6 Alabama school officials charged with fraud, conspiracy in $7 million virtual schools scheme
Athens Alabama Feb 25 2021
Six Alabama educators have been indicted in a years-long, lucrative fraud and conspiracy scheme involving virtual schools throughout the state.
Federal prosecutors say officials in Athens City Schools and Limestone County Schools, including two former superintendents, conspired to get more state funding by pretending to enroll full-time private students into the systems’ virtual schools. The two school districts were improperly paid around $7 million in state education funding for the 2016-17 and 2017-18 school years, according to federal officials.
“The money Alabama sets aside for public education should be used for exactly that— educating the students of our public schools,” said U.S. Attorney Louis Franklin. “The defendants in this case prioritized their own profits over the education needs of our students.”
Those named in the indictment received payments as a result of their participation, according to prosecutors. Private school officials involved are not alleged to have profited individually, though their schools and students did receive payments and access to educational equipment.
Children at private schools who then were unknowingly enrolled in the public virtual schools as part of the scheme were unaware of the fraud, federal officials said. Some, but not all, of their parents have been notified of the alleged identity theft, officials said.
The indictment calls into question the apparent success of Alabama virtual schooling and the apparent lack of state oversight, even before the pandemic increased enrollment in virtual options.
“Alabama taxpayers send their money in expecting it to support students,” said state Superintendent Erick Mackey at a press conference. “We expect that trust to be upheld by all of Alabama’s teachers and administrators. Unfortunately, today, we are dealing with broken trust.”
Mackey did not detail any steps the state may consider to increase accountability in light of the investigation.
The 80-page indictment unsealed Tuesday morning in the federal Middle District of Alabama names as defendants:
William L. (“Trey”) Holladay III, 56, a resident of Athens and the former superintendent of the Athens City Schools district
Deborah Irby Holladay, 57, of Athens and formerly employed by the Athens City Schools district
William Richard (“Rick”) Carter Jr, 45, also of Athens, currently the executive director of planning for Athens City Schools and formerly the district’s director of innovative programs
David Webb Tutt, 61, of Uniontown
Gregory (“Greg”) Earl Corkren, 56, of Tuscaloosa
Thomas Michael Sisk, 55, a resident of Toney and formerly the superintendent of the Limestone County School district
During a Tuesday afternoon press conference, federal officials said the investigation started two years ago and involved more than 200 interviews statewide.
William Holladay, also known as Trey, was indicted on more than 100 counts of fraud, including wire fraud and falsifying private student information. Holladay received cash payments from those involved, according to prosecutors.
Holladay was superintendent of Athens city schools until Oct. 31 but was placed on paid leave in June after investigators visited his house during what an FBI spokesman called a “law enforcement action.” Deborah Holladay is his wife.
According to the indictment, Holladay began the scheme in 2015, enrolling students from private schools in Athens Renaissance, the district’s virtual school option. He told the state that guest-enrolled students would take a few classes from the virtual school but remain enrolled in their home schools.
Instead, private school students at Marengo Academy in west Alabama were added to Athens’ enrollment database, making them look like full-time students of the district and inflating the district’s enrollment numbers.
In return, private school students would receive laptops from the district and could use the district’s online learning tool, Odysseyware.
Expanding the scheme to other schools and districts
In 2016, Holladay and Carter, who eventually became the director of innovative programs for the Athens City School District, recruited additional private schools to provide private student information in order to enroll additional students in Athens Renaissance. Parents did not consent to give their children’s information to Athens Renaissance.
They then replicated the scheme in Limestone County and Conecuh County schools.
More than 750 students, from Alabama but also from Mississippi and Georgia, from five private schools, were enrolled as public school students in Athens Renaissance for the 2016-17 school year.
The indictment further alleges that the defendants went to various lengths to conceal the fraud from the state. Such lengths included: creating fake report cards, manufacturing false addresses for the students of the private schools who lived outside of Alabama, and submitting falsified course completion reports to the state department of education.
Eventually, the public schools also coordinated standardized testing for the private school students — who otherwise were not taking enough state-mandated credits through the virtual academy — and entered their grades and report cards in the district’s student database and grading software.
Prosecutors say Corkren’s business, Ed Orp, which he created at Holladay’s direction, was paid more than $500,000 from June 2016 until July 2017 by Athens City Schools. After the recruitment of Limestone County Schools to the scheme, that district paid Corkren more than $100,000 between September 2016 and February 2017.
Corkren then, through his organization, distributed the money among the private schools involved and the school officials involved.
In July 2016, Holladay brought Limestone County Superintendent Tom Sisk into the scheme. Limestone schools would pay Ed Op, the LLC, $55 per student — $10 more than the $45 per student stated in the contract presented to the school board — and Corkren would set the extra money aside and eventually give it to a charity of Sisk’s choosing.
Limestone County schools counted more than 200 Monroe Academy students in 2016-17 state enrollment numbers.
In 2017, Corkren sent a $15,000 donation to an unnamed charitable organization, which in turn gave $13,000 to Sisk.
In the spring of 2017, Holladay recruited Tutt, a longtime friend in Marengo County, to contact more private schools to participate in the fraudulent scheme during the 2017-18 school year. Tutt Educational Services was created to facilitate the scheme.
Tutt’s organization was paid more than $20,000 by Corkren between March and July 2017. Under a subsequent agreement, Corkren would pay Tutt $16,500 per month along with other fees adding up to more than $250,000 for the 2017-18 school year.
Eventually, six private schools — Marengo Academy, Jackson Academy, Pickens Academy, the Lakeside School, Southern Academy, and Monroe Academy — received more than $150,000 combined.
Corkren received another $1 million during the 2017-18 school year. Tutt received more than $580,000 and Sage Professional Development, LLC, operated by Deborah Holladay, received more than $160,000 during the same time period.
Sisk withdrew from the scheme prior to 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 recruited the Conecuh County Schools superintendent to contract with Tutt to enroll private school students from Abbeville Christian Academy into the district’s virtual school, Genesis Innovative School. Tutt paid Abbeville Christian $800 per month for student internet access and provided 50 laptop computers and two charging carts. Deborah Holladay trained teachers at Abbeville Christian how to use Odysseyware.
The 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.
State officials asked questions at several points, but Holladay always denied accusations that private school students were improperly enrolled in Athens Renaissance.
“They are taking a full class load from us and we’re educating them,” Holladay wrote after an August 2017 inquiry, according to the indictment.
Students from the private Lakeside School in Eufaula were disenrolled from Athens Renaissance prior to the start of the 2017-18 school year after state education officials confirmed those students were private school students.
Holladay instructed Corkren to falsify student course records to prove other private school students enrolled in Athens Renaissance had taken a full course load in the public school district, as required by state law in order to receive state funding for those students.
As of November 2017, more than 500 private school students were fraudulently enrolled in Athens Renaissance. More than 50 private school students from Abbeville Christian Academy were fraudulently enrolled in Conecuh County Schools.
After state officials began asking questions, Holladay began looking at converting Athens Renaissance into a public charter school, which would face fewer regulations than a public virtual school.
Holladay planned to recruit private school students for the charter school. as had been done in the scheme so far.
Holladay contracted with an organization named only as “Company A,” which received $340,000 between October 2017 and August 2018, to pursue the project to become a charter school.
The plans to operate the charter school were ultimately abandoned after the state superintendent said Athens City Schools could not authorize a charter school that served students statewide.
Federal prosecutors have announced a press conference for Tuesday afternoon to discuss more details about the case.
Al.com
