Audit: Online school inflated time students spent learning

By JULIE CARR SMYTHMarketsAssociated Press

Ohio's then-largest online charter school may have broken the law by withholding information used in calculating payments and inflated the amount of time students spent learning, the state auditor said Thursday.

The now-shuttered Electronic Classroom of Tomorrow also didn't deduct time the students were inactive online and didn't properly document whether students were learning during times the company claimed for payment, according to the report from Republican Auditor David Yost.

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"ECOT officials had the ability to provide honest, accurate information to the state and they chose not to," Yost said.

Yost said that withholding information and misleading state education regulators could represent criminal fraud. He has referred the audit's findings to the FBI, the U.S. Attorney, the Franklin County prosecutor and the U.S. Department of Education's inspector general.

Republicans' handling of the now-shuttered charter school, which has given generously to GOP candidates, is a key campaign issue for Ohio Democrats this fall. Yost won the Republican primary Tuesday in the race for attorney general.

An attorney representing ECOT didn't immediately return a phone message seeking comment. The school, which closed in January, has previously alleged the state engaged in a conspiracy to show the school had been overpaid.

The Ohio Department of Education has sought about $80 million in repayments from ECOT through its last two attendance reviews — $60 million for the 2015-2016 school year and $19 million for the 2016-2017 school year. Yost said he now suspects ECOT owes Ohio taxpayers much more.

Yost's audit, covering the school's finances for 2016-2017, also said three private companies affiliated with ECOT should return $250,000 spent on an ad campaign attacking state lawmakers and the state Education Department for seeking the repayments. The companies said in a joint response that none of the parties involved were ECOT employees and none of the money spent was directly linked to ECOT.

The audit incorporated input from a former ECOT technology employee who told The Associated Press that ECOT officials had ordered staff to manipulate data gathered using ActivTrak software installed in 2016 to reach desired outcomes.

ECOT's former spokesman told the AP at the time that most allegations against ECOT were "made-up, ridiculous attempts to abuse a corpse."

Yost called ActivTrak the "smoking gun" and said that they can now prove ECOT submitted false information to get paid more.

"For the first time, we have evidence that... ECOT hid the truth beneath meaningless and unreliable information, fake proof that ODE inexplicably accepted," he said.

Yost said the whistleblower didn't tell state auditors anything they didn't already know when he first came to the office in May. The auditor said state investigators needed to build a strong case before turning the allegations over to prosecutors.

Former U.S. Attorney Steve Dettelbach, who's running against Yost in November's attorney general race, rejected Yost's .

"That is not even close to accurate. That's not even in the stratosphere of how it happens," he said. "As a federal prosecutor for 20 years, I know fraud cases don't get better with age."

Yost faulted the state Education Department, which handled the review of ECOT's attendance data, for not doing more and for accepting what he said were "watered down, blanked out spreadsheets."

Spokeswoman Brittany Halpin said that the Education Department "repeatedly questioned and subsequently rejected portions of ECOT's data."

"No one has held ECOT more accountable for the education of students than the Department of Education, and our work to return approximately $80 million to Ohio's taxpayers continues," she said.

Yost's office had planned to release the audit May 1. The office attributed the delay to waiting for updated financials reflecting the school's closure and spending on the $250,000 ad campaign, and other data that's part of the investigation.

That period also included Tuesday's primary election.

Democratic gubernatorial nominee Richard Cordray called the audit the latest attempt by Republicans "to whitewash their ECOT scandal." ECOT's owner, Bill Lager, has donated generously over the years to GOP campaigns, including to Yost.

"They willfully looked the other way as a billion of our taxpayer dollars went to a politically-connected for-profit charter school instead of to educating Ohio students," Cordray said.

Yost said contributors only get "good government" when they donate to him. "Bill Lager's been getting lots and lots of good government from my office, and I don't think he likes it very much."

The campaigns of Yost and Republican state Rep. Keith Faber, a state auditor candidate, both announced Thursday they would donate their ECOT contributions to charities. Yost will give away about $30,000 he received from ECOT in 2010 and 2014, and Faber will give away about $36,000 he got over about 15 years.

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