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برچسب: Fraud

  • As feds plan new measures to prevent financial aid fraud, colleges hope real students still enroll

    As feds plan new measures to prevent financial aid fraud, colleges hope real students still enroll


    The 2025-26 FAFSA form.

    Credit: Andrew Reed

    Top Takeaways
    • California’s community colleges have dispersed $14 million and likely much more in financial aid to fraudsters.
    • The U.S. Department of Education says colleges must verify the identities of more students this summer. In the fall, it plans to launch permanent screening. 
    • Colleges worry that the new measures could burden students too much and prevent some from enrolling.

    California colleges are worried that new federal measures seeking to crack down on financial aid fraud, which has stolen millions in grants, could result in the unintended consequence of fewer legitimate students enrolling. 

    At California’s community colleges, where the fraud has been most pronounced in the state, financial aid officials hope the new steps will strike a balance between deterring bad actors while also minimizing the burden on real students. Some students may find taking extra steps to prove their identity to be an extra barrier to enrolling, possibly scaring them off, administrators say. 

    “How do we do fraud mitigation, but also still have students apply? The more barriers, the harder we make it to get in our systems, the less people will come,” said Tina Vasconcellos, associate vice chancellor of educational services at the Peralta Community College District. “It’s great the federal government wants to help us and cut down on fraud, but at the same time, is it going to create another hoop for our students to jump through to get to us in the first place?”

    The U.S. Department of Education announced last month it will roll out new ways to verify the identities of students who apply for aid. Most of the fraud has tapped federal aid, in the form of Pell Grants intended for low-income students, but some state and local aid has also been stolen in California and elsewhere. 

    The federal department said it would require colleges this summer to verify the identities of additional first-time applicants. That will apply to about 125,000 students in total nationwide, but the department didn’t say how that will be split among the colleges. To get verified, students will have to show government-issued identification such as a passport or driver’s license. If the college determines that a student is unable to show the identification in person, the student can be given the option to do so on a video call.

    “Although we recognize that these verification selections could be challenging for some institutions and students, it is a critically important and targeted step toward preventing fraud,” the department wrote in an announcement.

    The additional verification for the summer term is only a temporary solution before the department implements a permanent screening process for every financial aid applicant for the upcoming fall term.

    Officials have not said what that process will entail in the fall. Among the possibilities, college officials speculate that requiring more students to come in person to prove they are real, which could be potentially challenging for students who live far away and take entire course loads online.

    Community colleges have been plagued by financial aid scammers who target those institutions because they are open-access and offer many classes fully online. That makes it much easier to enroll in classes online and be eligible for aid. At least $14 million in aid, and likely much more, has been dispersed to fraudsters at California community colleges since 2021. 

    It’s also easier to defraud community colleges than more expensive universities because tuition is so low or otherwise covered, and much of the grants go directly to students for living costs, rather than to the colleges for tuition. 

    “We don’t know what the plan is for the fall,” said Jill Desjean, the director of policy analysis at the National Association of Student Financial Aid Administrators. Ideally, Desjean said, the process would be automated so that additional steps aren’t required of students or staff. “There’s just a limit to what the schools can do.” 

    Pretending to be legitimate students, fraudsters start by applying for admission online. Some of them are caught there, but others successfully get admitted and enroll in classes. At that point, they can request financial aid, which, if they’re successful, gets distributed to personal bank accounts via direct deposit.

    Beyond stealing aid, the scams have additional consequences for real students. Since each course has a finite number of seats, genuine students are sometimes left on waiting lists and can’t enroll because fraudsters are taking up the available seats.

    In a statement when the new measures were announced, U.S. Secretary of Education Linda McMahon said the department “has a responsibility to act” because fraud is “taking aid away from eligible students, disrupting the operations of colleges, and ripping off taxpayers.”

    Jasmine Ruys, vice president of student services at College of the Canyons in Santa Clarita, acknowledged that “it’s our job to make sure that fraud is not happening and that we’re good stewards of taxpayer money.” 

    She added, though, that the college strives to balance that responsibility with not asking too much of students.

    “Some students work during the day, so they might have to take time off work to be able to come over to us to verify,” Ruys added. “So we try really hard not to put any kind of barriers up for a student.”

    Even being asked to upload additional documents online could be difficult for some students, said Vasconcellos of the Peralta district, which serves Oakland and the rest of northern Alameda County. 

    “We still have a digital divide. There are students within our community who have less access to all aspects of technology,” she said. “A lot of our students are actually still using their phones to take their classes. So what I’d be concerned about is if the technology on the receiving end isn’t working and if it’s not easy to upload your ID, or whatever it is that they’re asking for, it’s going to potentially be a barrier.”

    Vasconcellos and Ruys both said they’re hopeful that whatever the department implements this fall will be something that doesn’t require much extra from students. 

    One possible solution, Ruys said, would be to add something at the beginning of the Free Application for Federal Student Aid (FAFSA), so the verification happens quickly rather than when students are getting ready to start their classes. That could be something similar to ID.me, an online identity verification platform already being used by many community colleges. 

    It’s not clear, however, whether the department is considering that option.

    “Whatever it is, we’re going to abide by all laws,” Ruys said. “We just hope that it doesn’t limit our students from being able to enroll and attend college.”





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  • Brookings Analysis: Trump’s “School Choice” Plan Enables Waste, Fraud, and Abuse

    Brookings Analysis: Trump’s “School Choice” Plan Enables Waste, Fraud, and Abuse


    Jon Valant is doing a great job as Director of the Brown Center on Education Policy at the Brookings Institution in Washington, D. C. He keeps close tabs on federal legislation. What follows is an excellent analysis of Trump’s legislation to use federal funds to underwrite the privatization of federal education funding. The potential for fraud, waste, and abuse is huge, he writes.

