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Final audit shows ECOT owes Ohio $117M

bill_lager_at_ecot_rally_in_may_-_credit_kasler.jpg
Karen Kasler
/
Statehouse News Bureau
ECOT founder Bill Lager in a rare public appearance at a rally at the Statehouse in May 2017, as questions were building about student attendance numbers reported by the state's largest online charter school.

The Electronic Classroom of Tomorrow, Ohio's largest online charter school before closing in 2018, owes the state more than $117 million, according to the state auditor's office.

Of the money ECOT owes back, more than $100 million is for funds appropriated by the state to educate kids the school couldn't prove it had. The audit said ECOT put another $10 million into companies owned by ECOT founder Bill Lager.

The audit looked into how much money ECOT received for students it couldn't ever prove attended the school full time, according to the audit from Auditor Keith Faber.

The findings for recovery also include more than $13 million against IQ Innovations and $3 million against Altair Learning Management Inc., two companies owned by Lager that did business with ECOT.

The final audit comes more than four years after ECOT shut down. Faber said in a statement, "Reporting delays, incomplete and inaccurate financial statements, and other issues hindered auditors’ work."

That goes back to the spring of 2018, when the school shut down because of financial problems related to court rulings that ECOT owed millions in repayments. At the time, Dave Yost — now the attorney general — was the auditor.

Yost had given ECOT an award for excellent record keeping in January 2016. A few months later ECOT tried to stop an Ohio Department of Education audit of student attendance, and in 2017 Yost called for state payments to ECOT to stop. Yost said a few months after ECOT closed in 2018 that it had turned over fraudulent data on student attendance.

ECOT's state report card showed it had a graduation rate of 39% in 2017, the year before it closed. It also had one of the highest dropout rates of any school in the US. ECOT received around $1 billion in state funding in its 17 years of operation.

ECOT was a big donor to mostly Republican campaign committees and candidates, including Faber and Yost, who ended up giving the ECOT money to other causes. Legal proceedings continue against Lager, ECOT and others.

In a statement, Yost's office noted that the court already found that ECOT and Lager's companies violated Ohio's public contracting laws resulting in more than $160 million in illegal payments.

“The court also held that Lager violated his fiduciary duties to ECOT and that Lager is strictly liable for all illegal expenditures of ECOT’s public funds," a statement from Yost's office said. "This is a significant win for Ohio’s taxpayers, both in this case and deterring similar corruption elsewhere. We will continue to pursue the case to final judgment.”

Contact Karen at 614-578-6375 or at kkasler@statehousenews.org.
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