Lawsuit seeks $150 million from closed Indiana online schools

IN Focus: Indiana Politics

FILE- In a Sept. 13, 2019 file photo the closed office of Indiana Virtual School, in Indianapolis, is seen with a message to creditors taped to the door stating that it no longer had assets or bank accounts. (AP Photo/Tom Davies, File)

INDIANAPOLIS — The leaders of two now-closed Indiana online charter schools are accused in a new lawsuit of defrauding the state of more than $150 million by padding their student enrollments and inappropriately paying money to a web of related businesses.

The lawsuit announced Monday by the Indiana attorney general’s office comes nearly two years after Indiana Virtual School and Indiana Virtual Pathways Academy shut down amid a state investigation that found the two online schools improperly claimed about 14,000 students as enrolled between 2011 and 2019, even though they had no online course activity.

The lawsuit seeks repayment of about $69 million it claims the schools wrongly received in state student enrollment payments. It also seeks $86 million that officials say the schools improperly paid to more than a dozen companies linked to them by common business officers or relatives and done so with little or no documentation.

“This massive attempt to defraud Hoosier taxpayers through complex schemes truly boggles the mind,” state Attorney General Todd Rokita said in a statement.

A state audit linked much of the misspending to Thomas Stoughton, who headed the online schools from 2011 to 2017. An attorney for Stoughton, BJ Brinkerhoff, declined to comment on the lawsuit.

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