    He writes:

    • The Educational Choice for Children Act (ECCA) would create a $5 billion federal tax-credit scholarship program through a tax shelter for wealthy individuals.
    • The bill would provide minimally regulated scholarship-granting organizations with a great deal of discretion over how federal education funds are spent.
    • A hypothetical scenario illustrates the possibility of waste, fraud, and discriminatory behaviors.

    The Educational Choice for Children Act (ECCA) continues to move, quietly, towards becoming one of America’s costliest, most significant federal education programs. Now part of the One Big Beautiful Bill Act, ECCA would create a federal tax-credit scholarship program that’s unprecedented in scope and scale. It has flown under the radar, though, and remains confusing to many observers.

    Recently, a colleague and I showed how ECCA is poised to redistribute funds from poor and rural communities to wealthy and non-rural communities. A study from the Urban Institute drew similar conclusions. Since those pieces were published, ECCA—then a standalone bill—has passed through the House of Representatives and now moves to the Senate. ECCA’s fate remains uncertain, which makes this as good a time as any to examine its potential implications.

    How would ECCA work?

    ECCA’s stealthiness is partly due to the confusing nature of tax-credit scholarship programs. These programs move money in circuitous ways to avoid the legal and political hurdles that confront vouchers. Tax-credit scholarship programs like ECCA aren’t quite private school voucher programs, but they’re first cousins.  

    In a voucher program, a government gives money (a voucher) to a family, which the family can use to pay for private school tuition or other approved expenses. With a tax-credit scholarship, it’s not that simple. Governments offer tax credits to individuals and/or corporations that donate to scholarship-granting organizations (SGOs). These SGOs then distribute funds (“scholarships”) to families.

    The U.S. already has 22 tax-credit scholarship programs, but they’re relatively modest, state-level programs. ECCA is different. ECCA would create a massive, federal tax-credit scholarship program, operating across all 50 states, with a current price tag of about $5 billion in the first year (down from $10 billion in the bill’s earlier draft). It offers an extremely generous tax credit. Individuals get a full, 1:1 tax credit (not just a deduction) for their contributions, which fully offsets their contributions. In other words, these “donors” don’t actually give up any money—hence the quotation marks. On top of that, ECCA allows individuals to donate marketable securities (e.g., stocks) rather than cash. This provides an avenue to treat ECCA as a tax shelter and avoid paying capital gains taxes. More on that in a moment.

    Most students would be eligible for a scholarship, with the exception of those from households that earn more than three times their area’s median gross income. (More on that in a moment, too.) The list of qualified expenses covers everything from private school tuition to online educational materials.

    Rather than go through all of the bill’s details, let’s take a look at a scenario that illuminates what this program could do. Remarkably, this scenario appears—to my eye, at least—fully compliant with the House bill (even if the characters are a bit overstated).

    A hypothetical scenario to illustrate some of ECCA’s risks

    A ‘donor’ who benefits from ECCA’s tax shelter

    Let’s imagine a billionaire, Billy, who couldn’t care less about K-12 education but cares a whole lot about his own wealth. Billy hears about ECCA from an acquaintance who tells him about how much money Billy could save by “donating” to an SGO. Billy’s adjusted gross income (AGI) was $20 million last year. That means, according to ECCA, that he’s eligible to donate $2 million to an SGO this year (10% of his AGI).

    Let’s walk through the math for Billy’s donation. Billy is looking to give $2 million in stock shares to an SGO. He bought these shares a few years ago for $1 million and then they doubled in value. That means that Billy’s earnings are subject to long-term capital gains tax if he sells the stock. With his AGI, that would be 23.8% in federal taxes plus another 4.7% or so in state taxes (depending on where he lives). In other words, if Billy sold the stocks today and kept the funds for himself, he’d owe about $285,000 in combined federal and state taxes on his $1 million in earnings (28.5% of $1 million).

    By donating the $2 million in stock to an SGO, not only does Billy get his entire $2 million back as a tax credit; he also dodges those capital gains taxes. He’s a billionaire who is $285,000 wealthier for having made this supposed donation. (For a detailed illustration of how this works—and some nice figures—I’d recommend this piece from the Institute on Taxation and Economic Policy.)

    A scholarship-granting organization with extraordinary leeway in how to direct ECCA funds

    Now, let’s get back to that SGO. Billy’s acquaintance, Fred, lives in the same town as Billy, which is one of the wealthiest areas in the United States. In fact, Fred set up the SGO, looking to capture ECCA funds within their shared community—and, just maybe, for himself. Like Billy, Fred doesn’t particularly care about K-12 education. He does have a penchant for fraud, though, along with a strong distaste for Republicans.

    It might seem that Fred’s SGO couldn’t distribute funds to families in their ultra-wealthy area, since ECCA has income restrictions for scholarship recipients. That’s not the case. ECCA restricts eligibility to households with an income not greater than 300% of their area’s median income. In Fred and Billy’s town, with its soaring household incomes, even multimillionaire families with $500,000 in annual income are eligible. In more modest (and rural) areas, the cutoffs aren’t nearlyso high.

    So, Fred is looking to give scholarship money to some wealthy families in his hometown. Notably, ECCA doesn’t limit the amount of money that he can give to any one recipient. ECCA just requires that he provide scholarships to at least two students—who, between them, attend at least two different schools—and that he not earmark the funds for any particular student. Fred offers students $100,000 apiece for supplemental tutoring. That might seem like a lot, but, hey, this is high-end tutoring.

    A vendor with little oversight or accountability

    In fact, Fred stipulates that the funds must be spent at a new tutoring shop, High-End Tutoring, just created by his buddy, a former teacher. ECCA seems to allow that. ECCA also allows Fred to take a nice cut for himself for running the SGO: 10% of the SGO’s total receipts.

