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3 Arizona Education Department employees indicted in $600,000 voucher fraud

A state grand jury indicted five people, including three former employees of the Arizona Department of Education, for allegedly defrauding the state’s school voucher program.

Attorney General Kris Mayes accused the individuals of forging documents to fraudulently sign up 17 children for the Empowerment Scholarship Account program, including five children that Mayes said do not exist. 

“To put it simply, they created ghost students with forged birth certificates, children that didn’t exist, and gave them fake disability diagnoses that would make them eligible for larger funding amounts,” Mayes said.

The attorney general accused Delores Sweet, Dorrian Jones and Jennifer Lopez — who were all Department of Education employees working on the voucher program — of then approving more than $600,000 in fraudulent requests they submitted on behalf of the children who were improperly enrolled in the program.

They three face dozens of felony charges, including conspiracy, forgery and money laundering. Sweet’s two adult children, Jadakah Johnson and Raymond Johnson Jr., also face charges in the case.

Children enrolled in the ESA program receive a median annual voucher of $7,400 to pay for educational expenses. But some students, including those with disabilities, receive much higher amounts due to the increased cost to educate those children.

According to Department of Education data, hundreds of students are approved to receive over $35,000 annually in ESA funding.

All three former employees facing charges worked under former Superintendent of Public Instruction Kathy Hoffman, a Democrat, and current Superintendent Tom Horne, a Republican. But Mayes said she believes the fraud ramped up in early 2023, following Horne’s election, and after the expanded ESA program went into effect.

Employees worked under 2 superintendents

“The ghost students I mentioned earlier were actually accepted into the program in early 2023,” Mayes said. “It is possible fraud was occurring prior to that point, but we believe it ramped up really at the beginning of 2023.”

The indictment alleges that the fraud began as early as October 2021 — the date when the first real child involved in the alleged fraudulent activity was enrolled in the voucher program. 

Horne and House Speaker Ben Toma (R-Peoria), who sponsored the bill that expanded the ESA program, pinned the blame on Hoffman.

“The three employees involved were hired by my Democrat predecessor and were fired by me,” Horne said.

Mayes said a credit union flagging unusual activity, not the Department of Education, brought the case to her attention, and the three employees were not fired until her office began its investigation. But Horne partially disputed that statement, saying his office first noticed alleged criminal activity by Jones and Lopez and notified the attorney general.

John Ward, Horne’s ESA director, said the AG’s Office found out about Sweet’s activities from a credit union. 

“As we were assembling documentation that the Attorney General's Office had requested regarding Delores Sweet, we just started to take a holistic look at some of the other employees within our program and we started to realize there were some anomalies with these two,” Ward said. 

Mayes said the case is indicative of a failure by the Republican-controlled Legislature to put guardrails on an expanded ESA program that has over 75,000 students enrolled and could cost more than $800 million next year — a common criticism from Democrats, even before this potential fraud case came to light.

'Very few controls and very little accountability'

Mayes questioned whether the Department of Education is even equipped to verify the veracity of birth certificates and disability diagnoses.

“From what our investigators found, there are very few controls and very little accountability in terms of analyzing birth certificates at the Department of Education – at analyzing determinations of disability,” Mayes said.

But Ward, the ESA director, said the eight-person team charged with reviewing those documents is trained to look for issues with birth certificates and the authenticity of those disability determinations.

“And that's in fact what happened with these cases that we've turned over to the Attorney General's office,” Ward said.

Both Ward and Horne acknowledged the ESA division still isn’t fully staffed — it has filled 30 of 42 funded positions — but said that hasn’t stopped the team from meeting 30-day deadlines to review those documents, even as ESA applications skyrocketed under the new program.

'The guardrails are there now'

Man speaking into a microphone
Arizona Superintendent of Public Instruction Tom Horne speaking with attendees at the 2024 Legislative Forecast Luncheon hosted by the Arizona Chamber of Commerce & Industry at Chase Field in Phoenix on Jan. 5, 2024.

And Toma said Mayes’ case shows that there are guardrails in place. He and Senate President Warren Petersen (R-Gilbert) have blocked efforts by Democrats to pass bills to rein in the ESA program.

“As we’ve seen in cases involving school districts, AHCCCS, unemployment insurance, and other government entities and programs, criminals invariably seek to exploit systems for personal gain, yet the law stands ready to hold them accountable,” Toma said in a statement. “I’m pleased to see today’s indictments for fraud from the Attorney General, which highlights the effectiveness of the state to identify and prosecute fraud.”

Mayes disagreed, saying the problems could have been identified sooner to avoid the loss of taxpayer funds.

“[Legislators’] number one job is to be good stewards of the taxpayers money,” Mayes said. “Obviously, I am trying to do that by prosecuting these cases, but they need to design a better program.”

Horne said he agrees with Toma.

“The guardrails are there now,” Horne said.

He said that includes hiring Ward — who worked in the Arizona Auditor General’s office for nearly two decades — and changing other protocols, like disallowing employees from requesting to work on specific accounts. Now, those assignments are randomized, he said. 

An initial hearing in the case is scheduled for March 28.

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Wayne Schutsky is a broadcast field correspondent covering Arizona politics on KJZZ. He has over a decade of experience as a journalist reporting on local communities in Arizona and the state Capitol.