'Futile exercise in poor judgement': OK AG dismisses 'meritless' ClassWallet lawsuit

OKLAHOMA CITY (KFOR) – On Monday, Oklahoma Attorney General Gentner Drummond assumed control of the state’s lawsuit against the parent company of ClassWallet over misuse of COVID-19 education funds and dismissed it, saying it incorrectly places blame on the vendor.

“I have been clear and consistent in communicating with the Governor on this matter,” said Drummond. “I will not allow taxpayer funds and State resources to be wasted in pursuit of this meritless lawsuit.”

The Attorney General, who last year dismissed a similar lawsuit brought against the same vendor, has long maintained that state actors, not Florida-based ClassWallet, are responsible for the misspent federal relief dollars intended to help families with educational expenditures during the pandemic.

“There’s a problem that’s not been addressed,” said Representative Mark McBride (R-Moore). “I don’t want to throw stones at anybody, but there was obviously a problem a year ago and it has not been addressed and gone away.”

Last month, Drummond denied Gov. Kevin Stitt’s request to refile the suit, noting that it would be a “futile exercise in poor judgement” given that state officials failed to use the controls available to them to manage the funds.

“This was gross negligence on the part of the state. Regardless of the actions of the vendor, the state should be looking inward and making sure that it was doing everything right in the way that the letter responding to the governor spells it out,” stated Representative Forrest Bennett (D-OKC). “Every dollar the state spends, we have a fiduciary responsibility to do the best we can on the part of our constituents.”

An audit by the U.S. Department of Education Office of Inspector General (OIG) found questionable expenditures and processes surrounding $31 million in Governor’s Education Emergency Relief (GEER) funds. A separate audit from State Auditor and Inspector Cindy Byrd confirmed the deep concerns regarding state actors’ lack of oversight and responsibility for these funds.

Auditor Byrd’s report identifies 39,634 items, including video game consoles, home appliances, furniture, and Christmas trees – totaling $1,707,377 – that were improperly purchased and did not have an educational purpose. 

Rep. McBride said with documents he has been provided with, it proves former Secretary of Education and now State Superintendent Ryan Walters gave ClassWallet “blanket approval” over email.

“It seems the governor and now, Superintendent Walters, are more interested in playing a blame game. But the evidence suggests that it would be very hard for them to convince anyone besides themselves that anyone else is to blame but them,” added Rep. Bennett. “It’s a case of a bruised ego. It seems that since this one was not attached to the Biden administration, they were more than happy to let those folks spend the money the way they thought they should.”

In a response letter to the Governor, Drummond said these findings would undermine any lawsuit against ClassWallet because the State rejected internal controls and oversight, failed to use ClassWallet’s available controls, and failed to develop any written monitoring policies and procedures. 

“The overwhelming evidence shows no oversight and no control measures and suggests that no one in your administration tried to shut off the spigot of these improper expenditures,” Drummond wrote in the Jan. 12 letter. 

In his entry of appearance, Drummond said the lawsuit leaves the State open to paying hundreds of thousands in defendant’s attorney fees.

“As the guardian of the State’s interests, I will not sit idly by while taxpayer funds are threatened by frivolous suits for political cover,” he wrote in the filing.

“I’m very supportive of the AG on this because I think the AG has evidence and he would not do that unless he did not. I had spoken with the the governor over a year ago when all this started blowing up and was assured that something would be done and nothing has ever been done. I feel like there is a problem there. And it was not ClassWallet. It’s a problem with leadership in the state.”

Representative Mark McBride (R-Moore)

In August 2022, then-Attorney General John O’Connor, a Gov. Stitt appointee, filed an initial lawsuit against ClassWallet claiming the company was culpable for the misspent money. That litigation sat idle for 179 days — one day shy of the maximum permitted before a case is dismissed for lack of service — before being dismissed by Drummond during his first month in office.

Rep. Bennett said to prevent another ClassWallet-like situation, he would be open to proposing legislation that would restrict the Governor’s powers.

“From sort of a company man standpoint, I’m not proud and I want us to make sure we find ways to to tighten this up so that in the future, the governor can be spared from scandals like this and the people can be spared from misspent dollars,” he said.

However, Rep. McBride told KFOR limiting the governor’s powers may not be the best course of action.

The letters from Gov. Stitt to the Attorney General and the letter in response are available here and here. The filings can be read here and here.

 

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