    No one really knows the arrangement that Fred and his tutoring friend have, if they have one, because there are hardly any transparency or accountability provisions in ECCA (aside from a requirement to obtain annual financial and compliance audits). We also won’t know if High-End Tutoring provides any educational value, because that’s not part of ECCA either. ECCA’s proponents have claimed there’s accountability to the SGO donors, who want to see their generous donations being put to good use. Billy, though, is enjoying his $285,000 money grab and content to leave Fred alone until it’s time for next year’s donation.

    An invitation to discriminate—and an attempt to keep local and state governments from intervening

    Fred does have one requirement of his own for High-End Tutoring that he doesn’t need to hide. High-End Tutoring isn’t going to serve any children of Republican parents. All students must complete an attestation form—stating that they and their parents are progressive—before receiving any tutoring services from this publicly funded vendor. Across town, another SGO leader is formally excluding LGBTQ+ children and children of LGBTQ+ parents from their pool of scholarship recipients.

    ECCA, in its current form, seems to allow all of this, as objectionable as it may seem. And it’s not just an issue with SGOs funding tutoring companies or other supplemental services. Similar issues could arise with private schools, especially in states without strong anti-discrimination protections.

    From hypotheticals to reality

    The scenario above might seem ridiculous or caricatured, and to some extent it probably is. But the point is, it’s allowable under the proposed legislation, and we should be realistic about how much fraud, waste, and bad behavior a program like ECCA would invite.

    Should we not expect wealthy stockowners to jump at the opportunity to exploit ECCA’s tax shelter? Is it unreasonable to think that many of these wealthy donors will look to benefit their own communities through their donations? Have we not seen bad actors creep in when governments offer large checks with hardly any accountability or strings attached?

    This isn’t some tiny, insignificant program either. This is a $5 billion federal program that, because of a “high-use calendar year” provision in ECCA, is almost certain to grow 5% annually. In fact, the cost is likely to be considerably higher than thatdue to the foregone capital gains tax revenue. That’s not quite the size of the behemoth federal K-12 programs—Title I ($18.4 billion in FY 2024) and IDEA ($15.5 billion)—but it’s not all that far off.

    And let’s be clear about cost, because ECCA certainly isn’t paid for by the contributions of generous donors. Tax credits are would-be revenue that the IRS is no longer collecting. That money is coming from somewhere else in the budget, whether it’s cuts in education spending, cuts to Medicaid or other social services, tax hikes, or increased debt.

    This bill would introduce the most significant and costliest new federal education program in decades. It has virtually no quality-control measures, transparency provisions, protections against discrimination, or evidence to suggest that it’s likely to improve educational outcomes. It’s very likely to redirect funds from poor (and rural) areas to wealthy areas.

    And, in its current form, ECCA leaves a whole lot of room for waste, fraud, and abuse.



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  • Dozens of fixes proposed to deter more mega-cases of charter school fraud

    Dozens of fixes proposed to deter more mega-cases of charter school fraud


    A multi-ethnic group of elementary age children are playing with blocks in class at their desks.

    Credit: Christopher Futcher / iStock

    Audacious, multimillion dollar scandals by two California charter school operators within the past decade exposed vulnerabilities to fraud resulting from inept and negligent oversight and inadequate auditing. A pair of inquiries into those weaknesses have concluded that several dozen actions could help spot, address and potentially deter future attempts by charter school operators to evade state laws and regulations.

    Both reports were issued within the past two months. One is a joint effort of the Legislative Analyst’s Office (LAO) and the Fiscal Crisis Management Assistance Team, a state fiscal oversight agency known as FCMAT. 

    The other is by the Anti-Fraud Task Force of the California Charter Authorizing Professionals, a nonprofit association for school districts and county offices of education. Its report reminded legislators and policymakers what’s at stake in failures of oversight: “Every theft of funds from our public schools not only harms the students, but also undermines public confidence in our public education system.” 

    A third and final report, concentrating on auditing reforms, will be released before June 30 by a multi-agency task force. Chaired by state Comptroller Malia Cohen, it was commissioned by San Diego Superior Court Judge Robert Longstreth, who presided over a jaw-dropping case of financial abuse.

    That case involved the now-defunct virtual charter school network A3 Education, which thrived because of a total breakdown of accountability systems. Its founders, Sean McManus and Jason Schrock, pleaded guilty in 2021 to a conspiracy to commit theft of public dollars, extracting $400 million in attendance-based state revenue, much of it based on phantom enrollments. They siphoned at least $50 million to a company they owned while promising services to students that were never provided. In return for serving four years on house arrest, the executives pledged to repay $37 million.

    A3 operated 19 charter schools approved by small school districts in a half-dozen counties that relied on the 1% to 3% in annual fees to balance their budgets. Collectively, the fees produced millions of dollars. The districts didn’t supervise effectively, because they lacked the capacity, expertise and, in some cases, motivation to hold charter schools accountable. 

    Big revenue for a tiny district

    Among them is Dehesa School District, with 84 students and one school in the San Diego County foothills. It chartered three A3 schools. Dehesa’s former superintendent was the only superintendent of the 11 people indicted in the A3 scandal.

    Dehesa also granted charters to two schools for Inspire Charter Schools, the other suspected perpetrator of large-scale fraud. Inspire, a home-school charter network with a dozen schools in multiple counties with, at one point, 24,380 students, directed 15% of its more than $100 million income to a corporation created by its founder, Herbert “Nick” Nichols III.

    Inspire enticed families to enroll by awarding $2,600 per student to spend on academic enrichment activities of their choice, including annual passes to Disneyland and Big Air Trampoline Park.

    An audit by FCMAT found that the records of financial expenditures and transfers of money from school to school, all run by Nichols’ central office, were so poorly kept and hard to track that FCMAT couldn’t prove fraud or other illegalities — although the deficiencies in recordkeeping increased the likelihood of them, the audit said. Nichols, who received $1,056,000 in advance pay, agreed to pay it back in a severance agreement in 2019 but declined repeated requests to speak with FCMAT, according to the audit.

