School officials across two dozen states and Puerto Rico allegedly siphoned roughly $225 million from education budgets through nearly 90 separate fraud schemes, embezzlement, fake invoices, inflated enrollment rolls, bid-rigging, and kickbacks, according to a joint investigation by the State Financial Officers Foundation and Open the Books, first reported by the Daily Caller News Foundation.
The two organizations reviewed the U.S. Department of Education Office of Inspector General's semiannual reports to Congress covering 2019 through 2026. What they found is a sprawling catalog of self-dealing that stretches from Indiana to Florida, Texas to West Virginia, and, in at least one case, all the way to a luxury home and a BMW in Southern California.
The scale matters. Every dollar stolen from a school budget is a dollar that never reached a classroom, never bought a textbook, never paid a teacher. And the people living with the consequences are the students and the taxpaying families who funded these programs in good faith.
One of the largest schemes detailed in the report centers on Indiana Virtual School and Indiana Virtual Pathways Academy. Between 2016 and 2018, the schools allegedly inflated their enrollment numbers, pulling in $44 million more in state funding than they should have received. The schools closed in 2019. Five years later, in 2024, the Department of Justice charged four individuals connected to the schools, founders, a director, superintendents, and an operations manager, for their roles in the scheme.
The fraud didn't just involve cooking the books on headcounts. Millions of dollars were allegedly directed to fraudulent companies controlled by a founder. When one employee tried to inform the state education department about what was happening, that employee was fired.
That sequence, inflate, steal, silence the whistleblower, is a pattern that should concern anyone who believes accountability starts at the local level. The federal government's track record of catching fraud in programs it funds is not exactly reassuring. The Feeding Our Future fraud case in Minnesota, which involved hundreds of millions in stolen pandemic aid, is a reminder of how long these schemes can run before anyone in authority notices.
In Broward County, Florida, the report details how Anthony Hunter, a public schools information officer, allegedly steered $17 million in taxpayer funds to a friend's business between 2015 and 2019. The friend, Georgia resident David Allen, operated a company called Education Consultants, Inc. Hunter allegedly bypassed the required bidding process and personally benefited from the arrangement.
A statewide grand jury indicted Hunter in 2021. But in 2024, a judge dismissed the indictment, not because the evidence was weak, but because the state grand jury lacked jurisdiction. The alleged crimes occurred only in Broward County, the judge ruled, so the statewide body had no business bringing the charges.
The jurisdictional technicality left $17 million in alleged theft without a criminal resolution. Whether Broward County prosecutors will pursue the case on their own remains an open question.
In Houston, the alleged fraud was more direct. Brian Busby, the chief operating officer of the Houston Independent School District, and contractor Anthony Hutchinson allegedly ran a $6 million scheme centered on school construction and grounds maintenance contracts. In exchange for steering contracts, Busby allegedly received cash bribes and hundreds of thousands of dollars in home remodeling.
When authorities searched the homes of Busby and Hutchinson in 2020, they discovered $186,000 in cash to be forfeited. The DOJ indicted both men, along with five other Houston ISD school officials who pleaded guilty to conspiracy charges. Busby and Hutchinson also allegedly attempted to interfere with the federal criminal probe.
Houston ISD Superintendent Mike Miles, who took over the district in June 2023, told the Daily Caller News Foundation that the district has since changed course.
"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."
That statement is welcome. But the fraud happened on the district's watch, and the taxpayers of Houston are the ones who paid for it.
The West Virginia case is smaller in dollar terms but no less brazen. Michael David Baker, the former maintenance director of Boone County Schools, pleaded guilty in 2025 to defrauding the district of $3.4 million. He spent the money on personal vehicles, equipment, and home improvements.
Baker's method was simple. He falsified documents to make it appear the school was receiving large shipments of hand soap, trash can liners, and face masks from a vendor called Rush Enterprises. Eighty percent of the products ordered between November 2019 and December 2023 were never delivered. When Rush Enterprises received payment, prosecutors allege the owner wrote checks back to Baker to split the proceeds.
In a small district like Boone County, the theft amounted to more than one thousand dollars per student stolen. Open the Books CEO John Hart put that in perspective:
"In one instance, the per-student fraud rate was enough to fund a semester at a charter school."
The pattern of taxpayer-funded programs hemorrhaging money to fraud is not limited to schools. But the education context makes it particularly galling because the victims are children whose achievement levels are already falling.
The report's reach extends well beyond the four cases detailed above. The New York Post reported that two Southern California school leaders stole nearly $20 million combined. Jorge Armando Contreras, the fiscal director of the Magnolia School District, embezzled $16.7 million to buy a luxury home, a BMW, designer goods, and expensive tequila. He received 70 months in federal prison. Separately, Los Angeles charter school executive Janis Bucknor stole over $3 million, roughly one-third of all federal and state funding her school received, and spent $220,600 on Disney vacations alone. She was sentenced to three years' probation.
Three years' probation for stealing $3 million from a charter school. The contrast between the scale of the theft and the lightness of the sentence speaks for itself.
The report's authors are blunt about its limitations. Of the 20 largest school districts in the country, only three appeared in the OIG reports reviewed. Dozens of smaller districts did. That gap suggests the problem is almost certainly larger than $225 million, the Inspector General can only catch what it examines.
SFOF CEO OJ Oleka told the Daily Caller News Foundation that the findings "only scratch the surface of the problem."
"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."
Fox News reported that roughly $67 million has been ordered repaid through court rulings or settlements, though it remains unclear how much of that money has actually been recovered. That gap, between what courts order and what taxpayers actually get back, is another question the report leaves open.
Nicole Neily, president of Defending Education, framed the issue as one of enforcement, not new legislation:
"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."
Alleigh Marre, executive director of the American Parents Coalition, connected the fraud to a broader erosion of trust between parents and school systems. She noted that roughly one in three low-income families spend 95 percent of their income to meet basic needs, and that the squandered funds represent lost opportunities for students to learn core skills like reading, math, and science.
"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."
That skepticism is well earned. When public officials treat education budgets as personal slush funds, buying luxury cars, remodeling homes, pocketing cash bribes, the damage goes beyond the dollar amount. It corrodes the public trust that makes self-governance possible. The same dynamic plays out when elected officials allegedly treat donor money as a personal expense account. The common thread is a class of people entrusted with other people's money who decided to help themselves first.
The education establishment's standard response to falling test scores and crumbling facilities is always the same: more money. The SFOF and Open the Books report suggests a different diagnosis. The money is there. It is being stolen, wasted, or lost to administrative bloat before it ever reaches a student.
Hart, the Open the Books CEO, made the point directly:
"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 it's urgently needed. Student outcomes will continue to suffer until we clean up both fraud and administrative overhead."
The report documents fraud in 24 states and Puerto Rico. It names specific officials, specific dollar amounts, specific methods. Some of those officials have been charged. Some have pleaded guilty. At least one had his indictment thrown out on a technicality. And the Inspector General's office, by its own admission, has only reviewed a fraction of the nation's school districts.
Accountability in public education is not a partisan issue in theory. In practice, the institutions that resist transparency, fight audits, and demand ever-larger budgets without delivering results tend to lean in one direction. Parents who ask where the money went are not being unreasonable. They are being responsible. The same instinct that drives communities to demand accountability when officials are caught breaking the rules applies here, too.
Nearly 90 fraud schemes. Roughly $225 million. Twenty-four states. And those are just the ones someone bothered to count.
The next time a school board says it needs more funding, taxpayers have every right to ask a simple question first: Where did the last check go?