Abstract 2 Significant Prosecutive Actions Resulting from OIG Investigations (October 1, 1995 March 31, 1996) School Owners and Officials Cosmetology Training Center Rochester, Minnesota Alvin Jay Schreur, owner Alvin Jay Schreur pled guilty to a one-count information charging him with bank fraud. In his plea agreement, Schreur agreed to make restitution in the amount of $238,065 to the banks involved and cooperate with the government in its investigation and prosecution of other individuals. From the period June 1, 1992 to September 30, 1992, Schreur defrauded three banks First Bank Eden Prairie, Norwest Bank Mankato, and Norwest Bank Rochester by executing a check-kiting scheme. The accounts were school accounts used for depositing guaranteed student loan and Pell Grant funds. Lauren Beauty College Parma, Ohio Stephanie Smigelski, president/owner Stephanie Smigelski was charged with grand theft in a one-count indictment in Cuyahoga County, Ohio. An OIG investigation developed evidence that Smigelski falsified students' hours of attendence, thereby allegedly obtaining illegally a total of $21,105 in Pell Grant funds for students who did not earn enough hours to qualify for a second Pell Grant disbursement. Interamerican Business Institute Chicago, Illinois Diego Aguirre, owner Diego Aguirre was indicted in the Northern District of Illinois on four counts of mail fraud and four counts of student financial assistance fraud. An OIG investigation developed evidence that between 1989 and 1992, Aguirre fraudulently cashed 232 student loan checks totaling $291,490. Our investigation also revealed that most of the students for whom the checks were issued had canceled their enrollment and never attended IBI, or only attended the school for a short time. According to investigators, Aguirre cashed the students loan checks without the students' signatures and converted the funds to his own use. Aguirre failed to refund any student loan funds kept by the school and allegedly destroyed the students files before he closed the school in 1992. A.B. Institute El Centro and San Diego, California Lawrence Doria, owner Lawrence Robert Doria entered into a plea agreement in U.S. District Court for the Southern District of California, San Diego, California. Doria pled guilty to count two of a three-count superseding indictment which charged him with submitting fraudulent loan applications. The investigation found that Doria opened a branch campus in El Centro, California, which was ineligible to participate in the student financial aid programs. In April 1990, Doria admitted to ED that the ABI-El Centro branch was only a recruiting office, and that only 25 students were enrolled at the El Centro campus. Doria also admitted that he had used ABI-San Diego's school code for the ineligible students to receive student aid funds. Doria informed ED that he had made a mistake and would make the appropriate refunds; however, he continued to certify and submit student loan applications on behalf of ABI-El Centro students through November 1990. Civil Actions Flamingo Beauty Colleges (FBC) Springfield, Illinois Jimmy Nevius, owner The U.S. Attorney's office in Springfield, Illinois, filed a civil complaint against Jimmy Nevius under the False Claims Act, charging failure to properly disburse student financial assistance funds. An OIG investigation developed evidence that FBC officials cashed student loan checks to which neither the school nor the students were entitled because the students did not complete the required number of hours of instruction. The students were entitled to the first of two student loan disbursements upon starting school, but were not entitled to the second disbursement until they completed the required hours. FBC failed to refund legitimate student loan funds on behalf of the students who withdrew from the school before FBC had earned all the student loans. Nevius and FBC are alleged to have improperly retained approximately $53,000 in student loans and grants by certifying 15 students and falsely claiming that they were enrolled at the school and that they had either a high school diploma or general equivalency degree or had been administered an ability-to-benefit test by an independent tester. We found that in fact an FBC employee administered the test, thus making the students ineligible to receive student aid funds. The complaint states that Nevius and FBC were unjustly enriched by obtaining ineligible loan disbursements totaling approximately $38,000 and by failing to refund approximately $52,000 in unearned student loan and grant funds. Under the False Claims Act, the court may grant judgment for treble damages plus civil penalties of $5,000 to $10,000 for each false claim. The total claim could be as high as $1 million. Other Investigative Cases Conrad Cortez El Paso, Texas A Federal grand jury, Western District of Texas, El Paso