Findings for Recovery of $117 Million-Plus Issued Against Defunct Electronic Classroom of Tomorrow



Columbus – Findings for recovery of more than $117 million were issued Tuesday against the defunct Electronic Classroom of Tomorrow (ECOT) for public funds it improperly received during its final years of operation, Auditor of State Keith Faber announced.

The total includes $106,584,728 owed to the Ohio Department of Education (ODE) and $10,658,473 owed to the Ohio Attorney General’s Office – funds that were paid to ECOT by ODE in fiscal years 2016, 2017, and 2018 for students of the online charter school whose total hours of attendance could not be confirmed.

ECOT was formed by William Lager in 2000 and became the largest online charter school in the state. Lager also founded Altair Learning Management I Inc., a private company contracted by ECOT to manage the school, and IQ Innovations LLC, a separate private company contracted by ECOT to provide learning management systems and other services.

Community schools, like ECOT, receive state funding under a formula that takes into account the number of students enrolled and the time they spend in classroom and learning activities. ECOT operated from early 2000 until 2018, when it was suspended and shut down.

According to state auditors, “ODE determined ECOT was not entitled to a portion of the funding it had received in fiscal years 2016 and 2017, as well as none of the funding received in fiscal 2018.”

The Auditor of State’s Office began discussions with ECOT officials in the spring of 2018, prior to the school’s closure, in preparation for a final audit. Reporting delays, incomplete and inaccurate financial statements, and other issues hindered auditors’ work. The final report included multiple findings and questioned costs that were not ultimately corrected.

Tuesday’s findings for recovery included $13,055,120 against IQ Innovations and $3,263,780 against Altair Learning Management I Inc. in money improperly paid to both by ECOT.

Legal proceedings against ECOT, Lager, and others involved continue. In early May, a Franklin County Common Pleas Judge issued judgments against IQ Innovations, Altair Learning Management I ,and another firm, Third Wave Communications, totaling more than $161.6 million. Additionally, “A trial is necessary to determine” Lager’s liability, the court ruled.

The Ohio Attorney General’s Office reached a settlement in June 2019 with the Education Service Center of Lake Erie West (ESCLEW) in the amount of $878,099, representing the per-pupil fund share it received as ECOT’s sponsor.