On Sept. 14, 2018, the day state officials checked enrollment to calculate school funding, two online charter schools claimed about 4,530 students that were not attending, according to federal prosecutors.
Thomas Stoughton, who founded Indiana Virtual School, and Phillip Holden, who was its director, were set to go on trial together Tuesday, Oct. 27 in federal court in Indianapolis. The two faced charges of conspiracy and wire fraud in a scheme prosecutors say cost Indiana more than $44 million.
On Oct. 26, Stoughton pleaded guilty as charged, according to courtroom minutes.
Holden will now be on trial by himself. In May, Holden’s attorney, Jon Little, told WFYI, “My client Mr. Holden is innocent.” An attorney for Stoughton could not immediately be reached.
Here is what to know about the trial, the online schools at the center of it and the state’s efforts to recover the money
Where is the trial?
The trial for Holden — which has been rescheduled four times — is set to begin at 9 a.m. Tuesday, Oct. 27 in courtroom 344 of the U.S. Courthouse, 46 E. Ohio St..
U.S. District Judge Richard L. Young is presiding.
Who is on trial?
A federal grand jury indicted Stoughton and Holden in January 2024 along with Percy Clark, the schools’ superintendent. Clark agreed to plead guilty in June 2025.
According to the indictment, Holden was director of Indiana Virtual School and responsible for areas including enrollment and attendance. He faces 17 counts of wire fraud and a count of conspiracy to commit wire fraud.
Stoughton owned or controlled the schools and several related companies. He pleaded guilty to 76 counts: conspiracy to commit wire fraud, 17 counts of wire fraud and 58 counts of money laundering.
What was Indiana Virtual School?
Indiana Virtual School and Indiana Virtual Pathways Academy were online, public charter schools. They enrolled students from across Indiana and claimed more than 7,000 students at their peak, WFYI previously reported.
Daleville Community Schools, a small rural district in Delaware County, authorized Indiana Virtual School in 2011 and Indiana Virtual Pathways Academy in 2017, and was responsible for oversight.
Prosecutors allege the schools used state money to pay for-profit companies controlled by Stoughton.
Chalkbeat Indiana reported in 2017 that Indiana Virtual School paid a company run by Stoughton millions of dollars and had one teacher for every 222 students.
When did the schools close?
The schools shut down in late August 2019 after Daleville Community Schools revoked the charters, board members overseeing the schools resigned and a federal grand jury began looking into the schools. Indiana officials had already alleged the schools received more than $40 million in state funds by exaggerating student enrollment.
In February 2020, the Indiana State Board of Accounts released a report that the schools made improper payments of more than $85 million in public funds to multiple companies linked to school officials and their family members.
Is the state trying to get back the money?
Indiana is trying to claw back more than $154 million from individuals and businesses with ties to Indiana Virtual School.
Attorney General Todd Rokita sued the schools, multiple vendors that provided services to them, and 14 individuals with ties to the schools or the companies that were inappropriately paid.
The civil case has not been scheduled for trial.
What is next for Clark and Stoughton?
Clark will be sentenced Jan. 14, 2027. Stoughton’s sentencing is set for March 11, 2027.
Eric Weddle is WFYI's education editor. Contact Eric at eweddle@wfyi.org or follow him on X at @ericweddle