Division, El Paso, Texas, returned a seven-count indictment charging Conrad Cortez with mail fraud. A joint OIG/U.S. Postal Service investigation developed evidence that Cortez, while posing as a student at a foreign medical school, submitted approximately 30 fraudulent guaranteed student loan applications. Cortez is alleged to have falsified the certification section of the applications stating that he was enrolled as a full-time student at Universidad Autonoma de Ciudad Juarez and submitted the applications to the guarantors. Cortez allegedly used various mail boxes to receive PLUS and SLS loans totaling $220,000. The investigation was initiated based upon receipt of an allegation from the Texas Guaranteed Student Loan Corporation. James A. Reeves Federal employee Shreveport, Louisiana James A. Reeves, a Social Security Administration (SSA) employee, was charged in a one-count criminal information in U.S. District Court for the Western District of Louisiana, Shreveport Division, Shreveport, Louisiana, with making false statements. Based on an anonymous complaint, OIG investigators confirmed that four student loans had been discharged based upon the reported death of James A. Reeves. A joint investigation with the FBI and the SSA/OIG developed evidence that Reeves used a ficititous Social Security number to obtain four PLUS loans totaling $16,000 for two nieces to attend Grambling State University. Interviews and records indicated that Reeves, while employed by SSA, used various documentation to secure both hardship and military deferments, including using U.S. Army stationery to defer payment by fraudulently claiming to have served in Desert Storm. Subsequently, Reeves fraudulently used a Social Security Administration form to have the loans discharged by claiming to be deceased. After being interviewed, Reeves made partial restitution in the amount of $5,035. Reeves subsequently pled guilty in U.S. District Court for the Western District of Louisiana, Shreveport Division, Shreveport, Louisiana, to the one-count information filed in this case. Ronnie Jackson University of Mississippi Oxford, Mississippi Ronnie Jackson was sentenced in the Northern District of Mississippi to 4 months home detention and 5 years probation, and was ordered to pay $6,245 in restitution and a $25 fine. This case was initiated based upon information received from the Pennsylvania Higher Education Assistance Agency (PHEAA) indicating that Jackson had fraudulently obtained Federal student financial aid by falsely stating that he was not in default on prior federally guaranteed student loans. The joint OIG/FBI investigation revealed that Jackson received $27,335 in student loans between 1980 and 1990. Jackson was in default on $21,090 when he applied for an additional $6,245 in loans while attending the University of Mississippi School of Law. Jackson contacted the Mississippi guaranty agency several times with regard to his defaulted loans, asking that they give him an exception or change the regulations to enable him to obtain additional financial aid to attend law school. Informed that he was not eligible, Jackson advised the Mississippi agency that he had already received guaranteed student financial aid from PHEAA. Maureen Donovan Boston, Massachusetts A one-count information was filed in U.S. District Court, Boston, Massachusetts, charging former Suffolk University and Suffolk University Law School student Maureen Donovan with fraudulently applying for and receiving Federal student financial assistance funds. A joint ED/OIG IRS/Criminal Investigative Division investigation developed evidence that Ms. Donovan provided false information to the two financial aid offices, thereby obtaining over $20,000 in grant, loan and work-study funds. Ms. Donovan's false statements were allegedly part of a larger scheme to hide her husband's source of income. Her husband, Charles Donovan, pled guilty to a three-count information charging him with racketeering, bank fraud, and access device fraud. Investigation determined that Mr. Donovan's sole source of income from at least 1988 to 1994 was loansharking. Mr. Donovan collected three percent interest weekly from his customers, a usurious rate of 156 percent annually. The investigation revealed that the Donovans enjoyed a lavish lifestyle with the proceeds of the loansharking activity which enabled them to purchase three Harley-Davidson motorcycles, three Ferraris, two BMWs, an Alfa Romeo, and a Mercedes. Okinaka Ihu Memphis, Tennessee Okinaka Ihu was indicted in the Western District of Tennessee on one count of student loan fraud and one count of forgery or false use of a passport. The indictment was a result of a joint ED/OIG and Immigration and Naturalization Service investigation. Further investigation revealed that Ihu received approximately $4,800 in federally guaranteed financial aid from Middle Tennessee State