A report from OpenTheBooks and the State Financial Officers Foundation has identified roughly 90 identified or prosecuted instances of fraud and abuse involving federal K-12 education dollars between October 2019 and March 2026, totaling approximately $225 million across 24 states and Puerto Rico. The findings are drawn from every semiannual report issued by the U.S. Department of Education's Office of Inspector General during that period. [1]
Geographic spread and large cases
The report found that Florida and Illinois each had 11 cases, costing $24.7 million and $14.5 million respectively. Puerto Rico and Texas each had 10 cases, totaling $39.6 million and $19.9 million. Indiana had the single largest loss, roughly $44 million from one scheme. [1]
The Indiana case involved Indiana Virtual School and Indiana Virtual Pathway Academy, where leadership inflated enrollment numbers between 2016 and 2018. The OIG found the schools received about $44 million more in federal and state funding than they should have. A separate investigation by the Indiana State Board of Accounts found that 83 percent of state funding received by those schools was disbursed to related-party vendors, with more than $85.7 million paid without invoices or itemized information. Four officials were charged in 2024; one former administrator agreed to plead guilty to wire fraud conspiracy. [2]
Oversight gap at largest districts
Only 3 of the nation's 20 largest federally funded school districts appeared in OIG records: Broward County Schools in Florida, Houston Independent School District in Texas, and Chicago Public Schools in Illinois. The remaining 17 had no OIG fraud investigations found in the records reviewed. The report states this means the findings are likely just the tip of a much larger problem. [3]
Comparative precedent: virtual school fraud
The Indiana virtual enrollment scheme has parallels in other states. Between 2016 and 2018, officials at Athens City Schools and Limestone County Schools in Alabama conspired to enroll private school students in virtual public schools without consent, falsely reporting those students to collect roughly $7 million in state funding. Six Alabama educators were indicted in 2021 after creating fake report cards, manufacturing false addresses, and submitting falsified course completion reports. That case was documented in an earlier OIG Semiannual Report to Congress covering April through September 2021, showing that the fraud categories identified in the new compilation — particularly virtual enrollment inflation — were known vulnerabilities years before. [5][6]
Limitations and oversight failures
The report itself acknowledges that the $225 million figure understates the true scope of fraud, because it includes only cases investigated by the Education Department's OIG, not those handled by state auditors, local investigators, or other bodies. [3] In addition to the Indiana case, an OIG audit of the Puerto Rico Department of Education's use of American Rescue Plan ESSER funds found that the agency failed to verify that contracted services were actually provided before disbursing federal money, resulting in $3.9 million in wasted funds. The OIG recommended the agency return the funds or take remedial action. [4]
The OIG's most recent semiannual report, covering October 2025 through March 2026, documents recent fraud cases including a former Boone County Schools maintenance director sentenced for a $3.4 million scheme, a former Savannah R-III School District accountant sentenced for $121,000 in embezzlement, and two former Paris Union School District 95 principals indicted on embezzlement charges. During that period, the OIG closed 14 criminal and civil investigations, securing more than $7 million in restitution, settlements, fines, savings, recoveries, and forfeitures. [4]