FBI investigates former Burlington school administrator in alleged $1.8 million fraud

BURLINGTON — Federal investigators are probing whether former Burlington School District administrator Stephanie Phillips defrauded the district in a scheme involving at least $1.8 million over 13 years.  

Phillips worked for the district starting in 1988 until she retired in May. She most recently served as the district’s director of teaching and learning. The FBI is looking into whether Phillips created a fake company called the Leading and Learning Consultants of VT to fraudulently take money from the school district, court documents stated. 

“I think it is fair to say that they were funds earmarked for professional learning,” said Russ Elek, a district spokesperson, in an email to VTDigger. 

Phillips has not been charged with a crime and did not immediately respond to requests for comment Wednesday. 

Superintendent Tom Flanagan emailed parents and community members Tuesday night responding to news of the investigation. 

“If these allegations are proven true, our district and community are victims, and we will seek to recover all funds and bring them back to our students,” Flanagan wrote, referring to the situation as “possible embezzlement.”  

“Shortly after Ms. Phillips left the District this spring, we identified concerning financial discrepancies. We reported them immediately and have been fully cooperating with both local and federal investigating agencies,” Flanagan added in his email. 

Federal agents executed a search warrant of Phillips’s house in Colchester on Oct. 16, regarding records and information about her company, according to court documents. The search was conducted “in connection with an ongoing federal investigation,” according to Sarah Ruane, a spokesperson for the FBI in Albany. Ruane declined to provide additional information. 

Agents had probable cause to believe Phillips “defrauded BSD by creating a false company — Leading and Learning Consultants of VT, LLC — and using that company in at least two fraudulent ways,” wrote Special Agent Eric Boyce in an affidavit. 

Phillips submitted invoices from her consulting company for her regular work at the school district, “allowing her to be paid twice for the same work,” Boyce wrote. She also generated invoices for work that was never done, according to Boyce. 

Investigators believe the company may be fake because agents have no evidence the company did any work with other school districts, although Phillips claimed the company had other clients, court records stated. 

Business filings with Vermont’s secretary of state’s office list Don Collins, a former state senator who chaired the Senate Education Committee, as the company’s manager. Reached on Wednesday, Collins, who is Phillips’s father, initially said he had no recollection of the company. He declined to comment further on the investigation. 

Since March 2013, agents believe Phillips fraudulently obtained at least $1,769,000 from the school district, according to court records.

Agents are investigating whether Phillips committed wire fraud, mail fraud and theft from school programs that receive federal funding, according to federal court documents. 

Phillips held positions of authority during her time at the district, working as an acting superintendent in 2014 and as an assistant principal at one point, according to Elek. 

Federal agents started their probe after the current superintendent filed a complaint with the Burlington Police Department in June, saying Phillips was paid by the district for work that was never completed, court documents show. 

Since discovering the information, Flanagan wrote in the community email, the district has strengthened its invoicing procedures and put tighter limits on individual spending. 

“We will continue to strengthen our financial controls with an outside expert who will review our system and provide us with additional steps we can take to ensure we are protected moving forward,” he said.  

News of the investigation was first reported by Vermont News First.

Read the story on VTDigger here: FBI investigates former Burlington school administrator in alleged $1.8 million fraud.