University and $1,025 from Tennessee State University. Ihu was arrested by Federal marshals as he was on his way to the University of Memphis to pick up approximately $2,700 in financial aid. Craig E. Jackson, bankruptcy specialist Northwest Educational Loan Association (NELA) Seattle, Washington Craig E. Jackson pled guilty in U.S. District Court, Western District of Washington, to one count of bank fraud. A joint investigation by the OIG and the Federal Bureau of Investigation (FBI) developed evidence that Jackson had embezzled and forged Stafford loan repayment checks in the amount of $7,523 and deposited the checks into his business account. The investigation resulted in Jackson's confession to the embezzlement of several thousand dollars in Stafford loan repayment checks. Jackson signed a plea agreement acknowledging that he had stolen, forged and deposited Stafford loan repayment checks totaling approximately $50,000 into his business account between August 1994 and December 1995. Jackson also agreed to make restitution of $49, 661. NELA ensured ED that the students would not be affected by Jackson's theft of the bankruptcy trustee checks. George I. Conroy, president Peabody, Berkeley-Rives Owings Mills, Maryland George I. Conroy agreed to plead guilty in the U.S. District Court for the Middle District of North Carolina to charges of embezzling $347,751 from the Piedmont Independent College Association (PICA) of Greensboro, North Carolina. Conroy was previously indicted by a Federal grand jury on charges of theft of government property. Conroy is alleged to have misled PICA officials by promising to deliver computer equipment and supply maintenance services while never intending to provide the computers or services. Sandra Moore Waco, Texas Sandra Moore was charged on four counts of student financial aid fraud in U.S. District Court, Western District of Texas. An OIG investigation developed evidence that Moore had obtained $6,713 in PLUS loan funds by forging the signature of the University of Houston's financial aid director. In August 1994, Moore signed a pretrial diversion agreement with the U.S. Attorney's office, Western District of Texas, Waco, Texas, in which she was placed on 18 months probation and agreed to pay restitution of $9,720 (principal and interest) in monthly installments as directed by the pretrial diversion officer, during the period of the program. Moore subsequently filed Chapter 13 bankruptcy and made only two monthly payments to the guarantor, the holder of the four defaulted PLUS loans. She also stopped reporting to Pretrial Services. When the Assistant U.S. Attorney learned that Moore had violated the conditions of her pretrial diversion program, the charges were filed. Illegal alien fraud ring Los Angeles, California A joint investigation by the ED/OIG, the Social Security Administration/OIG, the Immigration and Naturalization Service, the California Student Aid Commission and California State Police found evidence that eight Nigerian illegal aliens fraudulently obtained over $56,500 in student financial aid by claiming to be U.S. citizens while attending Casa Loma College in Los Angeles. The following individuals were previously charged in the Los Angeles, California, Municipal Court with perjury and grand theft, and were sentenced this period, as shown below.  Michael Alabi was sentenced to serve 37 days of incarceration and 3 years probation and was ordered to pay $8,874 in restitution and perform 100 hours of community service.  Winifred Young was sentenced to two days of incarceration in the county jail and placed on three years probation, and was ordered to perform 200 hours of community service and pay $3,518 in restitution.  Faustina Berkoh pled guilty to three counts of perjury and one count of grand theft. Berkoh was immediately sentenced to serve 42 days in the county jail, placed on 3 years probation, ordered to pay $5,066 in restitution and fined $200. The court also ordered her to complete 250 hours of community service and to use her correct Social Security number and California driver's license number.  Felicia Adeyemo was sentenced to five years probation, ordered to pay $5,318 in restitution and fined 200. She was also ordered to perform 200 hours of community service, and to use only her true name and to surrender her passport to the court.  Veronica Manna pled no contest to one count of grand theft and was immediately sentenced to one day in the county jail, placed on three years probation, ordered to pay $12,472 in restitution and fined $200. She was also ordered to perform 100 hours of community service and to use her correct name.  Esther Douglas pled guilty to one count of grand theft and was sentenced to three years probation and ordered to perform 100 hours of community service and ordered to pay $2,789 in restitution.  