Attorney General Gentner Drummond has welcomed the dismissal of a lawsuit filed by Governor Kevin Stitt against ClassWallet, a company contracted to help distribute educational funds during the Covid-19 pandemic. The case was dismissed by U.S. District Judge Joe Heaton, who found that it failed to state a claim for which relief could be granted.
Drummond had previously withdrawn the Attorney General’s Office from the litigation in December after determining that the claims lacked legal merit. “This lawsuit was baseless from the outset and nothing more than a waste of taxpayer dollars,” Drummond said. “Overwhelming evidence has shown that Gov. Stitt and his administration rejected internal controls and oversight as well as failed to use ClassWallet’s available controls, leaving his administration responsible for the payout failures that occurred.”
Federal and state audits highlighted issues with how $31 million in Governor’s Education Emergency Relief (GEER) funds were managed. The U.S. Department of Education Office of Inspector General found questionable expenditures and processes related to these funds. State Auditor and Inspector Cindy Byrd’s audit further confirmed concerns about oversight, identifying 39,634 items—including video game consoles, home appliances, furniture, and Christmas trees—worth $1.7 million that were improperly purchased without an educational purpose.
In his decision, Judge Heaton wrote: “The complaint is devoid of underlying facts regarding the nature of payments allowable or not allowable under the Bridge of Gap grant program. The court concludes the factual allegations, viewed in the State’s favor, are not sufficient to state a plausible breach of contract claim based on authorizing payments not within the scope of the Bridge the Gap grant program.”
