An Indiana district will close its new online school after Chalkbeat revealed that its manager is caught up in a state investigation into alleged enrollment inflation and misspending at two virtual charter schools.

Following an internal district investigation, the Nineveh-Hensley-Jackson school board decided Tuesday to cut short the manager’s three-year contract to run Indian Creek Online Academy. The school, which opened this year and serves about 120 Indiana students in grades 6-12, will close at the end of June.

“This was a mutual agreement,” Nineveh-Hensley-Jackson Superintendent Tim Edsell told Chalkbeat. He did not elaborate on the district’s internal investigation.

Gar Hoover, the businessman hired to manage Indian Creek Online Academy, was named in the State Board of Accounts’ investigation into Indiana Virtual School and Indiana Virtual Pathways Academy, two virtual charter schools that shut down last year amid allegations of an $86 million enrollment fraud and self-dealing scheme.

Hoover served as an Indiana Virtual School board member and later worked for a company providing services to the two virtual schools. The investigation lists him among more than a dozen other individuals responsible for repaying some of the misspent funds. During the 2016-17 school year, Hoover signed off on a request for more than $96,000 in state funds based on inflated enrollment numbers, the state investigation said.

A federal investigation has been launched into the fraud allegations. It is unclear whether Hoover’s role is included in that investigation.

Hoover said he was not involved in any of the problems found at the two virtual charter schools.

“I have always and continue to act in the best interests of the students,” Hoover wrote in an email to Chalkbeat this week. “In that vein, and to avoid disruptions, I am ending my management in the education industry on June 30, 2020.”

Nineveh-Hensley-Jackson does not plan to hire another management company to keep Indian Creek Online Academy open, Edsell said. Instead, the district will look for ways to offer students online instruction through its educational service center or help students transfer to other online schools.

Hoover’s online management company also provides services for Michigan Online School, a charter school in Michigan that serves about 430 students. Michigan Online School plans to stay open and find a new management company, board president Chris Van Winkle said.

“We’re just in the process of changing management companies, in light of some of the allegations,” Van Winkle said. “I don’t know what’s all true or whatever, but we’re moving away from anything related to that.”

He added that Hoover “has done nothing but good for us.”