State of Oklahoma sues Florida company over management of federal COVID relief money for students

The state of Oklahoma filed a lawsuit against ClassWallet, a company they contracted to provide emergency federal education funds during the COVID-19 pandemic, earlier Friday.

The named plaintiffs in the lawsuit are Oklahoma’s Office of Management and Enterprise Services and the Office of Educational Quality and Accountability. They filed against Florida-based Kleo Inc., ClassWallet’s parent company.

In August 2020, Oklahoma officials hired ClassWallet to distribute $17.3 million in federal Governor’s Emergency Educational Relief (GEER) funds.

According to court records, ClassWallet provided services for two aid programs for Oklahoma: The Stay in School grant, which gave up to $6,500 in tuition assistance to parents of private school students who were affected by the COVID-19 pandemic, and the Bridge the Gap Digital Wallet, which provided $1,500 grants to low-income families to buy educational materials.

For ClassWallet’s services, the state of Oklahoma paid the company a $650,000 portion of the GEER funds.

In the lawsuit, the state of Oklahoma claimed that ClassWallet failed to keep records verifying eligibility for the Stay in School grant program. The state also claimed the company failed to submit required monitoring information to the U.S. Department of Education and failed to follow guidelines for allowed purchases in the Bridge the Gap program.

The state of Oklahoma is seeking more than $150,000 for breach of contract and fraud, according to the lawsuit. The state also asks that the court declare ClassWallet a subrecipient of the grant funds. If the court declared the company a subrecipient, the company would then be legally responsible to monitor and submit reports on how the grant money was spent.

In July, FOX23 reported that a federal audit report recommended that the U.S. Department of Education should have the state of Oklahoma pay back at least $650,000 in misspent GEER funds and require the state to review an additional $5.5 million in purchases.

The report also indicated that the state of Oklahoma failed to follow federal guidelines for four of Gov. Stitt’s five educational relief programs.

This is a developing story.

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