Therese Nojang was ordered to serve four days in the county jail and placed on two years probation, ordered to perform 50 hours of community service and pay $7,033 in restitution, and fined $100.  Marygrace Okoye was sentenced to three days in the county jail, placed on three years probation, and ordered to perform 100 hours of community service and pay $2,600 in restitution. Most of the individuals provided false birth certificates to the school indicating they were born in the Virgin Islands. The investigation revealed the individuals were illegally in the U.S. when they obtained the loans and grants and were, therefore, ineligible to receive them. The above individuals (with the exemption of Nojang and Okoye, whose charges were reduced to a misdemeanor since their restitutions was paid in full) are eligible to be deported because they were convicted of a felony. UPDATE on Previously Reported Cases Arthur Nelson III, director Edward Kleinman, admissions director Sharon L. "Tess" Hodge, director, education department Barbara Taylor, director of finance Gigi Reid, financial aid representative Temple School Baltimore, Maryland The above individuals pled guilty this period to charges of wire fraud in connection with activities to defraud the student aid programs. An OIG investigation developed evidence that from 1990 through 1993, the defendants executed a comprehensive scheme to defraud ED of student aid funds, a scheme that affected every division of the school; specifically, the admissions department, the financial aid department, and the education department. In 1994, pursuant to OIG's investigation and the results of a concurrent audit of the Temple school initiated by National Education Center (NEC), the Temple School's parent corporation, NEC voluntarily suspended additional drawdowns of Title IV funds, ceased enrolling students, and repaid a liability of $2.4 million identified by the audit (see Semiannual Report No. 29, page 23). In addition, NEC and the Temple School terminated five employees, each of whom pled guilty this period to one count of wire fraud in U.S. District Court for the District of Maryland, Baltimore, Maryland, as detailed below.  Arthur Nelson III pled guilty to one count of a six-count indictment charging him with wire fraud after being indicted by a Federal grand jury. Our investigation disclosed that Nelson approved the examination of forged signatures and fabricated necessary forms to meet various deadlines imposed for the submission of financial aid paperwork for new students. The amount of money fraudulently obtained from ED as a result of his actions was between $500,00 and $800,000.  Edward Kleinman pled guilty to a one-count criminal information charging him with wire fraud. Our investigation disclosed that, in an effort to increase the number of new students admitted each term, Kleinman was either directly involved in, or specifically aware of and approved, various improprieties in the processing of new students. The amount of money fraudulently obtained from ED because of his actions was between $500,000 and $800,000.  Sharon L. "Tess" Hodge pled guilty to a one-count information charging her with wire fraud. Our investigation showed that Hodge altered student academic records to maintain student retention rates at a high level. The amount of money fraudulently obtained from ED because of her actions was in excess of $70,000.  Barbara Taylor pled guilty to a one-count information charging her with wire fraud. Our investigation revealed that Taylor routinely forged student signatures on financial aid documents, fabricated documents, and altered student attendance records. The amount of money fraudulently obtained from ED as a result of her actions was in excess of $350,000. Taylor received an eight-month split sentence consisting of four months incarceration and four months home confinement, to be followed by two years of supervised probation.  Gigi Reid pled guilty to a one-count information charging her with wire fraud. Our investigation found that Reid changed income and dependency information on financial aid forms in order to obtain greater amounts of financial aid for students who otherwise were ineligible for aid or were eligible for a significantly smaller amount. The amount of money fraudulently obtained from ED as a result of her actions was in excess of $100,000. Reid was sentenced to one year probation, with four months of the probation to be served in home detention with telephone monitoring. American Career Training Corporation Pompano Beach, Florida A Federal district court judge granted the government's motion for summary judgment on two counts in a civil suit against American Career Training Corporation (ACT) and its owners. A judgment of $9,494,224 was entered against the school for breach of contract and a judgment of $3,532,332 was entered against the owners, James and Joseph Calareso, for unjust enrichment. The United States