$225,000,000 In ‘Hideous’ Fraud Schemes Found Across US Schools, Report Alleges
A new report from the State Financial Officers Foundation and Open the Books uncovered nearly 90 alleged fraud schemes involving roughly $225 million across American schools since 2019.
The report alleges that school districts have been embezzling funds, creating fake invoices and then pocketing the money, lying about student enrollment numbers to collect more aid, bid-rigging and receiving kickbacks.
The SFOF and Open the Books reviewed the U.S. Department of Education Office of Inspector General’s semiannual report to Congress between 2019 and 2026 — finding that fraud has taken place in 24 states and Puerto Rico.
“All fraud is harmful, but defrauding education dollars meant to help kids learn and succeed is especially hideous. The findings in this report should alarm every family, teacher, and civic leader, especially since they only scratch the surface of the problem,” SFOF CEO OJ Oleka said in a statement to the Daily Caller News Foundation.
Indiana schools received $44 million more funding from the state than they should have by inflating their enrollment numbers between 2016 and 2018, according to the report. Indiana Virtual School and Indiana Virtual Pathways Academy faced fraud schemes from four individuals within the educational institution including the founders, a director of one school, the superintendents, and an operations manager.
The four directed millions of dollars to fraudulent companies controlled by the founder and they also fired an employee who attempted to inform the state education department about the fraud. The schools closed in 2019, and the quartet was charged by the Department of Justice is 2024, per a press release from the department.
“These schemes within public schools arguably hit us where it hits more: America’s future leaders. Every dollar wasted on fraud never makes it to the classroom where its urgently needed. Student outcomes will continue to suffer until we clean up both fraud and administrative overhead. In one instance, the per-student fraud rate was enough to fund a semester at a charter school,” John Hart, CEO of Open the Books said in a statement to the DCNF.
WASHINGTON, DC – JUNE 2: A sign is displayed outside of the Lyndon Baines Johnson Department of Education building on June 2, 2026 in Washington, DC. (Photo by Kevin Carter/Getty Images)
In Florida’s Broward County, Public Schools Information Officer Anthony Hunter allegedly steered $17 million of taxpayer funds to a friend’s business without going through the required bidding process and then personably benefitted from the funds, according to the report.
From 2015 to 2019 Hunter allegedly guided the funds to David Allen, a Georgia resident, and his company Education Consultants, Inc, according to the report. A statewide grand jury indicted Hunter in 2021 for bypassing the bidding process for school equipment and giving business to his friend.
However, in 2024 a judge dismissed the indictment arguing that the state grand jury did not have the jurisdiction over the case because the alleged crimes only occurred in Boward County Florida, according to the report. (RELATED: Blue City’s Public Schools Light Money On Fire Only For Students To Keep Failing, Report Shows )
“This report is a good reminder that America doesn’t necessarily need more laws-we need to enforce the existing laws on the books. Every dollar siphoned out of the education system by self-interested grifters is a dollar that’s not furthering a child’s education at a time when student achievement and proficiency are at a frightenedly low point. We don’t need more money in education- we need more accountability so that finite funds get into classrooms,” Nicole Neily, President of Defending Education said in a statement to the DCNF.
In Texas, Houston Independent School District had two individuals who allegedly led a six million fraud scheme centered around school district construction and ground maintenance contracts in exchange for cash bribes and hundreds of thousands of dollars in home remodeling, according to the report.
Chief operating officer of Houston Independent School District, Brain Busby, and Contractor Anthony Hutchinson were indicted by the Department of Justice including five other school officials who pled guilty to conspiracy charges. The five individuals conspired with Busby and Hutchinson by accepting bribes, per SFOF and Open the Books’ report. Busby and Hutchinson attempted to interfere with the federal criminal probe when they heard it was happening. Authorities searched the two individuals’ homes in 2020 and discovered $186,000 in cash to be forfeited.
“Since June 2023, we have made it a priority to eliminate waste and most importantly, now every decision we make is focused on closing student achievement gaps, preparing students for the future, and supporting teachers,” Superintendent Mike Miles of Houston Independent School District said in a statement to the DCNF.
STAMFORD, CONNECTICUT – OCTOBER 21: A kindergarten room sits empty at Rogers International School as students from that class quarantine at home, according to parents, on October 21, 2020 in Stamford, Connecticut. (Photo by John Moore/Getty Images)
In 2025, Michael David Baker, former maintenance director of Boone County Schools in West Virginia pleaded guilty to defrauding the school district out of $3.4 million. This amounted to over one thousand dollars per student being stolen. The money was used on personal vehicles, equipment, and home improvements on his residence, the report found. (RELATED: ‘A Culture That Defers To Fraud’: Witnesses Reveal How Hardworking Families Pay Higher Taxes)
He falsified documents by making it look like the school was receiving large amounts of hand soap, trash can liners, and face masks from Rush Enterprises, according to the Office of Inspector General Report. Prosecutors allege that when Rush Enterprises received payment the owner wrote checks to Baker to have a share of proceeds. Eighty percent of the products that were ordered were never delivered between November 2019 and December 2023, according to the report.
“But between teacher unions and activists infiltrating the classrooms to push activism, and misuse of funding for schools, parents are right to be skeptical of their school systems,” Alleigh Marre, Executive Director of the American Parents Coalition said in a statement to the DCNF.
“With more than $230 million in taxpayer dollars being squandered for frivolous items outside of curriculum and resources, students are losing out on important chances to learn core competences like reading, math, science, and opportunities for critical thinking,” Marre’s statement added.
Of the 20 largest school districts only three schools were included in this report, whereas dozens of smaller school districts turned up their reports. The problem of education funding unfolds as America is in a deepening affordability crisis, according to the report. Roughly one in three low-income families spend 95% of their income to meet basic needs. For these households every dollar that is spent on fraud could have been a dollar improving their child’s education.
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