Ex-Director Goes On Trial In $44M School Case

Phillip Holden, former director of Indiana Virtual School, goes on trial Tuesday morning in federal court in Indianapolis on charges tied to a scheme prosecutors say cost Indiana more than $44 million. Opening statements are set for 9 a.m. in courtroom 344 of the U.S. Courthouse at 46 E. Ohio St.

The case had been scheduled as a joint trial for Holden and Thomas Stoughton, who founded Indiana Virtual School. Stoughton entered a guilty plea Oct. 26 to conspiracy to commit wire fraud, 17 counts of wire fraud and 58 counts of money laundering, according to courtroom minutes. Holden will stand alone. Holden faces 17 counts of wire fraud and one count of conspiracy to commit wire fraud. His attorney, Jon Little, said in May that his client is innocent. U.S. District Judge Richard L. Young is presiding. The trial date has been reset four times.

Federal prosecutors say the trouble began with enrollment numbers. On Sept. 14, 2018, the day state officials checked enrollment to calculate school funding, Indiana Virtual School and Indiana Virtual Pathways Academy reported about 4,530 students who were not attending, according to the indictment. Both were online public charter schools. At their peak they claimed more than 7,000 students. Daleville Community Schools, a rural district in Delaware County, authorized Indiana Virtual School in 2011 and Indiana Virtual Pathways Academy in 2017 and oversaw their operations. Prosecutors allege the schools used state money to pay for-profit companies controlled by Stoughton.

The schools closed in late August 2019 after Daleville Community Schools revoked their charters, board members resigned and a federal grand jury opened an investigation. Indiana officials had already alleged the schools collected more than $40 million in state funds by inflating enrollment. In February 2020, the Indiana State Board of Accounts reported the schools made improper payments of more than $85 million in public funds to companies tied to school officials and their family members.

Indiana is pursuing more than $154 million from people and businesses connected to the schools. Attorney General Todd Rokita sued the schools, vendors that serviced them and 14 individuals tied to the schools or the companies that received payments. That civil case has no trial date. A federal grand jury indicted Stoughton, Holden and Percy Clark, the schools' superintendent, in January 2024. Clark agreed to plead guilty in June 2025.

Sentencing dates are already on the calendar. Clark is scheduled for Jan. 14, 2027, and Stoughton for March 11, 2027.