Probe: Oklahoma virtual charter founders embezzled millions

OKLAHOMA CITY (AP) — The founders of Oklahoma’s largest virtual charter school embezzled millions of dollars in state funds through an illegal scheme that involved the use of “ghost students” to artificially inflate enrollment numbers, investigators allege.

Oklahoma State Bureau of Investigation agent Tommy Johnson outlined the allegations in an affidavit for a search warrant of an Epic teacher’s home filed late Monday in Oklahoma County. Investigators seized a laptop and mobile phone during their search.

In the affidavit, Oklahoma State Bureau of Investigation agent Tommy Johnson wrote the school’s founders, David Chaney and Ben Harris, split illegal profits of more than $10 million between 2013 and 2018.

“Ben Harris and David Chaney inflated the number of students reported to (the Oklahoma State Department of Education) by enrolling and/or retaining ‘ghost students,'” Johnson wrote. “Ghost students were students enrolled in Epic that received little or no instruction from Epic teachers.”

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The two men operated Epic Youth Services, a for-profit limited liability company, which contracted with the school to oversee operations and received a portion of the school’s state-appropriated funds.

The existence of the affidavit was first reported by The Oklahoman . The OSBI’s investigation is ongoing, and formal charges have not been filed.

Epic did not make Chaney or Harris available for an interview, but released a statement from the two men on Wednesday saying they dispute the allegations in the affidavit and that they’ve cooperated fully with investigators for more than five years.

“We will continue to cooperate with investigators, as we have throughout the history of our school,” the statement read. “We are confident the facts will once again vindicate our team.”

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Epic is a free, public school for children in pre-kindergarten through grade 12 that has enjoyed explosive growth since it was founded by Chaney and Harris in 2011. The school had more than 21,000 students enrolled last year and received more than $113 million in state funding in fiscal year 2019, according to figures from the Oklahoma State Department of Education.

“These allegations are extremely serious and disturbing,” State Superintendent of Public Instruction Joy Hofmeister said in a statement. “The State Department of Education stands ready to work with any criminal investigation to determine if public education and countless Oklahoma taxpayers have been defrauded of millions of dollars.”

A department spokeswoman said Wednesday federal investigators also have sought data about Epic from the agency.

Epic also has expanded its virtual charter school operations into California and began efforts to move into Arkansas .

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The school boasts on its website that Epic teachers can earn an estimated $15,000 more than the state average, and many parents say their children prefer Epic to a traditional brick-and-mortar school. Epic also offers a “learning fund” credit of between $800 and $1,000 per student that can be used to pay for such things as karate and dance lessons, yoga or music instruction.

Johnson wrote in the affidavit that Harris and Chaney used the learning fund to entice parents to enroll their students in Epic. Dozens of the ‘ghost students’ were home-school or private-school students who were enrolled just so parents could receive the credit without any intent to receive instruction.

“Many teachers dubbed them ‘members of the $800 club,'” according to the affidavit.

One former Epic teacher told Johnson about a family in rural Oklahoma that withdrew 10 of their children from a local public school and received $8,000.

“The parents did not require the students to participate in any of Epic’s curriculums and they spent their day horseback riding and participating in other non-educational activities,” Johnson wrote.

Chaney also recruited students from private schools for dual enrollment in Epic, sometimes without their parents’ knowledge, according to the affidavit. In one case, a student was counted for two school years after she moved to another state.

In his affidavit, Johnson wrote he has probable cause to believe crimes committed include embezzlement, conspiracy, obtaining money under false pretenses, and violation of Oklahoma’s Racketeer-Influenced and Corrupt Organizations Act.