A federal investigation into the purchase of educational software and equipment by Maryland's second-largest school system has taken a toll on the nation's third-largest toy company, LeapFrog Enterprises Inc.
The president of SchoolHouse, LeapFrog's education division, resigned in December after the California company found that he had broken ethical rules. Two other employees left the company shortly after, including a saleswoman who lived with Prince George's County schools chief Andre J. Hornsby.
The FBI visited Hornsby's office Tuesday as part of its investigation into the purchase of nearly $1 million in equipment from LeapFrog. Hornsby did not disclose at the time of the purchases that he was living with a company employee. Hornsby has maintained that his personal life has no bearing on his work decisions.
For LeapFrog, the deal with Prince George's to put its software and equipment into 70 high-poverty elementary schools to help kindergartners and first-graders learn to read and compute has tarnished a company whose reputation essentially had been unsullied.
LeapFrog is responsible for the LeapPad, a laptop-size device that turns ordinary books into touch-screen multimedia activities -- one of the biggest-selling toys in recent years.
Founded in 1995 by a San Francisco lawyer looking to help his son learn phonics, the Emeryville, Calif., company commands entire aisles at warehouse stores and does business with 60,000 schools.
The company and its breakout products "sort of transformed the educational toy industry," said Chris Byrne, editor of the trade newsletter the Toy Report.
Company spokeswoman Cherie Stewart said that LeapFrog "is not a target" of the FBI investigation in Prince George's, whose school system spent federal Title I dollars to purchase the LeapPad equipment.
"We are in 60,000 classrooms. The LeapPad is in 24 million homes. This is one incident," Stewart said. "We are a very passionate company, and we feel like we are a very ethical company."
The Prince George's contract ranks among the largest in LeapFrog history and helped fortify its educational division as the company's total retail sales flagged. LeapFrog sales fell to $640 million last year from $680 million in 2003, resulting in a net operating loss. But sales in the education division rose from $38 million to $55 million during that span.
LeapFrog does "a very solid business" in the Washington region, Stewart said, but most of that is in individual schools. Representatives of Virginia's Education Department and the D.C. and Montgomery, Howard and Anne Arundel county school systems said none have adopted LeapFrog products systemwide. LeapFrog equipment is common in schools in a number of states -- including Utah, Idaho and Florida -- that have put the company's products on a list of approved curriculum tools.
"They're really big, and they're really innovative," said Melinda George, executive director of the State Educational Technology Directors Association in Arlington. "They're really attuned to meeting states' needs."
LeapPad content is customized for schools so teachers can record each student's work on a cartridge, which can be plugged into their desktop computer for downloading and analysis.
In Prince George's, for example, school system records show that about $809,000 was spent on 216 "classroom kits," each of which includes 22 LeapPads, headphones, software, teaching manuals, programmable cartridges and interactive books. In addition, the system spent more than $100,000 on various additional cartridges and about $46,000 for extra LeapPads and headphones.
The program is underway in at least 385 Prince George's classrooms. More than 400 teachers were trained to use the materials, as were principals, teacher aides and others. Some reported glitches at the outset, but school officials have said the program has been well received overall.
Teachers in Prince George's and elsewhere have said the products help them monitor academic progress of many students, identifying skills that were mastered and those that were not, and charting what officials call a "learning path" with the data.
"We can keep track of where the kids started and where they end," said Shelley Goodman, director of exceptional-student services for the Dalton public schools in rural Georgia. "It's wonderful. The kids just eat it up."
Staff writers Nick Anderson, Michael Barbaro and V. Dion Haynes contributed to this report.