    A3 and Inspire may have committed the largest-scale fraud, but they weren’t the only cases of embezzlement and probably won’t be the last. Last week, Al Muratsuchi, D-Torrance, who chairs the Assembly Education Committee, and Josh Newman, D-Fullerton, who chairs the Senate Education Committee, requested approval of a state audit of a charter school and related operations after whistleblowers told Sacramento TV news channel ABC10 about suspected fraud, waste and abuse of public funds. The audit would include examining oversight of the district authorizer, Twin Rivers Unified.

    The employees of Sacramento-based Highlands Community Charter School asserted problems that include falsified student attendance numbers, cronyism and misuse of public funds for luxury gifts for staff and students, staff bonuses, and political contributions. Highlands Community Charter enrolls adult immigrant students for career and technical courses and English language instruction.

    Reports by both LAO-FCMAT and the authorizers’ task force make similar recommendations for effective oversight, such as demanding that nonprofit charter school boards scrutinize third-party contracts for conflicts of interest and annual financial audits. In return for authorizers doing more work, the LAO-FCMAT report would raise their fees to 3% of a charter school’s Local Control Funding Formula revenue.

    The LAO-FCMAT report calls for limiting small school districts’ ability to authorize charter schools with enrollment no larger than the district’s own. It suggests creating a new entity to approve and oversee all-virtual charter schools, which currently must seek multiple distinct authorizers in many counties, complicating coherent oversight. 

    The task force calls for establishing a statewide Office of Inspector General, perhaps under the state Attorney General, to investigate and prosecute financial fraud in school districts, community colleges and charter schools. The office would have the power to issue subpoenas and prosecute.

    Demand more of charter authorizers

    Past attempts to legislate reforms broke down amid contention between school districts and charter schools’ advocates. But David Patterson, a founding member and now president of the California Charter Authorizing Professionals, said he’s optimistic that collaborative work over two years will resolve disagreements.

    He said the bulk of recommendations would not require statutory or regulatory changes and could be adopted immediately. They’d involve creating a fraud risk management program for all charter schools and charter management organizations, as well as district and county authorizers. Elements would include regularly training charter school board members and fleshing out expectations and statutory obligations for authorizers which, Patterson acknowledged, are “outmoded and insufficient.” Even some of the small authorizers “that everyone wants to pick on, deservedly so, probably met minimal requirements” under the state’s 30-year-old charter school law, he said.

    There also would be clear procedures for filing complaints of suspected fraud, including a statewide hotline, Patterson said. Currently, there are no formal channels for reporting suspected fraud. Jeff Rice, founding director of APLUS+, which advances personalized learning models for 91 member charter schools in California, said he called out Inspire for the Disneyland passes, and others complained to authorizers and county offices about illegal enrollment practices, to no avail, he said.

    ‘The San Diego County District Attorney’s Office charged A3’s founders and administrators with defrauding the state by inflating tuition revenue by purchasing children’s personal information from private and public schools and then enrolling them without families’ knowledge. FCMAT suspected Inspire did something similar by manipulating enrollments in a multitrack attendance schedule.

    Eric Premack, executive director of the Charter Schools Development Center in Sacramento, a veteran charter school adviser and advocate, put the blame on auditors and authorizers for not detecting the fraud.

    “Even the smallest authorizer spending 20 minutes in the school could have and should have found this. If it’s a brick-and-mortar school, go visit at least a couple of classrooms,” he said. “And if there’s no students in the classroom and no teaching going on, you know you have a problem. In an independent study program, go in, look at the enrollment list. And then say, ‘I want to see this kid’s work.’”

    Both reports suggest improvements in the auditing process.

    • Charter school audits are not required to extensively examine enrollment and attendance records. The LAO-FCMAT report would require an auditor to flag for the board and authorizer any monthly variation in enrollment or attendance numbers exceeding 5%. 
    • Sampling records and transactions for compliance is critical to detecting discrepancies. The standard practice is for the auditor to choose what should be sampled. But the LAO-FCMAT report said that in recent cases of fraud, the school had provided the sample. The report calls for mandating that the auditors choose. 
    • Charter schools must choose an auditor from a state-sanctioned list. But there’s no requirement that auditors have any expertise in doing school audits. That would change. Auditors on the state list would be required to take regular training in school financing and regulations.

    The anti-fraud task force and LAO-FCMAT reports focused on non-classroom-based charters because that’s where cases of fraud, including A3 and Inspire, have largely been concentrated. Non-classroom-based charters are defined as schools in which less than 80% of instruction occurs in a classroom.

    Contrary to widespread belief, few of them are strictly online schools, as the LAO and FCMAT discovered. About a quarter of the state’s 1,200 charter schools are non-classroom-based, serving 38% of charter school students. Post-COVID, the combination of hybrid schools and home-based schools that spend part of the week in school facilities is a fast-growing sector of schools. Most report they offer no virtual instruction or are primarily classroom‑based.

    Classification as a non-classroom-based charter imposes a set of requirements to qualify for full funding. Class sizes can be no larger than 25 to 1; schools must spend at least 40% of their revenue on certificated teachers and staff and 80% of their budget on instruction.  

    In a recommendation that surprised and pleased most charter advocates, the LAO-FCMAT report recommends narrowing the definition of non-classroom schools to those offering less than 50% instruction in a classroom. Schools would be able to count facilities expenses as part of instruction, and qualify for after-school funding that other schools receive.

    “We question whether a whole bunch of charter schools should have to go through the funding determination process,” said Mike Fine, FCMAT’s CEO. “The name non-classroom-based charter school is a misnomer for many schools that don’t have a virtual component, have a robust facility (operation) and a cost structure that isn’t any different from any other school.”

