The former superintendents of the Athens City and Limestone County school systems, Trey Holladay and Tom Sisk, were indicted by a federal grand jury along with four other people.
All six are charged with conspiracy. Other charges include wire fraud and identity theft.
Those charges stem from alleged misappropriation of school funds.
"What we are seeing is a breaking of that trust," State Superintendent Eric Mackey said.
The U.S. Attorney's Office, the FBI, U.S. Department of Education and Alabama State Department of Education all were involved in a more than two year investigation into an alleged scheme, ultimately stealing money from taxpayers.
The 'scheme' took place from 2016 to 2018. Investigators interviewed more than 200 people to gather evidence.
Trey Holladay was indicted on more than 100 counts of fraud, including wire fraud and falsifying private student information. The indictment alleges he received cash payments from those involved. His wife is also facing charges.
Investigators said Limestone County Superintendent Tom Sisk was brought into the scheme in July of 2016. According to federal officials, both districts were improperly paid around $7 million in state education funds during those two school years.
Prosecutors claim the defendants pretended to enroll full-time private school students into their online learning systems.
"Many of these students had never heard of Athens City Schools or had ever been into Limestone County," U.S. Attorney Louis Franklin said.
These private schools involved are scattered across the state. While the indictment claims private school officials involved did not profit from the scheme, their schools and students did receive access to educational tools and equipment.
"To keep this fraud from being brought to light, the defendants went as far as to create fake report cards, transcripts and even home addresses and report those to the state department of education," Franklin said.
The indictment claims the state did question enrollment several times, but Holladay always denied accusations. He claimed students were taking a full class load through the district.
An attorney for the Holladays released a statement Tuesday, denying these accusations.
Limestone County Schools also released a statement. It emphasized that no one currently working for the district is involved in the investigation. They added they are working to be more transparent.
Athens City Schools declined to comment.
Trey Holladay was fired from Athens City Schools in October. He was placed on administrative leave in June of 2020 after the FBI raided his home as part of this investigation.
Sisk left Limestone County Schools in September 2019 for a job in Bristol, Tennessee. He has since left that job.