Former Pasadena Schools Superintendent Agrees to Plead Guilty in $44 Million Indiana Fraud Case

Percy Clark, former superintendent of the Pasadena Unified School District, has agreed to plead guilty to conspiracy to commit wire fraud in a case that federal prosecutors say defrauded the Indiana Department of Education of more than $44 million.

Clark, who led PUSD from 2001 to 2006, entered into a plea agreement this week, admitting to his role in submitting inflated student enrollment numbers while serving as superintendent of Indiana Virtual School (IVS) and Indiana Virtual Pathways Academy (IVPA), according to a story that appeared in pro.stateaffairs.com.

On Wednesday, a spokesperson with the US Attorney’s Office for the Southern District of Kentucky confirmed the plea deal when contacted by Pasadena Now.

The false data allowed the schools to receive millions in state funding for students who never attended classes, according to the pro.stateaffairs.com story.

The scheme reportedly occurred between 2016 and 2018 and involved enrolling or re-enrolling thousands of students without verifying participation, and reactivating inactive students ahead of the state’s official enrollment count days.

According to the indictment, Clark and co-defendant Phillip Holden also allegedly fired an employee who attempted to alert state officials to the irregularities.

Clark was indicted on 28 federal counts: one count of conspiracy to commit wire fraud, 16 counts of wire fraud, and 11 counts of money laundering which could have netted him more than 20 years in prison.

Christopher King, has already pleaded guilty. A fourth defendant, school founder Thomas Stoughton Sr., faces similar charges and additional counts of money laundering.

Prosecutors allege the virtual schools funneled state funds through for-profit companies owned by Stoughton, ultimately paying out millions to Stoughton, members of his family, Clark, King, and others.

The Indiana State Board of Accounts referred the matter to the FBI, U.S. Department of Education Inspector General, Indiana State Police, and the Indiana Office of Inspector General following a 2019 audit. In addition to the criminal case, Clark is named in a 2021 civil lawsuit filed by the Indiana Attorney General’s Office seeking to recover more than $154 million in misappropriated public funds.