    In 2019, the Legislature imposed a two-year moratorium on passing new non-classroom-based charter schools, and has twice extended it. The moratorium expires in 2026.

    Fine said the idea behind the LAO-FCMAT report was to air issues and propose solutions in order to avoid another moratorium extension. “Come next year,” he said, “this will provide a foundation for a starting point of a discussion.”





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  • Strengthen auditing to curb charter school fraud, a new task force recommends

    Strengthen auditing to curb charter school fraud, a new task force recommends


    San Diego County Attorney Sumner Stephan announces in 2019 the indictment of 11 individuals affiliated with A3 Education, including founders Sean McManus and Jason Schrock, who subsequently took a plea deal.

    Credit: Office of the San Diego County District Attorney

    A court-commissioned task force formed in the aftermath of a massive fraud by an online charter school network issued recommendations Wednesday to thwart the recurrence of similar operations.

    State Controller Malia Cohen, who chaired the task force, said that the 20 recommendations for reforming the system for auditing schools should apply not only to charter schools but also school districts and county offices of education.

    The report urges significant improvement in training, selecting, overseeing and disciplining school auditors as well as an expansion of their responsibilities. 

    “With the education of our children at stake and significant state investments of taxpayer money in education, it is crucial that all schools be held to the highest level of integrity, accountability, fiscal compliance, and transparency,” Cohen wrote in an introduction to the 50-page “Audit Best Practices for Detecting and Curtailing Charter School Fraud.”

    There were multiple failures that allowed the Academics Arts and Action Education (A3) charter network of 19 schools to pilfer tens of millions of dollars in public funding. The multi-agency task force focused on strengthening the auditing process, because a system of detecting and quickly responding to possible fraud relies on effective annual reviews by professional, independent auditors, who are overseen by Cohen’s department.   

    San Diego Superior Court Judge Robert Longstreth signed an order in September 2023 establishing the multi-agency task force after observing how A3 exploited weaknesses in the auditing system. A3 fraudulently enrolled participants in its summer athletic programs into the charter school’s academic program so that it could claim average daily attendance funding, even though the students received no education services. Additionally, private schools and other programs that participated in the enrollment scheme received a portion of the state’s per-student funding while A3 pocketed the rest, according to the report.

    In 2021, Sean McManus and Jason Schrock, A3’s founders, pleaded guilty to a conspiracy to commit theft of public dollars for the phantom enrollments. In return for serving four years on house arrest, the executives agreed to repay $37 million.

    The State Controller’s Office and the San Diego County District Attorney’s Office, which prosecuted A3, led the task force. It also included divergent perspectives from the California Charter Schools Association, the California School Boards Association, and the California County Superintendents.  

    Many of the recommendations will require legislative action and additional funding to implement, as noted in the report in a section titled “Obstacles and Solutions.” While charter school advocates and district authorizers agree in principle that there’s a need for changes, they have disagreed in the past over specifics of added regulation. The report called for collaboration among those with differing perspectives.

    This is the third significant report this year that looked at the multiple breakdowns of oversight responsibility and holes in transparency laws that failed to spot flagrant violations by A3 and now-defunct Inspire Charter Schools, a home-school charter network that could not account for tens of millions of dollars in state funding.  

    The first report was a joint effort of the Legislative Analyst’s Office (LAO) and the Fiscal Crisis Management Assistance Team, a state fiscal oversight agency known as FCMAT. The second was by the anti-fraud task force of the California Charter Authorizing Professionals, a nonprofit association for school districts and county offices of education.

    Both groups made similar recommendations for stronger oversight, including demanding that nonprofit charter school boards scrutinize third-party contracts for conflicts of interest. 

    The authorizers’ task force called for establishing a statewide Office of Inspector General to investigate and prosecute financial fraud in school districts, community colleges and charter schools.

    The LAO-FCMAT report also called for limiting small school districts’ ability to authorize large-scale charter networks. Not only do they lack the knowledge and capacity to monitor complex operations, but the oversight fees they can charge, sometimes reaping millions of dollars yearly, could create an incentive to look the other way. Dehesa School District, with one school in the San Diego County foothills, chartered three A3 and two Inspire charter schools.

    The failure of an audit to catch A3’s “exponential” fluctuations in enrollment was one area that the report said needed fixing.  It recommends tracking enrollment and attendance changes monthly; had this been in place, an auditor may have identified a potential for fraud.

    Other recommendations

    Qualifying, certifying and evaluating accountants: Currently, only 22 certified public accounting firms — less than 0.1% of licensed accounting firms in California — audit 93% of school districts and charter schools, according to the report. As a result, the report stated, “The poor performance of any one CPA firm may significantly impact the quality and reliability of school audits.”  And those auditing schools have not been required to have any training specifically on auditing schools. 

    The report recommends:

    Requiring 24 hours of training on school auditing before an auditor can be listed among certified public accountants eligible for school auditing.

    Requiring the State Comptroller’s Office to do a quality review after an auditor’s first school audit.

    Adding conditions for deleting a poorly performing auditor from the state’s auditor eligibility list.

    Frequent turnover in a charter school’s auditors can be “a red flag” for a subpar auditor or a district with possible misconduct. The report recommends monitoring for these trends.

    Conflicts of interest: Some cases of charter fraud have revealed collusion between vendors with close personal ties to charter leaders, self-dealing by charter CEOs and other conflicts of interest that could lead to fraud or waste. Some boards of directors have failed in their legal responsibility to identify and prohibit them. 

    The report recommends financial disclosure statements for the top five highest-paid school employees, the 25 highest paid vendors, and disclosure statements for charter schools’ contracts with charter management organizations.

