Explosive report finds $225M in alleged K-12 education fraud amid Trump's crackdown: 'Especially hideous'
FIRST ON FOX: A coalition of state financial officers said it uncovered roughly $225 million in alleged fraud across America’s schools over the past six years, identifying nearly 90 cases involving embezzlement, fake invoices, inflated enrollment, bid-rigging and kickbacks.
In a new report obtained exclusively by Fox News Digital, the State Financial Officers Foundation (SFOF) and Open the Books analyzed every Education Department Office of Inspector General (OIG) Semiannual Report to Congress issued between Oct. 1, 2019, and March 31, 2026, revealing alleged fraud across 24 states and Puerto Rico.
"All fraud is harmful, but defrauding education dollars meant to help kids learn and succeed is especially hideous," SFOF CEO OJ Oleka said in a statement to Fox News Digital.
"The findings in this report should alarm every family, teacher, and civic leader, especially since they only scratch the surface of the problem. The state financial officers courageously tracking every school dollar abused historically have had a bloated federal education bureaucracy only make their job harder."
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The findings come as the Trump administration prioritizes cracking down on government fraud, with Vice President JD Vance leading a nationwide "War on Fraud," raising fresh questions about oversight of federal education spending. About $67 million was ordered to be repaid through court rulings or settlements, though it's unclear how much has actually been recovered.
Oleka said the report is a reminder that state oversight has "never mattered more."
Only three of the nation's 20 largest federally funded school districts appeared in OIG records, according to the report. The remaining 17 were absent, while federal investigations targeted dozens of smaller districts, charter schools, online schools and education programs, highlighting potential gaps in federal oversight.
"With that in mind, stronger oversight of federal education dollars is more than some bureaucratic exercise — it is an economic and moral imperative," the report said. "Families deserve assurance that the public institutions meant to serve their children are not being looted by the very officials entrusted to lead them."
Open the Books CEO John Hart said the alleged fraud "hits us where it hurts most," because it shortchanges "America's future leaders," adding that in one case, the per-student fraud loss was enough to fund a semester at a charter school.
"These schemes within public schools arguably hit us where it hurts most: America’s future leaders," Hart said. "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's largest cases included allegations that two now-closed Indiana online charter schools received $44 million in excess funding by inflating enrollment and that a Puerto Rico tutoring company obtained $24 million by billing for services never provided. In Florida, a Broward County Public Schools information officer allegedly steered $17 million in contracts to a friend's business, bypassing competitive bidding while personally profiting from the deals.
In Texas, former Houston Independent School District Chief Operating Officer Brian Busby and contractor Anthony Hutchison allegedly orchestrated a fraud scheme of more than $6 million, involving school construction and grounds maintenance contracts in exchange for cash bribes and hundreds of thousands of dollars in home renovations.
A federal jury found Busby and Hutchison guilty of conspiracy, bribery, filing false tax returns, and witness tampering, with Hutchison also convicted on seven wire fraud counts, according to the U.S. Attorney's Office for the Southern District of Texas.
"Bureaucratic bloat, insider dealing, and poor oversight prompted Governor Abbott and the Texas Education Agency to intervene in HISD and appoint new leadership," HISD Superintendent Mike Miles told Fox News Digital. "School funding was being squandered, the quality of schools had deteriorated, and the majority of students' education was being neglected. That is no longer the case. 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."
The report makes the case the alleged fraud carried a direct cost for students in smaller school districts and that the true cost is likely even higher because not all fraud is detected, investigated or prosecuted.
California accounted for two of the report's most costly cases.
Students at the now-closed Community Preparatory Academy charter school lost about $9,090 per student after the school's head used $3 million in taxpayer funds for personal travel, restaurants, online shopping and private school tuition for her children, according to the report. In Magnolia School District, students lost about $3,553 per student after a former fiscal services director allegedly embezzled nearly $16.7 million to buy a luxury home, car and designer goods.
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Additionally, students in West Virginia's Boone County Schools lost about $1,096 per student after a former maintenance director stole $3.4 million through fraudulent invoices for janitorial and custodial supplies that were never delivered, using the proceeds to buy vehicles, equipment and make improvements to his home.
The report also cited Chicago Public Schools, which agreed to return about $1 million in federal grant funding after an OIG review found the district could not adequately verify student eligibility for an Indian Education grant program.
Fox News Digital reached out to Broward County Public Schools, Chicago Public Schools, Magnolia School District and Boone County Schools for comment.
Alleigh Marré, executive director of the American Parents Coalition, said the report "highlights parents' worst fears."
"This is why parents need to have a seat at the table to ensure their children are receiving the best education possible and schools are not wasting taxpayer dollars on noneducation-based materials," Marré said.
The report concluded that "every step must be taken to unwind the enormous bureaucracy and spending" by returning education to the state and local level.
"Not only is that in keeping with the founders’ vision for a limited Executive Branch, but state and local officials are much better equipped to understand the needs of their communities, find efficiencies, innovate for better student outcomes and keep foxes out of the proverbial henhouse," the report said.
Department Spokesperson Ellen Keast told Fox News Digital that "rooting out waste, fraud, and abuse across the government is a priority for the Trump-Vance Administration."
"Secretary McMahon is proud to serve on the Vice President’s Task Force to Eliminate Fraud and remains committed to delivering lasting results for American students and taxpayers – including nearly $2 billion in taxpayer savings to date.," Keast said. "Misuse of taxpayer funds became widespread under the previous Administration, which is why addressing it is a top priority."