Attorney General Todd Rokita said a court decision Monday enabling him to proceed with a lawsuit against several virtual schools and affiliated entities is a win for Hoosiers statewide.

“We’re talking about $154 million in monies misappropriated from the public treasury,” Attorney General Rokita said. “Hoosiers deserve a full accounting, and they deserve to have these funds returned to the state. I will hold accountable those who try to steal from Indiana taxpayers.”

Last July, Attorney General Rokita sued Indiana Virtual School (IVS), Indiana Virtual Pathways Academy (IVPA), Indiana Virtual Educational Foundation (IVEF) and other related entities and individuals. The lawsuit followed a State Board of Accounts (SBOA) special investigation, which concluded public funds were misappropriated through malfeasance, misfeasance and/or nonfeasance.

On Monday, the Hamilton Superior Court ruled in favor of Attorney General Rokita against defendants’ motions to dismiss the lawsuit.

“Our lawsuit needs to move forward because it serves the public interest,” Attorney General Rokita said. “This week’s decision indicates that the court sees this case as an appropriate one. Now we look forward to prevailing on behalf of Hoosiers.”

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.

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.

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