Former Indiana Online School Director Convicted of Wire Fraud in $60 Million Enrollment Scheme
After an eight-day trial in federal court in Indianapolis, Marion County, Indiana, a jury convicted Phillip Holden, 65, of Middletown, in Delaware County, Indiana, of 17 counts of wire fraud and one count of conspiracy to commit wire fraud for his role in a scheme that fraudulently obtained more than $60 million in state education funding through two online charter schools. The U.S. Attorney's Office for the Southern District of Indiana announced the verdict.
According to court documents and evidence presented at trial, Holden served as Director of Operations for Indiana Virtual School and Indiana Virtual Pathways Academy. From at least 2016 to 2018, Holden participated in a scheme with founder Thomas Stoughton and others to fraudulently inflate student enrollment figures reported to the Indiana Department of Education, claiming more than 6,000 students were enrolled between the summers of 2016 and 2018.
Like other public and charter schools in Indiana, the two schools received state funding based on reported enrollment, so higher reported numbers brought more funding. The fraudulent submissions caused the department to overpay the two schools by more than $60 million. Trial evidence showed the defendants directed employees to stop verifying student interest before enrollment or re-enrollment, allowing inactive and ineligible individuals to be counted, including people who had already graduated, joined the military, transferred to other schools, or were deceased.
Shortly before the September 2018 count day, the defendants directed an information technology contractor to identify about 600 former students who had been unenrolled for inactivity and were not listed as attending another school, then instructed employees to re-enroll many of them for the official count. Evidence also showed Holden, at Stoughton's direction, retaliated against an employee who tried to report the fraud to the department in 2017, threatening and ultimately firing the employee.
Stoughton, 77, of Carmel, the founder of both schools, pleaded guilty the day before trial to 58 counts of money laundering, 17 counts of wire fraud and one count of conspiracy to commit wire fraud, and is scheduled to be sentenced on March 11, 2027. Holden faces up to 20 years in federal prison per count and is scheduled to be sentenced on February 25, 2027.
The FBI Indianapolis Division, the Indiana State Board of Accounts, the Indiana Office of Inspector General and the Indiana State Police investigated the case. U.S. District Judge Richard L. Young presided over the trial, which included testimony from 40 witnesses and more than 350 exhibits.
Source: U.S. Department of Justice
Published by GSM · USA (original Chinese edition)
Photo: 图：联邦调查局 FBI 总部大楼（联邦固定图库）。 / Photo: FBI headquarters building (federal asset library).
