$225M in education funds lost to alleged nationwide fraud, watchdogs say

A coalition of state financial officers and government watchdogs says more than $225 million in taxpayer money intended for students was lost to alleged fraud over the past six years, arguing the cases highlight weaknesses in oversight of federal education spending as the Trump administration intensifies its broader campaign against waste, fraud and abuse. The report, released by the State Financial Officers Foundation (SFOF) and Open the Books, examined every U.S. Department of Education Office of Inspector General semiannual report to Congress issued between Oct. 1, 2019, and March 31, 2026. Researchers identified nearly 90 cases across 24 states and Puerto Rico involving alleged embezzlement, fake invoices, inflated enrollment, bid-rigging, kickbacks and other schemes. Supporters of the report caution that the findings likely represent only a fraction of overall fraud because they include only cases investigated by the Education Department's inspector general. "For millions of American students, these tax dollars were supposed to pay for education," said John Hart, CEO of Open the Books. "Instead, investigators uncovered millions of dollars diverted through fraud and abuse." Among the largest alleged schemes cited in the report were two now-closed Indiana online charter schools that allegedly received approximately $44 million in excess public funding by inflating student enrollment. In Puerto Rico, a tutoring company is accused of fraudulently billing roughly $24 million for services investigators say were never provided. In Florida, a former school district employee allegedly steered approximately $17 million in contracts to a friend's company while personally profiting. The report also highlights the conviction of a former Houston Independent School District chief operating officer and a contractor in a multimillion-dollar bribery and fraud scheme involving school construction contracts. Arizona State Treasurer Kimberly Yee, who serves as chairwoman of the State Financial Officers Foundation, said stronger oversight and accountability are needed to deter future misconduct. "In many of these cases it was blatant fraud," Yee said. "Individuals were taking advantage of the system, knowing what the rules were, yet still misdirecting those dollars for illegal uses." The report comes as the Trump administration continues emphasizing efforts to root out waste, fraud and abuse across the federal government. The White House has described Vice President JD Vance as leading a government-wide "war on fraud," with education spending becoming one of several areas receiving heightened scrutiny. The organizations behind the report say they hope the findings encourage stronger financial oversight and improved safeguards to ensure education dollars reach classrooms rather than fraudulent schemes. READ MORE: https://13wham.com/news/nation-world/... _______________ Stay up to date with our social media: 13 WHAM on Facebook:   / 13wham   13 WHAM on Twitter:   / 13wham   13WHAM on Instagram: https://www.instagram.com/13whamtv/?h... 13WHAM on TikTok: https://www.tiktok.com/@13wham?lang=en 13 WHAM Daily Local News Digest:    • 13WHAM Local News Digest   For more information, visit https://13wham.com/ Have a news tip? Send it directly to us: Email us: [email protected] Call the Newsroom: (585) 334-8700 WHAM is a NY based station and a ABC Television affiliate owned and operated by Deerfield Media, Inc and receives certain services from an affiliation of Sinclair Broadcast Group. Sinclair Broadcast Group, Inc. is one of the largest and most diversified television broadcasting companies in the country today. #13WHAM #News #Rochester #NewYork