(INDIANAPOLIS) - The Indiana Secretary of State's office announced Tuesday that it has come to a preliminary agreement over a $27 million lawsuit against the state teachers union.
State officials said they've reached an agreement in principle with the Indiana State Teachers Association (ISTA) and the National Education Association (NEA) for allegedly defrauding Hoosier teachers of more than $27 million.
The Secretary of State's office alleged that ISTA and the NEA sold health plans, which were unregistered securities, to 27 school corporations. ISTA and the NEA then made misrepresentations regarding these securities and improperly commingled funds.
In a press release, the secretary's office announced a tentative $14 million settlement with ISTA. The funds would go to school corporations to compensate for lost investments.
"ISTA was blatantly covering up their Ponzi-like scheme through falsified account statements," said Connie Lawson, Indiana secretary of state. "Repeatedly doctoring account statements to create the illusion that investment funds exist after they've been misappropriated is shameful. I hope this case will serve as a warning to others who think they can take advantage of their investors and as a reminder to investors to keep a vigilant eye on their investments."
Lawson said the settlement, roughly half of what her office claims was defrauded from teachers, was a "leadership step to get this money in hand for schools as soon as possible."
"This is the right result for teachers and schools," said Secretary Lawson. "The tentative amount puts roughly 50 cents for every dollar lost from this mismanagement back to the school corporations."
The settlement must be agreed upon by each school corporation to avoid sending the case to trial. An October trial date is still on the docket of U.S. District Court Judge Sarah Evans Barker.
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