State silent on pursuit of millions taken in alleged virtual school fraud scheme

LIMESTONE COUNTY, Ala. – The News 19 Investigative Team continues to dig into how a group of educators and administrators came to be charged in connection to an alleged scheme to defraud both the U.S. and state governments.

Former Athens City Schools Superintendent Trey Holladay and former Limestone County Schools Superintendent Tom Sisk are 2 of the 6 named in the indictment. Investigators accuse the group of executing a multi-million dollar virtual school fraud scheme.

The indictment alleges Holladay called many of the shots.

Federal investigators say the scheme was about money. The indictment says former Athens City Schools Superintendent Trey Holladay, figured out a way to inflate enrollment at virtual academies.

Then state funding for the students was funneled into Athens City School district, Limestone, and Conecuh County school districts.

The indictment says the virtual programs were run by Athens City and Limestone County Schools.
But many of the students were actually full-time private school students, mostly from the state’s black belt.

We asked the state board of education when they were first made aware that something may not be right. We got no straight answer.

“Several months ago, the U.S. Office of Inspector General did come and sit down with me, based on some things that the department was able to share with them,” said State Superintendent Eric Mackey, “We have provided them all the information they’ve asked for, and it does go back for quite some time, but I cannot give an exact date when the investigation started because they’ve asked us not to get into that.”

Ultimately, investigators say the scheme led to the fraud of millions in state approved funding.

The indictment says the state did question many of the things going on at the virtual academies as far back as 2016.

Feds say Holladay lied and instructed a co-defendant in the case to forge course reports to say the full-time private students were full-time virtual students.

The indictment also alleges the private school students’ parents did not originally sign permission forms to enroll their students in virtual academies. Instead, Holladay is accused of telling headmasters they could grant permission on behalf of students.

Later down the line, the indictment alleges Holladay and his co-defendants agreed to pay the headmasters for each consent form signed by actual parents.

We asked Mackey whether people should be concerned about virtual school operations, or the state’s ability to oversee them. He said the arrests showed the oversight system works.

But concerning the millions of taxpayer dollars funneled to the parties by an alleged fraud scheme. Mackey would not say whether the state is planning to recover the money.