California Reaches Settlement With K12 Over False Claims Allegations
The online charter-school operator was accused of violating advertising and competition rules
Updated July 8, 2016 6:34 p.m. ET
California Attorney General Kamala Harris said Friday her office reached a $168.5 million settlement with K12 Inc.,
a remote-learning, charter-school operator that was accused of violating advertising and competition rules.
The settlement also covered 14 nonprofit schools known as the California Virtual Academies, or CAVA schools, affiliated with K12. The company manages 15 nonprofit virtual charter schools throughout California serving about 13,000 K-12 students, the attorney general said in a press release announcing the settlement.
As part of the agreement, the attorney general’s office maintains that K12 will forgive about $160 million in debt accrued by the nonprofit schools it manages, which was a result of the fee structure in the K12 contract. The company also will pay $8.5 million to address all claims.
The attorney general’s office alleged that K12 and the CAVA Schools published misleading advertisements about students’ academic progress, class sizes and hidden costs, among other aspects of the schooling.
The attorney general’s office added that authorities were informed by a whistleblower that K12 inflated attendance figures to collect more state funding than was due.
K12 said in response that the attorney general’s office “mischaracterized” the settlement and the company added that it has made no admission of wrongdoing. According to the Herndon, Va., company’s statement, the $168.5 million figure cited by California authorities was “flat wrong.” The company said that the settlement was only $2.5 million.
“K12 will be making an $8.5 million payment to the state,” it said. “Of that amount, $6.0 million is to defray the cost to taxpayers of the Attorney General’s investigation, and $2.5M are settlement costs related to the separate private lawsuit alleging misreporting of attendance at the CAVA schools.”
K12 said the implication that it was paid $160 million by the California schools is false.
“CAVA schools have not paid that money to K12 and K12 never expected to receive it given California’s funding environment,” said Stuart Udell, K12’s chief executive.
A representative for the attorney general’s office said it stood by its earlier statement.
California authorities also said the agreement with K12 calls for the company to reform its contracts, undergo independent reviews of its services for students with disabilities and ensure accuracy of all advertisements, among other changes.
Write to Ezequiel Minaya at email@example.com
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