    The report reiterates a best practice that some auditors apparently did not follow: To preserve independence, an auditor should never allow a school district or charter school to determine which financial transactions and enrollments should be sampled for an audit.

    Some of the most visible cases of abuse have occurred with non-classroom based charter schools. Those are charter schools in which less than 80% of instruction occurs in person.  

    Consisting of hybrid charter schools and home schools, they comprise about a quarter of the state’s 1,300 charter schools and nearly 40% of charter school students. Exclusively online charter schools are only a small piece.

    Non-classroom-based charter schools are also increasingly popular with parents seeking scheduling flexibility and more options in their children’s education. 

    In 2019, the Legislature imposed a two-year moratorium on approving new non-classroom-based charter schools and has extended it twice.

    Thus, there will be pressure on the Legislature to consider the auditing and oversight reforms that the three reports have suggested before the moratorium ends in 2026.





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  • Financial aid fraud is growing at California’s community colleges

    Financial aid fraud is growing at California’s community colleges


    The Foothill-De Anza Community College District is one of many across the state trying to combat bad actors who enroll to steal financial aid. The district, which includes Foothill College, shown above, is now using artificial intelligence to sniff our scammers.

    Credit: Barbara Kinney

    Since the Covid-19 pandemic, California’s community colleges have been plagued by scammers who pose as students and enroll to steal financial aid — and now it’s getting even worse. 

    The state’s 116-college system has lost more than $7.5 million to financial aid fraud this year, state data shows. That’s already much higher than the colleges reported losing all of last year. Most of it is federal aid, in the form of Pell Grants intended for low-income students. 

    Colleges have increased their efforts to detect and deter the fraud through both more human interaction and automated detection. Officials believe they are getting better at doing so, but the increasing losses show that the college system is still vulnerable to scammers, who are often part of sophisticated crime rings, some overseas. 

    Community colleges have long been susceptible to fraud, since they are generally open access and usually don’t deny admission to students who meet basic requirements as the more selective University of California and California State University do. The problem was made worse by the Covid-19 pandemic. The shift to remote instruction “created fertile ground” for fraudsters, said Paul Feist, a spokesperson for the chancellor’s office overseeing California’s community colleges. The scammers wanted to get their hands on the nearly $2 billion in federal stimulus dollars available for emergency student aid available across the colleges. 

    That stimulus aid is now depleted, but the fraudsters aren’t slowing down, according to the data EdSource obtained through a public records request. In 2024, through September, community colleges in California reported disbursing more than $7.6 million in aid that they later wrote off as fraud. The data was provided to EdSource in late October, but the system did not yet have October data available.

    The $7.6 million is up from about $4.4 million that was reported lost all of last year. And that was much larger than the $2.1 million that was reported lost between September 2021 and the end of 2022. September 2021 is when the state chancellor’s office asked colleges to begin reporting monthly about application, enrollment and financial aid fraud. EdSource requested those reports via the state’s Public Records Act. In response, the state shared data on the amount of fraud reported each month but redacted the names of individual colleges. 

    Some officials attribute the latest spike in fraudulent activity to the Department of Education rolling back verification rules for the Free Application for Federal Student Aid (FAFSA), requiring colleges to verify fewer applications. Fraudsters may have seen those changes and sensed an opportunity to get their hands on aid. 

    Pretending to be legitimate students, the fraudsters apply online for admission. Some frauds are caught there, but those who successfully get admitted and enroll in classes can request financial aid, which colleges often distribute to personal bank accounts via direct deposit. 

    Some colleges, as a result, are going back to the old-fashioned method of requiring students to show up in person and prove they are real before they can become eligible for aid. Others, acknowledging the possibility of human error, are also turning to automated methods, including using artificial intelligence to detect suspicious applicants. 

    It is also likely that the colleges are more consistently reporting the fraud. When the chancellor’s office first began asking the colleges to report monthly, there was only “modest participation,” a chancellor’s office official said in a 2022 memo. Now, colleges are reporting at higher rates, though some have still not submitted their reports for months. College officials also believe they have improved at detecting fraud over the past three years.  

    Feist said it can take more than six months from when a scammer applies online for colleges “to detect, investigate and confirm” the fraud. He added that he expects the college system to have better information about the scope of the fraud by the end of this year.

    The scams can have consequences for actual students. With a finite number of seats for each course, real students are often left on waiting lists and unable to enroll in necessary classes because fraudsters are taking up space.

    For the colleges, combating the fraud is a never-ending battle. They have to constantly adapt to the fraudsters, who themselves evolve and come up with new tactics. 

    “This past year, essentially, we would think we’re a step ahead and then the next day we would be a step behind. We were always playing cat-and-mouse,” said Nicole Albo-Lopez, vice chancellor of educational programs for the Los Angeles Community College District. 

    Fraud going up

    In total, colleges since fall 2021 have reported distributing $14.2 million in financial aid that they wrote off as fraud. Federal aid has accounted for the majority of that, but colleges have also distributed more than $3 million in state and local aid to the scammers.  

    Feist noted that is a small percentage — less than 1% — of the total aid the colleges have distributed to students in that time. 

    The fraud initially spiked in 2021, when the colleges had billions of dollars available in emergency financial aid grants for students. Between March 2020 and March 2021, the federal government passed three pandemic relief bills and awarded California’s community colleges $4.4 billion, of which $1.8 billion was allocated for emergency grants. 

    The financial aid office at East Los Angeles College in Monterey Park.

    Distribution of emergency grants ended in 2023, but the fraud did not. Some colleges have reported eye-popping losses of federal aid, leading to the $7.6 million the system has lost so far this year. 

    One college, its name redacted in the data shared with EdSource, reported losing $405,395 in April, $344,296 in July and $119,262 in May. Another college lost $193,286 in April and $76,303 in June. When colleges write off aid distributions as fraud, it’s typically because the recipient stops attending classes altogether after receiving the aid.

