K12 Inc. for profit charter school operator pays $160 million on alleged misleading ads touting student academic progress

K12 Inc, a Virgina based for profit publicly traded company,will pay $160 million debt relief to its 14 affiliated nonprofit schools known as the California Virtual Academies over alleged violations of California’s false claims, false advertising and unfair competition laws. The Attorney General’s Office alleged that K12 and the CAVA Schools it operates in California misled parents to induce them to enroll their children in K12 schools by publishing misleading advertisements about students’ academic progress, parent satisfaction, their graduates’ eligibility for University of California and California State University admission, class sizes, the individualized and flexible nature of their instruction, hidden costs and the quality of the materials provided to students.In addition, the Attorney General’s office alleged that K12 and its affiliated schools submitted inflated student attendance numbers and collected more dollars in state funding from the California Department of Education than they were entitled to.According to a whistle blower, K12 allegedly counted a student logging on for as little as one minute as a full day of attendance, wasting taxpayer dollars and harming students by depriving them of a full day of high-quality academic instruction.Finally, the Attorney General’s office alleged that K12 and its employees influenced nonprofit online charter schools to enter into unfavorable contracts that put them deep in a financial hole.

The Bureau of Children’s Justice and False Claims Unit of the California Department of Justice conducted the investigation into K12’s practices.

As part of the settlement, which is subject to court approval, K12 will provide about $160 million in debt relief to the nonprofit schools it manages—“balanced budget credits” that the schools accrued as a result of the fee structure K12 used in its contracts—and will pay $8.5 million in settlement of all claims.

“The K12 curriculum used by Flex includes a robust catalog of core and elective courses, with over 200 choices, as well many more electives than most schools in the areas of art, science, history, business/career, and technology,” according to SV Flex staff.

In its settlement, K12 has also agreed to implement significant reforms of its contracts with the CAVA Schools, undergo independent reviews of its services for students with disabilities, ensure accuracy of all advertisements, provide teachers with sufficient information and training to prevent improper claiming of attendance dollars and change policies and practices to prevent the kinds of conduct that led to this investigation and agreement.

 

Jeffrey Newman represents whistleblowers