some but not all of their parents were notified of the alleged identity theft, officials said.

The indictment calls into question the apparent success of virtual schooling in Alabama and the apparent lack of state oversight even before the pandemic increased enrollment in virtual options.

“Alabama taxpayers are sending their money, expecting them to support students,” state supervisor Erick Mackey said at a news conference. “We expect this trust to be maintained by all Alabama teachers and administrators. Unfortunately, we are dealing with a broken trust today.”

Mackey did not detail the steps the state could consider to increase accountability in light of the investigation.

The 80-page indictment closed Tuesday morning in the Alabama Federal Central District:

  • William L. (“Trey”), Holladay III, 56, resident of Athens and former superintendent of the Athens City School District
  • Deborah Irby Holladay, 57, has worked in Athens and previously in the Athens City School District
  • William Richard (“Rick”) Carter Jr, 45, also of Athens, currently Executive Director of Urban School Planning in Athens and former Director of Innovative Programs in the District
  • David Webb Tutt, 61 years old, Uniontown
  • Gregory (“Greg”) Earl Corkren, 56, Tuscaloosa
  • Thomas Michael Sisk, 55, is a resident of Toney, formerly superintendent of the Limestone County School District

At a press conference on Tuesday afternoon, federal officials said the investigation began two years ago and involved more than 200 interviews nationwide.

William Holladay, also known as Trey, has been charged with more than 100 frauds, including wired fraud and falsification of student private information. Holladay, according to prosecutors, received cash payments from those involved.

Holladay was the superintendent of Athens city schools until Oct. 31, but was placed on paid leave in June after investigators visited his house when an FBI spokesman called a “law enforcement action”. Deborah Holladay is his wife.

According to the indictment, Holladay began the program in 2015, enrolling students from private schools in the Renaissance of Athens, a virtual school opportunity in the district. He told the state that guest enrolled students are taking some classes from the virtual school but still enrolling in their own school.

Instead, private school students at the Marengo Academy in West Alabama were added to Athens ’enrollment database, making them appear to be full-time students in the district and increasing the enrollment number in the district.

In return, private school students would receive laptops from the district and could use the district’s online learning tool, Odysseyware.

Extension of the system to other schools and districts

In 2016, Holladay and Carter, who eventually became director of innovative programs for the Athens urban school district, recruited additional private schools to provide private student information to enroll additional students in the Athens renaissance. Parents did not consent to the transfer of their children’s data to the Athenian Renaissance.

The system was then repeated in Limestone County and Conecuh County schools.

Of the five private schools, more than 750 students from Alabama but also Mississippi and Georgia were enrolled as public school students in the Athens Renaissance for the 2016-17 school year.

The indictment further alleges that the defendants made various efforts to conceal the fraud from the state. Such lengths included making fake report cards, producing fake titles for students in private schools living outside of Alabama, and submitting fake course completion reports to the state education department.

Related: Is the Future of Education in Alabama Online?

Finally, public schools also harmonized standard tests for private students — who otherwise did not meet state-mandated credits through the virtual academy — and entered their grades and report cards into the district students ’database and grading software.

Prosecutors say Corkren’s Ed Orp store, which he set up under the direction of Holladay, was paid more than $ 500,000 from June 2016 to July 2017 by Athens city schools. After enrolling in the limestone county schools, the district paid Corkren more than $ 100,000 between September 2016 and February 2017.

He then distributed the money through the Corkren organization between the private schools concerned and the officials of the school concerned.

In July 2016, Holladay involved Tom Sisk Limestone County Superintendent in the system. Limestone schools pay $ 55 per student to Ed Op, LLC – $ 10 more than the $ 45 / student included in the contract presented to the school board – and Corkren set aside the extra money and eventually donated it to Sisk’s charity. selected.

Limestone County schools counted more than 200 Monroe Academy students in the 2016-17 state enrollment numbers.

In 2017, Corkren sent a $ 15,000 donation to an unnamed charity, which in turn gave $ 13,000 to Sisk.

In the spring of 2017, Holladay recruited Tutt, who was a friend in Marengo County, to contact several private schools to participate in the fraudulent program during the 2017-18 school year. To facilitate the system, Tutt educational services were established.

Cuttren paid $ 20,000 to Tutt’s organization between March and July 2017. Under a subsequent agreement, Corkren paid $ 16,500 a month to Tutt, with a total of more than $ 250,000 paid in the 2017-18 school year, among other fees.

Eventually, six private schools – Marengo Academy, Jackson Academy, Pickens Academy, Lakeside School, Southern Academy and Monroe Academy – received more than $ 150,000.

Corkren received an additional $ 1 million during the 2017-18 school year. Tutt received more than $ 580,000 and Sage Professional Development, LLC, run by Deborah Holladay, received more than $ 160,000 during the same period.

Sisk left the system before the start of the 2017-18 school year. Monroe Academy students were no longer enrolled in any public school for that year.

Also in 2017, Holladay hired the superintendent of Conecuh County Schools to sign with Tut to enroll private school students at Abbeville Christian Academy in the district’s virtual school, the Genesis Innovative School. Tutt paid Abbeville Christian $ 800 a month for student Internet access and provided 50 laptops and two carts. Deborah Holladay trained Abbeville Christian teachers to use Odysseyware.

Conecuh Superintendent Zickeyous Byrd is not named as a defendant in the lawsuit. He recently left the district and took a job in Barbour County.

There is no state intervention

Public officials asked questions at several points, but Holladay always denied allegations that private school students had not been properly enrolled in the Athens renaissance.

“They take a full class load from us and we train them,” Holladay wrote after an August 2017 investigation, according to the indictment.

Students at the Eufaula Private Lakeside School were expelled from the Athens Renaissance before the start of the 2017-18 school year after public education officials confirmed that these students were private schoolchildren.

Holladay instructed Corkren to falsify records of student courses to prove that private school students enrolled in the Renaissance of Athens had completed a full course load in the state tank area, as required by state law in order to receive state support for students.

As of November 2017, more than 500 private school students have been fraudulently enrolled in the Athens Renaissance. More than 50 private school students from Abbeville Christian Academy were fraudulently enrolled in schools in Conecuh County.

After government officials began to ask questions, Holladay began looking at transforming the Athenian Renaissance into a public charter school that would face less regulation than a public virtual school.

Holladay planned to enroll private school students in the charter school. as has been done in the system so far.

Holladay entered into a contract with an organization named only as Company A, which received $ 340,000 between October 2017 and August 2018 to continue the project to become a charter school.

Plans to operate the charter school were eventually rejected after the state inspector said that Athens city schools could not authorize a charter school that would serve the entire country.

Federal prosecutors announced a press conference Tuesday afternoon to discuss further details of the case.