    At the same time, dozens of colleges did not report fraud numbers for at least one month this year, raising the possibility that the actual amount of aid lost to fraud is even higher than what has been reported.

    Some officials theorized that the federal government’s relaxed FAFSA verification requirements could be playing a role. Typically, about a quarter of FAFSA applications are selected for verification, which involves the colleges verifying the information a student reports on their application. Under the new rules, colleges are now required to verify a much lower share of FAFSA applications — even lower than during the pandemic, when rules were also relaxed, according to the National Association of Student Financial Aid Administrators. 

    The changes were implemented to help colleges more quickly process aid applications, particularly after the FAFSA delays that plagued colleges and students last academic year.

    Victor DeVore, the dean of student services at the San Diego Community College District, said it is likely that the relaxed FAFSA verification led to more scams.

    “It’s letting people know that, ‘Oh look, they’re relaxing their verification rules, so now I have a better chance of trying to get some aid fraudulently,’” he said. 

    At the same time, colleges have also been have getting better at identifying the fraud. 

    This year, about 25% of applications have been flagged as possible fraud, up from 20% last year. “Part of the reason is that our systems are becoming more effective at detecting fraud, even as the attempts become more sophisticated,” Feist said.

    ‘Nobody’s trained in this’

    There are three stages of fraud: Application fraud, when scammers try to get admitted to the college; enrollment fraud, when they attempt to get a spot in a class; and financial aid fraud, when they successfully receive aid after enrolling.

    Fraudsters often target classes with no prerequisites, since those are easier to access, said Tina Vasconcellos, vice chancellor of the Peralta Community College District, which is based in Oakland and has four colleges in Alameda County.

    Spencer O’Bosky, a computer science major at Los Angeles Pierce College, tried several times in the spring to enroll in online math classes, only to see them fill up shortly after they opened for registrations. 

    When he eventually was able to enroll in one, some of the other students listed on the course roster didn’t turn in any work and were dropped as suspected scammers. 

    “I always thought I was the only one experiencing this, but then I heard about it happening a lot,” O’Bosky said. “I think it’s terrible. It stops people from being able to sign up for these classes.”

    To keep the fraudsters out, several college officials said they have turned to a simple yet effective tactic. When a student is flagged as suspicious, staff ask them to either come to campus in person or join a video meeting to prove they are a legitimate student. 

    But some still slip through the cracks, especially as scammers get more sophisticated.

    “Nobody’s trained in this. We have humans doing this all over the state, all over every state trying to figure out how to mitigate this issue that nobody’s trained for,” Vasconcellos, the Peralta vice chancellor, said.

    To reduce human error, colleges have looked for ways to automate fraud detection. 

    The state chancellor’s office last year piloted a new ID proofing system, working with the online platform ID.me to verify identities of applicants. Feist said the verification system “has been effective in helping to reduce the amount of fraud and help mitigate local workloads” but added that “bad actors continue to shift their attacks.”

    Some fraudsters now steal identities and submit the stolen but legitimate information — like a real address and real forms of identification — when applying, said Jory Hadsell, the vice chancellor of technology for the Foothill-De Anza Community College District. When the fraudster sets up direct deposit, they only need a bank account and routing number, not a name to match the one on their application. 

    Scammers also changed their approach at the San Diego district after officials there successfully started sniffing them out by detecting that they were using virtual private networks (VPNs), which create a connection between the user’s computer and a network in another location, making it appear like the fraudster is in that location. For example, one student applied with their VPN set to a Los Angeles location, but their IP address showed they were actually in China.

    Rather than VPNs, the fraudsters this past year started using burner phones, which come with a business IP address, said DeVore, adding that it’s harder to determine whether those are legitimate. “They switched up their game,” he said.

    To add another layer of fraud detection, the Foothill-De Anza district is one of two in a trial test with an artificial intelligence platform, Lightleap, to identify potential scammers by analyzing “key data and behavioral elements,” according to a report presented to the state’s board of governors this summer.

    The AI platform, for example, can identify “fraud clusters,” such as when many applications are coming from the same IP address, Hadsell said. 

    Vasconcellos, who wants to similarly use AI at the Peralta district, said she is hopeful it will become a more common fraud detection tool, both at her district and across California.

    “We just need to keep learning and keep trying to get ahead of it,” Vasconcellos added. “They keep changing, and we have to keep changing to address whatever new things, new ways they’re trying to get through.”

    Delilah Brumer, a former member of the EdSource California Student Journalism Corps, contributed reporting.





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  • Jonathan V. Last: MAHA Is a Fraud

    Jonathan V. Last: MAHA Is a Fraud


    Jonathan V. Last writes for and edits one of the liveliest and most informative sites on the Internet: The Bulwark. That is home base for a significant number of Republican Never Trumpers. In this post, he explains that Robert F. Kennedy Jr. is not only unqualified in medical issues but his ignorance puts all of us in danger.

    America has never been healthier. Going backwards is going to mean more people getting sick and dying.

    (Composite / Photos: GettyImages / Shutterstock)

    1. The Past Sucked

    I had a great conversation with Your Local Epidemiologist, Katelyn Jetelina, yesterday. It’s here if you missed it.

    As she was explaining the state of play with measles outbreaks and falling vaccination rates, I asked her if there was any analog to this moment in the history of public health. She couldn’t think of one.

    What America’s new public health establishment—by which I don’t mean actual public health experts but their dilettante conspiracist bosses—is doing is choosing to move the country backwards. Less medical research, a pull-back on life-saving vaccines, turning away from science and embracing folk medicine.

    Our new health establishment is explicit about wanting to go backwards. It’s right there on the hat: Make America Healthy Again.

    Again.

    Meaning: America used to be “healthy” and now is not.

