Nation's Largest Virtual Charter School Provider Sued Over Stock Deals

I have made no secret here about my skepticism of full-time online education for elementary- and secondary-age students. My skepticism has done nothing to stem the on-rushing tide of virtual charters that are spreading across the nation like a bad case of impetigo. The charter school movement is so leery of having their brand besmirched that they are increasingly trying to distance themselves from the virtual charter industry. Colorado Virtual Academy was recently in such bad shape performance-wise that they revealed plans to transfer low scoring students to a sister virtual charter with a different name so as to rescue the name of Colorado Virtual Academy. So even a miserable virtual charter is attempting to distance itself from itself.

At the top of the heap of suspect virtual charter school providers sits K12 Inc. of Herndon, Virginia. K12 Inc has been run since its inception by Ron Packard, a former banker with no record of having ever managed a successful education venture. K12 Inc currently operates in more than 30 states with more than 100,000 students. Of course, enrollment figures are a moving target since the turnover in enrolled students in a particular grade can reach almost 100% in a single year.

Now a new federal lawsuit accuses the K12 Inc. of reporting overly positive public statements during 2013 and that K12 CEO Ron Packard, who resigned in January, sold millions of dollars of LRN stock just prior to the true story of K12 Inc's poor performance becoming public knowledge. Packard made almost $6.5 million in the stock deals. Later after company targets for enrollments and revenues were hugely missed, K12 Inc stock fell by almost 40%. Lawyers for K12 Inc deny very hint of wrong doing. Previously, K12 Inc had settled with a state teachers retirement system that claimed that K12 Inc had reported misleading information resulting in a large loss for the retirement system. That payout to the retirement system approached $7 million.

If Americans want public education to be privatized, then they must be prepared to deal with what occasionally happens in private companies.