then voluntarily dismissed the remaining False Claims Act counts, because there were insufficent available assets to justify going to trial on those counts. The Department of Justice is pursuing action to collect on the summary judgment against the owners, inasmuch as the school is defunct and has no assets. The lawsuit filed by the United States against ACT and its owners was based upon evidence that the defendants failed to pay refunds for students that had received Federal guaranteed student loans to attend the travel agent and secretarial school. The school and its owners had been the subject of an investigation in 1990 by the Senate Subcommittee on Investigations, Committee on Governmental Affairs. (Semiannual Report No. 31, page 26) California Institute Long Beach, California Ronald Van Avery, owner Ronald Van Avery was arrested by an ED/OIG special agent pursuant to a Federal arrest warrant issued by the U.S. District Court for the Central District of California. The warrant was based upon a Federal grand jury indictment charging Avery with five counts of wire fraud and two counts of false statements. The indictment alleges that between 1987 and 1990, Avery illegally retained $4.3 million in Federal guaranteed student loans. The money was for 2,200 students' tuition refunds, which were required to be returned to the California Student Aid Commission. Dorothy Aristone School Maple Shade, New Jersey Dorothy Aristone, owner Dorothy Aristone was sentenced to three years probation and four months home confinement, and was ordered to pay $17,663 in restitution to ED. Aristone, who pled guilty to one count of making a false statement, admitted defrauding the Pell Grant program by falsely certifying that two EKG Technician courses met the minimum hours required and enrolled students in those ineligible courses. (Semiannual Report No. 31, page 18) Ron Bailie School of Broadcast Seattle, Washington Ron Bailie, owner; Nada Bailie and Terri Bailie, operators The owner and operators of Ron Bailie School of Broadcast (BSB) were sentenced in U.S. District Court, Seattle, Washington, to terms of imprisonment for having embezzled approximately $270,000 in Perkins Loan Funds. Ronald Bailie, owner of BSB, was sentenced to 36 months in prison to be followed by 3 years probation and fined $50,000. Bailie's wife, Nada Bailie, was sentenced to 27 months in prison and fined $25,000. Their daughter, Terri Bailie, was sentenced to 27 months in prison and fined $25,000. In addition, Ron, Nada and Terri Bailie were ordered jointly and severally to make restitution of $259,619. The Bailies' convictions were based on their acts while operating the now defunct Bailie School of Broadcast, with school locations in Seattle, Spokane, San Francisco, San Jose, Denver and Phoenix. The investigation disclosed that the Bailies embezzled approximately $200,000 in Perkins Loan payments collected by the servicer and forwarded them to BSB; and approximately $20,000 from 280 students who paid BSB directly after the servicer's contract had ended. The funds were intended for the Perkins Loan revolving fund but were used instead for business and personal expenses. The OIG traced each direct student payment to ensure that each student would receive credit for his or her payments. In an attempt to cover up the stolen funds, the Bailies filed six fraudulent Federal Applications and Fiscal Operation Reports (FISAPs) for each of the six BSB campus-based schools. The FISAPs contained false and fraudulent statements claiming that the institutions had the Federal Perkins Loan funds in cash on hand or in their trust accounts. (Semiannual Report No. 31, page 18) Michael Boyd Cleveland, Ohio Michael Boyd was sentenced in the Northern Federal Judicial District of Ohio to 15 months incarceration and 3 years probation, and was ordered to pay $191,500 in restitution. A joint ED/OIG and U.S. Postal Inspection Service OIG investigation revealed that Boyd submitted 30 fraudulent student loan applications. Boyd received over $140,000 in guaranteed student loans while claiming to be a medical student at Universidad Federico Henriquez y Carvajal in the Dominican Republic. Our investigation disclosed that Boyd initially attended the school but dropped out during the second year. He continued to generate and submit fraudulent applications for three years after attending the school. Boyd used multiple Social Security numbers and names, forged school officials' signatures, concealed prior defaulted student loans, and falsified attendance certifications. (Semiannual Report No. 31, page 21) Donna M. Perona, data entry clerk United Student Aid Funds, Inc. Topeka, Kansas Donna M. Perona pled guilty in Federal District Court, Kansas City, Kansas, to one count of a 12-count indictment charging her with mail fraud. Perona was sentenced to five years probation and was ordered to pay restitution of $26,189 