The Journal Gazette
 
 
Tuesday, February 18, 2020 1:00 am

Senator paid by maligned school

Virtual School facing accusations of fraud

NIKI KELLY | The Journal Gazette

INDIANAPOLIS – A state senator with a legal practice and consulting business was paid between 2011 and 2019 by a virtual charter school now accused of defrauding taxpayers of $68 million.

Sen. Travis Holdman, R-Markle, ended his contract with Indiana Virtual School last year as allegations of malfeasance arose.

It is unclear how much Holdman made from his contract because the school is shuttered. Attempts to reach the founder, superintendent and attorney for the school were unsuccessful Monday. Holdman declined to say how much he was paid but considered it a small account.

“I tried to keep an arm's-length business relationship with them,” he told The Journal Gazette on Monday. “I'm terribly embarrassed to be linked in any way.”

Holdman is chairman of the Senate Tax and Fiscal Policy Committee and has served Senate District 19 since March 2008. The district includes Wells, Adams and parts of Allen, Blackford and Grant counties.

He is also a lawyer who previously was a deputy prosecutor. Holdman is known for his expertise in the insurance and banking industries.

Indiana Virtual School and its initial operator, Indiana nonprofit Business Consulting Inc., worked with politicians from the get-go – according to education blog School Matters. It reported Friday that in July 2011, just a month after the school got its first charter, its board approved a contract with Holdman's consulting firm.

The senator's statements of economic interest, which must be filed every year, list his law practice and consulting firm as private businesses he owns. But legislators are not required to list individual clients.

Twice – once in 2013 and once in 2014 – Holdman said on those filings that he attended a meeting with Indiana Virtual School officials at the Indiana Department of Education.

Other than that, Holdman said he had no day-to-day involvement with the school but during breakfast meetings focused largely on big-picture items such as strategy and succession.

He said in a statement the schools paid him a monthly retainer to be “available for general business consulting on legal and personnel matters, contract interpretation, the relationship with the school's authorizing entity and strategic planning.”

Virtual charters have been under a cloud since a Chalkbeat investigation in 2017 uncovered inflated enrollments and money being sent to a bevy of outside vendors related to the founder of Indiana Virtual School and its sister school, Indiana Virtual Pathways Academy.

A State Board of Accounts review released last week found the schools wrongly received $68.7 million in state payments by improperly claiming about 14,000 students as enrolled between 2011 and 2019, even though they had no online course activity. In addition, the schools inappropriately paid almost $86 million to companies linked to the schools' founder or his associates.

Both schools, which had a shared administration and last year reported about 7,200 students, shut down in August after state education officials cut off funding based on initial estimates of $40 million in enrollment overpayments.

The audit report said its findings had been given to federal and state authorities for possible criminal prosecution. A federal grand jury subpoena to the schools in August was included in documents released last year.

Holdman would not comment on whether he has spoken to state or federal authorities.

The senator supports charter schools in general but said he was conscious of the appearance of impropriety and avoided voting on specific virtual education matters. For instance, a bill increasing oversight over virtual charters passed last year. Holdman didn't vote on Senate Bill 567 on the floor. One time the roll call said he was excused; a second time, he didn't vote. Holdman said he went to the Senate Ethics Committee for guidance on the issue.

“I never engaged in any discussion on virtual charters,” he said. “I buttoned it up.”

Holdman said that included private conversations in caucus.

nkelly@jg.net


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