OKLAHOMA CITY — When two tech-savvy Oklahoma men launched their vision for an innovative charter school in 2011 that students could attend from home, the timing was perfect.
Republicans had just extended their majorities in the Legislature, taken control of every elected statewide office and installed a new state superintendent of public instruction who was eager to embrace new ideas.
Epic Charter Schools, which has no schoolhouse and serves pre-kindergarten through 12th grade students who attend online, has exploded in growth in the eight years since it launched and now boasts an enrollment that rivals the biggest districts in Oklahoma. Last year, the school reported more than 21,000 students and received nearly $113 million in state funding. But those numbers are now coming under scrutiny from state investigators who revealed last month they are looking into whether the school's two founders, David Chaney and Ben Harris, artificially inflated the number of students and pocketed millions of dollars illegally.
While the bulk of state money pays for teacher salaries and benefits at Epic, Chaney and Harris own a for-profit company that manages the school for 10% of its overall revenue and have made millions of dollars on the endeavor. With a glitzy advertising campaign, the school attracts more students every year.
Chaney and Harris also opened up their wallets to prominent politicians, donating more than $160,000 almost entirely to Republican candidates in the last two election cycles, including the governor, state superintendent and attorney general. Epic also operates in California, where it has more than 500 students from five counties. A contract in Texas was put on hold because of the ongoing probe in Oklahoma.
No charges have been filed, but an Oklahoma State Bureau of Investigation agent wrote in an affidavit for a search warrant that the men recruited and enrolled "ghost students" who received little to no instruction. Many of these students were home-schooled or attended private school, but they were recruited by Chaney and Harris to also enroll in Epic, the investigator wrote.
Neither Chaney nor Harris responded to requests for an interview, but they released a statement in which they denied wrongdoing and disputed the allegations.
"We are confident the facts will once again vindicate our team," the statement read.
The "once again" refers to a fraud investigation of Epic that the OSBI started several years ago at the behest of then-Gov. Mary Fallin. Findings were referred to the attorney general's office, but no charges were brought. A spokesman for Attorney General Mike Hunter said the case never was closed.
Epic is hardly the only online charter school to have found itself in hot water. In a similar case this year in California, 11 people were indicted on multiple criminal charges related to a series of charter schools that prosecutors allege stole more than $50 million by creating phantom institutions that enrolled students, sometimes without their knowledge. A charter school management company, A3 Education, is at the center of those allegations.
In 2016, a Virginia-based for-profit company that operated online charter schools in California, K12 Inc., reached a $168.5 million settlement with the state over attendance and academic progress records.
Last year in Ohio, the attorney general sued the founder and leaders of what had been that state's largest online charter school, aiming to recoup millions of dollars after it shut down mid-school year amid a dispute over public funding and how students were counted.
And in Indiana, education officials want to recover about $40 million from two online charter schools, after an audit found they inflated enrollment figures.
"Public education laws in this country were not written to contemplate kids attending school on the internet," said Greg Richmond, chief executive officer of the National Association of Charter School Authorizers.
In many states, laws governing virtual charter schools are not clear, a problem often compounded by understaffed oversight entities and confusion about who enforces enrollment and attendance laws, Richmond said.
"When you put all that together, someone who is ill-intentioned can drive a truck through that, and we've seen that happen now in several states," he said. "And because they are virtual schools, they're not misappropriating funds for 300 or 400 kids. It can be 3,000 or 4,000 kids, so the scale is at a whole other level compared to a brick-and-mortar school."
The rapid growth of virtual charter schools in Oklahoma reflects a national trend, with more than 430,000 students nationwide enrolled in 501 full-time virtual schools and 300 blended schools that mix in some traditional classroom time, according to a May study by the National Education Policy Center. Virtual schools operated by for-profit entities were more than four times as large as other virtual schools, the study noted.
The study found that students in district-operated virtual schools performed far better than charter-operated schools and recommended states slow or stop the growth of virtual charter schools, reduce student-to-teacher ratios and sanction schools that perform poorly.
Charter schools, which are publicly funded but exempt from most government regulations, have become increasingly popular in recent years, particularly among Republicans, as a way to provide more alternatives to traditional public schools.
How virtual charter schools stack up against traditional public schools is a mixed bag. An analysis of Epic's student performance released last year shows that students at some grade levels exceeded the statewide averages in math and English, but that the school's four-year graduation rate had been less than half the statewide average over the last few years.
In Oklahoma, lawmakers plan to explore the issue before next year's legislative session, and the state's new Republican governor has ordered an investigative audit of the school and related entities.
"I think this was a foreseeable crisis, and it came from a lack of preparation and planning in the initial legislation," said state Rep. John Waldron, a Democrat and public school teacher elected to the state House last year. "We didn't put the right procedures in place to monitor things, and it's raised inevitable questions."