and a $50 fine and assessment. United Student Aid Funds, Inc. (USA Funds) is a student loan services provider; its services include liaison between schools and lenders, loan application processing, and disbursement of loan proceeds. Perona worked at the USA Funds' Topeka regional office. Her duties there included electronic data entry of PLUS and Stafford Loan application information and electronic transfer of that data to the USA Group, Inc., corporate headquarters in Fishers, Indiana. Our investigation disclosed that Perona submitted seven fraudulent loan applications and obtained $26,188 in student aid funds. In her position as a USA Funds employee, Perona forged signatures on loan applications that she knew to be fraudulent, forwarded the information to the USA Group corporate office, and used the U.S. mail to send the checks to her and her husband's residence. On the loan applications, Perona provided false information using her name and her husband's and children's names. She also used false Social Security numbers, forged the signatures of applicants and financial aid officers, and listed false school enrollment information. Perona then received loan checks and deposited them into her own account in Citizen State Bank and Trust in Hiawatha, Kansas. (Semiannual Report No. 31, page 19) Robert D. Barber, admission representative Margaret Donnelly, school director Edmondson Junior College Nashville, Tennessee A Federal grand jury in the Middle District of Tennessee indicted Robert D. Barber and Margaret Donnelly on one count each of conspiracy to defraud the U.S. Department of Education. The indictment alleges that Barber encouraged and instructed employees to alter admissions tests and falsify Federal grant applications so that students could illegally obtain Federal student grants and loans. Barber received large bonuses based on student enrollment. The indictment further alleges that Donnelly coached and encouraged students to falsify Federal grant applications in order to fraudulently obtain Federal grants on behalf of ineligible students. This indictment is a result of an ongoing criminal investigation by the Office of Inspector General. To date, eight former Edmondson employees have been convicted of conspiracy to defraud the Department of Education of approximately $200,000 in Federal student loans and grants. (Semiannual Report No. 31, page 27 and Semiannual Report No. 30, page 30) USA Training Academy Newark, Delaware The actual recoveries received from the liquidation of properties owned by USA Training Academy, Inc., Newark, Delaware, and its primary shareholder, Robert Teeven, reached the $10 million level with the receipt of the twenty-first distribution under the plan. USA Training Academy and its owner were the subjects of a civil suit resulting from an OIG investigation that found fraud and misrepresentations in the administration of the Title IV programs. As part of a settlement agreement reached in December 1993, the defendants agreed to liquidate their assets and distribute most of the proceeds to ED. By the time the liquidation is completed, the Department is expected to recover about $14.4 million. (Semiannual Report No. 28, page 28) Sheila F. Davis Wilberforce, Ohio Shelia F. Davis, a/k/a Shelia Davis Webster, was sentenced in the Southern District of Ohio, Dayton, Ohio, to serve 13 months incarceration on each of two counts of student financial aid fraud. Upon release Davis will be on three years supervised probation. The sentence followed Davis's guilty plea to a two-count information. Our investigation found that Davis had fraudulently submitted 14 PLUS loan applications while attending Central State University in Wilberforce, Ohio. In addition to using her own name, Davis also used the names of her mother, father, brother, and boyfriend on the applications to obtain the loans. Davis's scheme netted her approximately $42,000 in PLUS loan funds. (Semiannual Report No. 31, page 22) Kim Dix Thomson Terre Haute, Indiana Kim Dix Thomson was sentenced in Vigo County Superior Court, Vigo County, Indiana, to one year supervised probation, ordered to pay $1,662 in restitution and assessed court fines. Thomson, a Terre Haute businessman, was sentenced as a result of pleading guilty to welfare fraud. An OIG and Indiana State University (ISU) police investigation revealed that Thomson paid another student, James Klug, to complete the course-work for Thomson's degree at ISU, and that Thomson authorized Klug to use Thomson's name and Social Security number to receive Title IV funds. Investigators found evidence that Klug used Thomson's identifiers to receive over $10,000 in student loans. (Semiannual Report No. 31, page 21) American Truck Driving School of Texas Waco, Texas Richard K. Crane, owner/operator A judgment of forfeiture was issued in U.S. District Court, Western District of Texas, Waco Division, ordering