Barnfield College claimed nearly £1 million in government cash for students it had no record of teaching, an investigation into the FE institution in Bedfordshire has found.
Barnfield College, which sponsors more than half a dozen academies and free schools, had been the subject of a government investigation by both the Skills Funding Agency and the Education Funding Agency over allegations of financial mismanagement.
As well as claiming for so-called "ghost students" the report also revealed the college also lost £1.25m in failed projects.
It is understood police are “assessing” two government reports into the stricken Barnfield Federation in Luton for possible criminal activity.
The SFA report, obtained by local radio station BBC Three Counties Radio, reveals the further education college had claimed nearly £1 million in government cash for students it had no record of teaching.
The investigation also revealed a culture of poor governance and a lack of financial oversight that led to the college's losses, the station claims.
Officials also looked into the compromise agreement paid out to the college’s former principal and the federation’s director general Sir Peter Birkett, who stepped down from his role in July last year.
The report is understood to have questioned the need for any such agreement to be paid out as Sir Peter had resigned from his position, rather than having his employment terminated.
As part of his package, he received a lump sum equivalent to his annual bonus, a further lump sum used as an incentive to sign the agreement, an additional month’s holiday on top of his contractual holiday allowance and his company car.
Hertfordshire Police confirmed to TES that it was “assessing” the reports, but added no criminal investigation was under way.
A government spokesperson said it had passed its reports to the police.
"A joint Skills Funding Agency and Education Funding Agency investigation was launched last year following serious allegations relating to financial irregularities and governance at the Barnfield Federation,” the spokesperson said.
"This investigation has now concluded and the reports have been passed to the police. The police have advised us not to publish the reports until they have concluded their assessment.
"It would be inappropriate to comment further at this stage.”
The news is likely to be the source of yet further embarrassment for both education secretary Michael Gove and prime minister David Cameron who have previously heaped praise on Sir Peter for his work at the federation.
Last year, Mr Gove said of the head of Barnfield College: "I think Pete [Birkett] would not just give some independent schools a run for their money, he would out-compete them."
Sir Peter was even invited to 10 Downing Street last year where he was singled out by Mr Gove for the work he was doing at the helm of a chain of academies and free schools.
The King Science Academy in Bradford, one of the government’s flagship free schools, is currently the subject of a police investigation following allegations of fraud.