New Records Show Empowerment Scholarship Fraud Rate Near 20%, Not 1%

Arizona education officials have long claimed fraud in the ESA program is minimal, but new data obtained by 12News paints a different picture.

Published on Feb. 12, 2026

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12News obtained Education Department records showing that one in five ESA purchases—such as cellphones, TVs, and diamond rings—were on the "unallowable" list, contradicting claims by Arizona Republican leaders that fraud in the Empowerment Scholarship Account program is only around 1% or less. The records indicate the actual rate of unallowable purchases may be closer to 20% of all transactions.

Why it matters

The Empowerment Scholarship Account program serves over 100,000 students in Arizona and is projected to cost the state $1 billion this fiscal year. Allegations of widespread misuse of taxpayer funds through unallowable purchases raise concerns about the program's oversight and accountability.

The details

Documents uncovered by 12News Investigates show unallowable purchases — spending explicitly banned under ESA program rules — may account for about 20% of transactions. This includes purchases of luxury items like diamond rings, smart TVs, gift cards, appliances, luxury clothing, and lingerie. While the state education department says it has taken action to recover around $1.2 million in unallowable expenses, the increase in improper spending began after the department directed staff to approve all ESA purchases under $2,000 due to a backlog.

  • The Education Department memo covers ESA spending from December 2024 through last September.
  • In late 2024, the state Schools Chief Tom Horne directed staff to approve all ESA purchases under $2,000 due to a backlog.

The players

Tom Horne

Arizona state Schools Chief who has long claimed fraud in the Empowerment Scholarship Account program is minimal, at 1% or less.

Kris Mayes

Arizona Attorney General who has challenged Horne's stance, saying taxpayers deserve transparency on whether public money is being spent on inappropriate items.

Doug Nick

Spokesman for the Arizona Department of Education, who says the department is cracking down on fraud and has taken action to recover approximately $1.2 million in unallowable expenses.

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What they’re saying

“You appear to contend that payment of public funds for unallowable purposes is not illegal… Respectfully, that does not make sense.”

— Kris Mayes, Arizona Attorney General (Letter obtained by 12News)

“I'm super proud of your outlet for staying on the case. At a minimum, people have the right to know whether and how that money, whether that money is being spent on diamond rings, flat-screen TVs, lingerie, and how much of it is being spent on those inappropriate items.”

— Kris Mayes, Arizona Attorney General (12News)

“Certainly there's a higher rate than what's been shared in the past….It speaks to the need to release the dollar amounts. It's difficult to understand how this level of purchases has, you know, been allowed to go through.”

— Jennings, Spokesperson for Tom Horne (12News)

What’s next

The Arizona Attorney General's office has expanded its investigation into the Empowerment Scholarship Account program, and is pushing for more transparency on how taxpayer funds are being spent.

The takeaway

This case highlights the need for stronger oversight and accountability in the Empowerment Scholarship Account program, as the apparent high rate of unallowable purchases raises concerns about the proper use of public education funds.