Ohio's Auditor Sends Blistering ECOT Audit To Prosecutors

May 10, 2018

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 by not deducting the time they were inactive online, the state auditor said Thursday.

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

"ECOT officials had the ability to provide honest, accurate information to the state and they chose not to," Yost said. "By withholding information, ECOT misled state regulators at the Department of Education, and ECOT was paid based on that information."

Yost said that 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.

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 for inflating attendance — $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.

His audit, covering the 2016-2017 school year, 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.

In its finding of intentional attendance manipulation, 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 "for the first time, we can prove that ECOT submitted information to ODE in order to get paid that it knew to be false when it was submitted."

"For the first time, we have evidence that, when ODE went to confirm that information, 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 and he faulted the state Education Department for not doing more.

"I would not have accepted the watered down, blanked out spreadsheets that were submitted to ODE," he said.

Messages left with an Education Department spokeswoman weren't immediately returned.

Yost's office had initially 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.

His office obtained new computer data through subpoenas, secured ECOT's ActivTrak server and made its criminal referrals all in the past 10 days, Yost said.

That period also included Tuesday's primary election, in which Yost won the Republican nomination for attorney general and Democrats made ECOT's misdeeds a main campaign issue.

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 and other top 2018 candidates.

"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 he doesn't exchange campaign contributions for favored treatment.

"When I receive a campaign contribution from anyone, the only thing I promise to give them is good government," he said. "Bill Lager's been getting lots and lots of good government from my office, and I don't think he likes it very much."