Former Athens, Limestone superintendents indicted for virtual-education fraud

Feb. 24—The former superintendents of Athens City Schools and Limestone County Schools are among six people named in a federal indictment that accuses them of fraudulently enrolling private school students in public virtual schools and receiving state education funds for their personal use.

A federal grand jury indicted William Lee "Trey" Holladay III, 56, of Athens, the former Athens City superintendent, and former Limestone County Schools superintendent Thomas Michael Sisk, 55, of Toney, along with two others with ties to Athens City Schools.

The 80-page indictment accuses the defendants of conspiring to fraudulently enroll students in Athens Renaissance School and Limestone County Virtual School. The defendants falsely inflated the systems' enrollment numbers in reports to the Alabama State Department of Education, according to the indictment.

As a result, the districts received payments from Alabama's Education Trust Fund as if the students actually attended public schools, according to the indictment, and the defendants then kept some of that money for their personal use.

Others indicted are: Deborah Irby Holladay, William Richard Carter Jr., David Webb Tutt and Gregory "Greg" Earl Corkren. Deborah Holladay, 57, Holladay's wife, retired in 2017 as a teacher in the school district and Carter, 45, is currently Athens City Schools' director of planning. He was previously director of innovative programs and principal of Athens High School. Corkren, 56, of Tuscaloosa, and Tutt, 61, of Uniontown, are both longtime friends of Trey Holladay, according to the indictment.

All six defendants are charged with conspiring to commit mail and wire fraud. Trey Holladay, Carter and Corkren are charged with aggravated identity theft for allegedly obtaining confidential student information to assist in the conspiracy.

The defendants on Tuesday appeared in court after being indicted on the charges, U.S. Attorney Louis V. Franklin Sr. said in a Montgomery news conference joined by representatives of the FBI, the U.S. Department of Education's Office of Inspector General and others.

The defendants skimmed the state money through direct cash payments and payments to third-party contractors owned by some of the co-conspirators, prosecutors alleged.

According to the indictment, the defendants obtained student identities to use in their scheme from various private schools located across the state, particularly private schools in the Black Belt region.

The defendants offered the private schools inducements — including computers, direct payments and access to online curriculum — to persuade them to share their students' academic records and personal identifying information with the public school districts so the information could be used to inflate enrollment numbers provided to the State Department of Education, according to the indictment.

During the school years that the scheme allegedly occurred — 2016-2017 and 2017-2018 — the private school students and parents had little to no connection with the public school districts in which they were supposedly enrolled, according to the indictment. The private school parents continued to pay tuition to the private schools and the students continued to attend the brick-and-mortar private schools each day and received instruction from the private schools' employees, prosecutors alleged.

During this time, the state reimbursed the Athens City and Limestone County school districts for the cost of educating these private school students, according to authorities.

Based on the allegations in the indictments, the overpayment from the state to the Athens district would have been at least $5.8 million and the attempted overpayment from the state to Limestone schools would have been at least another $1 million.

Athens Renaissance School is a virtual and blended K-12 school operated by Athens City Schools, and the county's program is the Limestone County Virtual School.

Assistant U.S. Attorney Jonathan Ross said the case was under investigation for "at least two years," but would not say how the investigation developed.

The indictment further charges that the defendants' efforts to conceal the fraud from the state included creating fake report cards, manufacturing false addresses for the students of the private schools who lived outside of Alabama and submitting falsified course completion reports to the State Department of Education.

If convicted of the conspiracy charge, each defendant faces a maximum sentence of five years in prison, monetary penalties and restitution. If convicted of wire or mail fraud, the defendants face a maximum sentence of 20 years in prison, monetary penalties and restitution.

Any defendant convicted of aggravated identity theft could receive a mandatory consecutive two-year sentence on each count.

"The money Alabama sets aside for public education should be used for exactly that — educating the students of our public schools," Franklin said. "The defendants in this case prioritized their own profits over the education needs of our students. In doing so, they stole children and parents' identities and bribed administrators of private schools."

Alabama State Superintendent Eric Mackey also attended Tuesday's news conference.

"Funds allocated for education should be spent to educate our public school students," Mackey said. "However, over the course of several years, the individuals named in the indictment betrayed the trust" of citizens, students, parents and other teachers and administrators.

Alleged money transfers

Among several allegations in the indictment, Corkren made transfers from the account of Educational Opportunities and Management LLC, of which he was the sole member, to his own personal account. Corkren on multiple occasions gave cash to Holladay at Holladay's request and also gave money to Carter, the indictment alleges. Corkren also paid for vehicle repairs for the Holladays' children, the indictment claims.

Also, from March through July 2017, Corkren made payments from an Educational Opportunities account to Tutt Educational Services, of which Tutt was the sole member, according to the indictment. These payments exceeded $20,000. Tutt in turn made payments to Sage Professional Development LLC, solely owned by Deborah Holladay, according to the indictment.

The indictment further states that Corkren wrote a check in January 2017, drawn on an Educational Opportunities account, payable to "Charity A," a charitable organization not identified in court documents. The check's value was about $15,000, according to the indictment, and, later that month, Charity A, at Sisk's direction, wired about $13,000 from its account to a personal account of Sisk's.

The Holladays denied the allegations in a statement released by their lawyer, Joe Espy III.

"We are a family of teachers and coaches," they said. "There is absolutely no way that we would do anything detrimental to the school system. The charges against us are unfounded and will be vigorously defended."

Holladay settlement: $250,000

Limestone County Schools said in a statement that it learned Tuesday that its "involvement with a virtual school program during the 2016-2017 school year" was included in the indictment.

"While the school system was mentioned in the indictment brought in the United States District Court for the Middle District of Alabama, the indictment does not name the Limestone County Board of Education or anyone currently involved with Limestone County Schools as defendants," Superintendent Randy Shearouse said in the statement.

"Moving forward, we will be a transparent and accountable school system which provides the best educational experience we can for our students," Shearouse said.

According to the indictment, Holladay met with the state superintendent and other ALSDE officials in March 2016 and discussed the practice of enrolling private school students in Athens Renaissance and then counting those students in the district's average daily membership. One state education department official raised concerns about the practice.

The Athens City Board of Education placed Holladay on paid administrative leave, at his request, on June 13, two days after the FBI confirmed its agents were at his Athens home as part of a law enforcement action. Assistant Superintendent Beth Patton was appointed acting superintendent.

On Oct. 23, the school board voted on a separation agreement with Holladay, with the system negotiating a settlement payment of $250,000 for Holladay, who had been the superintendent since 2013.

On Dec. 8, the Athens City school board voted to name interim superintendent Patton the system's new superintendent.

Sisk, the superintendent of Limestone County Schools since 2012, left the Limestone County district at the end of October 2019 to accept an offer to be director of schools with Bristol Tennessee City Schools. He is no longer in that position.

— marian.accardi@decaturdaily.com or 256-340-2438. Twitter @DD_MAccardi.