assets valued at an estimated $2,235,000 to be forfeited to the U.S. government. The assets property of Richard K. Crane, doing business as American Truck Driving School of Texas (ATDS) were seized by special agents with the ED/OIG, the Interbal Revenue Sservice/Criminal Investigative Division and the U.S. Marshals Service in December 1994 pursuant to a 39-count indictment charging Crane, Lucy Ingraham and seven corporations with mail fraud, conspiracy to defraud the government, obstructing a Federal audit, false statements, money laundering, and aiding and abetting. Investigation revealed that Crane, while operating ATDS, intentionally failed to refund federally insured student loan proceeds totaling approximately $2,600,000. The above assets which included real estate, five automobiles (including a 1992 Mercedes Benz 600 SEL and two Chevrolet Corvettes), four tractors, seven show tractor trucks, seven show trailers, and a boat were ordered to be forfeited after ATDS failed to make restitution of $1,200,000 as agreed to in the plea agreement entered by Ingraham in September 1995 on behalf of ATDS. This period, the seized ATDS assets were auctioned in Crowley, Texas, in an auction conducted by EG&G Dynatrend, which holds a contract with the Department of the Treasury. The sale grossed $346,750. (Semiannual Report No. 31, page 25; Semiannual Report No. 30, page 28) PLUS Loan Fraud Atlanta, Georgia Selina Ann Lamotte, Wylie Irving, Mary Jones and Keith Lamotte Selina Ann Lamotte, Wylie Irving, Mary Jones and Keith Lomotte were sentenced in U.S. District Court, Northern District of Georgia, for their participation in a scheme to defraud the PLUS Loan program. A joint Department of Health and Human Services (HHS)/OIG, U.S. Postal Inspection Service and ED/OIG investigation found that Selina Ann Lamotte submitted and led others to submit more than $108,000 in falsified PLUS loan applications.  Selina Ann Lamotte was sentenced to 10 months, to be split between incarceration and home confinement, and 3 years supervised probation after her release, and was ordered to pay restitution of $50,058 and a special assessment of $250.  Wylie Irving was sentenced to five years probation and six month of home confinement, and was ordered to pay restitution of $27,160.  Mary Jones was sentenced to four years probation and was ordered to pay $11,486 in restitution and a $150 special assessment.  Keith Lamotte was sentenced to serve 90 days of home confinement and 4 years probation and was ordered to pay $11,640 in restitution and a $250 special assessment. (Semiannual Report No. 29, page 25) Unilex College San Francisco, California Theo Karen Nelson, owner/president; Keith Watson, CEO Theo Karen Nelson and Keith Watson each pled guilty in the Eastern District of California to one count of obstruction of justice charges. Both subjects are attorneys. The plea agreement carries a maximum sentence of five years imprisonment, a $250,000 fine, and three years supervised release. Collateral consequences of conviction are revocation of their license to practice law and debarment from further Title IV participation. A joint investigation by the ED/OIG, the FBI, the HHS/OIG, and the California Student Aid Commission found that the subjects intentionally moved records out of state after several grand jury subpoenas were issued for the records. The subjects rented a residence using false names, used false names on Department of Motor Vehicles records, and gave outdated drop-box addresses. When at last the subjects were found and the location of the records determined, the records that were there were seized. Subsequent actions on the part of the subjects revealed additional records which should have been produced earlier pursuant to the subpoena. At that point, the OIG seized those additional records. Walker Education Center Detroit, Michigan An OIG investigation revealed that Walker Education Center was a business established solely to falsify the Pell Grant applications of college students. Mack Walker and his sister Ethel Durr were sentenced to prison terms on February 1, 1995, for their operation of the Walker Education Center (see Semiannual Report No. 30, page 26). The students who paid Walker and Durr to falsify their Pell Grant applications were targeted for civil and criminal action by the U.S. Attorney's office. At the end of the reporting period, 33 Affirmative Civil Enforcement (ACE) program targets have yielded 20 civil settlement agreements totaling $114,702. In addition, 4 civil lawsuits have been filed. Seventy-eight targets for criminal proceedings have produced 66 pretrial diversion agreements, accompanied by promissory notes, and resulting in recoveries of $711,202. The current total recoveries of the Mack Walker investigation are $825,904. (Semiannual Report No. 31, page 26; Semiannual Report No. 30, page 34; Semiannual Report No. 29, page 21)