Dueling Lawsuits Open Up Questions About Leading Online Learning Company

From Forbes. Stride (formerly K12) is back in court again, and it looks kind of ugly. Plus, some surprises.

A litigation battle between Stride LearningLRN +17.5% Inc and one of its corporate offspring shows just how rough the for-profit education business can get. Future of School and the for-profit education giant are locked in a legal struggle; publicly available depositions taken from the two main parties kick up a cloud of dirt, that both obscures and reveals a difficult struggle.

“They gave me a baby and told me to raise it. I did it. Then they threw it out the window,” says Future of School CEO Amy Valentine.

K12/Stride

Stride Inc started out life as K12, a for-profit company aimed at providing on-line and blended learning. It was founded in 2000 by Ron Packard, former banker and Mckinsey consultant, and quickly became the leading national company for cyber schooling.

One of its first big investors was Michal Milken. That investment came a decade after he pled guilty to six felonies in the “biggest fraud case in the securities industry” ending his reign as the “junk bond king.” Milken was sentenced to ten years, served two, and was barred from ever securities investment. In 1996, he had established Knowledge Universe, an organization he created with his brother Lowell and Larry Elison (OracleORCL -1.6%), who both kicked in money for K12.

K12 is no stranger to controversy or the courtroom.

But besides that…

In 2015, K12 created the Foundation for Blended and Online Learning (FBOL). It was an attempt to create some support for the ideas that were the entire basis of K12’s business. It had a single employee—its CEO.

Amy Valentine had been with K12 for several years already, working an Executive Director for K12’s operations in Colorado. The Foundation’s work was providing scholarships and grants for teachers, students and organizations as a way to “advance the industry.” They also created some studies about the effectiveness of blended and online schools. Valentine says that they found brick and mortar schools with integrated tech to be most effective.

Valentine was still on the K12 payroll, and the Foundation depended entirely on funding from K12 for its existence. But Valentine and K12 CEO Nate Davis agreed that it should transition to an independent entity and began work on a long-term plan to accomplish that. With that in mind, she says, the Foundation changed its name to Future of School.

FBOL/FoS has an independent board, though that quickly developed direct ties to K12. Tony Bennett was brought on to the Foundation board and was installed as its chair. Soon after Bennett was hired as part of K12’s leadership team. Bennett had been Florida’s education commissioner, but resigned in 2013 amid allegations that while in the top spot for Indiana schools, he had cooked the books and changed the state grade given to a charter school founded by a leading Republican donor.

This is a long story, complete with various forms of bad behavior. You can read it all over here.