Teenagers who were in prison or working full time were fraudulently enrolled as students at Australia's top indigenous college, a north Queensland court has heard.
Jean Illingworth, former principal of Djarragun College near Cairns, was charged with fraud in January for allegedly providing incorrect enrolment numbers to obtain up to $9 million in taxpayer funding.
On Friday, the 66-year-old, who denies any wrong-doing, fronted Cairns Magistrates Court on the first day of a four-day committal hearing.
She faces two charges each of fraud and perverting the course of justice.
In outlining the case against Illingworth, prosector Michael Cowan alleged she enrolled a number of children who never attended classes.
He says this included teenagers who were in prison or employed and others who were either too young or too old.
Teenagers who had been expelled and "chronic truants" were also kept on the roster, he says.
The school received $20,000 in state and federal funding for each student.
Mr Cowan says there was an enrolment drive across Cape York where children were enrolled but didn't show up at the school.
"It wasn't the case that these were phantom students," Mr Cowan told the court.
"These kids existed. They just never showed up."
Mr Cowan says the school was running at an unsustainable level and funds were used to keep it going.
On Friday, Illingworth's lawyer Tony Kimmins questioned lead investigator Detective Sergeant Sheridan Heaton over interviews she conducted with a key witness, a former teacher at the school.
Det Heaton says she didn't take notes during the interviews which weren't recorded, as was normal practice.
Illingworth is also accused of asking a friend to deliver a false statutory declaration to a former teacher for them to sign as well as meeting with another witness.
In 2009 Illingworth was named Queensland Senior Australian of the Year for her work in transforming the once dysfunctional college into a much admired model of success.
The committal hearing continues.