    I’m sorry, I know we’re supposed to meet people where they are and give them a loving truth sandwich, but this is the stupidest fucking thing I’ve ever heard.

    Does anyone remember what “health” looked like in America a generation or two ago? Half the country smoked. People dropped dead at 50 on the reg. Child birth was dangerous. Seatbelts were suss. Drug use was off the charts.

    Dangerous communicable diseases were still around. Cancer was a death sentence. AIDS looked like an unstoppable tsunami.

    Food? Do remember what grocery stores looked like in 1980? Aisles of canned vegetables, processed foods, and frozen TV dinners. Fresh produce? Good luck. That section of the Acme was a shoebox.

    But that’s all anecdotal. Let’s look at the data. Because it shows—absolutely, unequivocally—that this is the healthiest period in American history.

    Let’s start with the dumbest possible metric: life expectancy.

    We’ve had a slight downtick in the last year or two largely driven by COVID. You know why a lot of people died from COVID? Because they refused to follow public health advice during the pandemic and then refused to get vaccinated once we had vaccines in hand. So it was precisely the MAHA idiocy that moved our life expectancy backward.

    Let’s zoom out and look at America compared to the rest of the developed world:

    You want to “Make America Healthy Again”? Get the fucking COVID vaccine like everyone else in the civilized world did.

    How about infant mortality? That’s another excellent marker of health in a society. Oh, look—it’s incredibly low: 5.61 deaths per 1,000 live births. This is up slightly from 2020 because, again, COVID. But it’s still a historic low.

    When do you think the golden, “healthy” past was? In 1980, the infant mortality rate was more than double what it is today (12.0). In 1960 it was more double that number (25.9).

    Real problems do exist. For instance: Access to healthcare for African-American women. The black infant mortality rate is double that of white Americans and the maternal mortality rate for African-American women has been rising sharply for a generation.

    These statistics are absolutely shameful. Yet you don’t hear a lot about them from the beef-tallow crowd, do you?

    How about infectious diseases? In 1900 half of all deaths in America were from communicable diseases. Through medical advances—especially vaccines—we got that number down to about 5 percent—until COVID. All by itself COVID accounted for 12 percent of all deaths in the United States in 2021.

    So again: If you want America to be healthy you’d do exactly the opposite of what the Trump administration is doing and urge everyone to get vaccinated.

    And while we’re talking about healthy habits: Americans don’t smoke like they used to.

    Also, forty years ago less than a fifth of people in cars used seatbelts. Today that number is well over 90 percent.

    2. The Big C

    Let’s talk about cancer. You ever feel like, “Man, people are getting cancer like crazy these days?”

    Here’s what happened. There was a huge spike in the incidence of cancer diagnoses from 1975 to 1995. Why? Two things.

    First, people were living longer and you have to die of something. Since people weren’t dying from polio, measles, and communicable diseases, they were living long enough to get cancer.

    Second, medical science developed more tools to detect cancer. Inventing effective tests and screenings means finding more incidences. Donald Trump knows this.

    So when you look at this graph the solid lines are cancer incidences. You see that they go up, and then down. But I want you to look at the dotted lines:

    The dotted lines are the cancer mortality rates. And what you see is that in the early 1990s, people started surviving cancer at higher rates even as the incidences of cancer increased. And from 1995 to 2000, as the cancer incidence rate peaked, the mortality rate fell off a cliff.

    Why?

    Because better tests = more cancer diagnoses = earlier interventions + therapeutic advances = much higher survival rates.

    The pattern we see with cancer incidence describes a lot of our health challenges today. Why do so many people get dementia or Alzheimer’s now? Because they’re surviving cancer and—again—something is going to get us eventually.

    Why so many autism diagnoses? Because 40 years ago doctors didn’t understand what they were seeing in kids who had ASD. Now they do. Once medical science understands what it’s looking at, you’re going to get more diagnoses. This isn’t hard to understand.

    Look: There are some things that have legitimately gotten worse over time. The incidence of Type 2 diabetes has increased dramatically since 1950. Some of this is linked to increasing obesity.

    What’s the answer? Diet and exercise, which you may recall Michelle Obama talking a lot about (and getting ridiculed by Republicans for her trouble). Semaglutide drugs show tremendous potential for helping curb obesity and reduce the incidence of diabetes.

    You may be surprised to hear that MAHA does not like this class of pharmaceuticals.

    So what’s going on here? Why does the “Make America Healthy Again” movement romanticize the health outcomes of the past (which were worse) and misunderstand the health outcomes of the present (which are significantly better along the most important vectors and continue to improve over time)?

    Why do people like RFK Jr. oppose medical practices that create better outcomes (vaccines; the Ozempic-class drugs)?

    I don’t know. Maybe you have a theory and can discuss it in the comments.

    But at the end of the day, the “why” doesn’t matter. What matters is the results. And the results are going to be bad.

    3. Worse Than Fraud

    Buildings used to catch on fire all the time in America. It was a serious problem. That’s why cities had as many fire stations as churches.

    Over time, we cut way down on the number of fires. We switched construction materials. We came up with safer mechanisms for delivering gas and electricity. We developed best-practices and enshrined them in building codes. The big thing was the invention of the sprinkler system.

    The result was that even as the total number of buildings in America kept growing, the annual number of structure fires kept going down. Dramatically.

    Imagine a movement that looked at this data and decided America didn’t need sprinkler systems anymore.

    Modern building costs are too high. There’s too much red tape. We spend billions on sprinkler systems every year that are never used. Let’s go back to the old ways. Make Buildings Great Again.

    After all, we don’t have to worry about fires anymore.

    The MAHA movement is like that. Except that while trying to get rid of sprinkler systems and building codes, they are also walking around carelessly tossing lit matches.

    These people aren’t just frauds. They’re arsonists. And right now they run the U.S. government, the CDC, the NIH, and the fire department, too.



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