Gallup-McKinley Schools Sue Stride for Fraud and Misconduct.
ByAinvest
Wednesday, Sep 10, 2025 10:09 am ET1min read
LRN--
The complaint asserts that Stride executives knowingly inflated enrollment numbers by retaining "ghost students" on rolls to secure state funding per student. Additionally, the company cut staffing costs by assigning teachers' caseloads far beyond the required statutory limits, with some teachers having more than 200 students each. Furthermore, Stride ignored compliance requirements, including background checks and licensure laws for its employees, and neglected federally mandated special education services for students [1][2][3].
The complaint also alleges that Stride suppressed whistleblowers who documented financial directives from the company's leadership to delay hiring and deny services to preserve profit margins. According to whistleblower testimony, senior Stride finance executives explicitly rejected requests to hire additional teachers, even when warned that the company violated a New Mexico statute. Instead, executives ordered additional staff cuts to ensure profit targets were met [1][2][3].
The GMCS lawsuit contends that Stride's practices, while boosting short-term profitability, came at enormous long-term cost. The district reported a 27.67% graduation rate in 2024, down from 54% in 2023, and substandard test scores in every subject. The case highlights the inherent risks in publicly traded education models that tie shareholder value to cost-cutting in already under-resourced schools and school districts [1][2][3].
GMCS Board President Chris Mortensen stated, "This case is about a publicly traded corporation deliberately choosing Wall Street margins over the futures of our children. Stride's financial model came at the direct expense of Native American and rural students in our district. That is unconscionable, and it is fraudulent." Board Member Kevin Mitchell, a member of the Navajo Nation, added, "Stride diverted taxpayer dollars to inflate its stock value while systematically denying our kids the qualified teachers and special education support they were legally entitled to receive" [1][2][3].
The complaint calls for compensatory and punitive damages, triple damages under New Mexico's Unfair Trade Practices Act, and restitution of taxpayer funds. More broadly, the case underscores the potential financial and reputational risks for publicly traded education providers that prioritize shareholder value over student outcomes [1][2][3].
For additional updates, visit the GMCS website at https://www.gmcs.org/page/stride-inc [3].
The Gallup-McKinley County Schools Board of Education has filed a complaint against Stride, Inc., alleging that the virtual education provider engages in fraudulent and deceptive practices to maximize profits. The complaint states that Stride inflates enrollment numbers, cuts staffing costs, and ignores compliance requirements, negatively impacting students, particularly Native American students.
The Gallup-McKinley County Schools (GMCS) Board of Education has filed a verified complaint against Stride, Inc. (NYSE: LRN), alleging that the virtual education provider has engaged in fraudulent and deceptive practices to maximize profits. The complaint, filed in New Mexico's 11th Judicial District Court, details several allegations of misconduct, including inflated enrollment numbers, excessive student-to-teacher ratios, and ignored compliance requirements [1][2][3].The complaint asserts that Stride executives knowingly inflated enrollment numbers by retaining "ghost students" on rolls to secure state funding per student. Additionally, the company cut staffing costs by assigning teachers' caseloads far beyond the required statutory limits, with some teachers having more than 200 students each. Furthermore, Stride ignored compliance requirements, including background checks and licensure laws for its employees, and neglected federally mandated special education services for students [1][2][3].
The complaint also alleges that Stride suppressed whistleblowers who documented financial directives from the company's leadership to delay hiring and deny services to preserve profit margins. According to whistleblower testimony, senior Stride finance executives explicitly rejected requests to hire additional teachers, even when warned that the company violated a New Mexico statute. Instead, executives ordered additional staff cuts to ensure profit targets were met [1][2][3].
The GMCS lawsuit contends that Stride's practices, while boosting short-term profitability, came at enormous long-term cost. The district reported a 27.67% graduation rate in 2024, down from 54% in 2023, and substandard test scores in every subject. The case highlights the inherent risks in publicly traded education models that tie shareholder value to cost-cutting in already under-resourced schools and school districts [1][2][3].
GMCS Board President Chris Mortensen stated, "This case is about a publicly traded corporation deliberately choosing Wall Street margins over the futures of our children. Stride's financial model came at the direct expense of Native American and rural students in our district. That is unconscionable, and it is fraudulent." Board Member Kevin Mitchell, a member of the Navajo Nation, added, "Stride diverted taxpayer dollars to inflate its stock value while systematically denying our kids the qualified teachers and special education support they were legally entitled to receive" [1][2][3].
The complaint calls for compensatory and punitive damages, triple damages under New Mexico's Unfair Trade Practices Act, and restitution of taxpayer funds. More broadly, the case underscores the potential financial and reputational risks for publicly traded education providers that prioritize shareholder value over student outcomes [1][2][3].
For additional updates, visit the GMCS website at https://www.gmcs.org/page/stride-inc [3].
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