Abstract 2 Significant Prosecutive Actions Resulting from OIG Investigations (April 1, 1996 September 30, 1996) School Owners and Officials Chicago Institute of Technology Chicago, Illinois Earle Ciaglia, president and co-owner Edwin Ciaglia, vice-president and co-owner Donald Desmond, chief financial officer Earle Ciaglia, president and co-owner of CIT, and Edwin Ciaglia, vice-president and co-owner of CIT, pleaded guilty in Federal court in the Northern District of Illinois. Earle Ciaglia pleaded guilty to one count of bank fraud and one count of conspiracy for his involvement in the scheme to defraud the Department of Education, financial institutions, students and creditors of approximately $3.4 million as charged in the indictment. Edwin Ciaglia pleaded guilty to one count of bank fraud and one count of conspiracy for his involvement in the scheme as charged. The plea agreements, per Federal sentencing guidelines, call for Earle Ciaglia and Edwin Ciaglia to serve from 63 to 78 months in Federal prison. Sentencing is scheduled for January 14, 1997. The above individuals along with Donald Desmond, chief financial officer, were previously indicted by a Federal grand jury in the Northern District of Illinois. The 25-count indictment charged the three former top officers of the medical and dental assistance training school with directing a scheme to defraud the Department of Education, financial institutions, students, and creditors of approximately $3.4 million during the years leading up to and continuing after the school's closing. The scheme involved the fraudulent receipt and retention of student grants and loans, bank fraud, and bankruptcy fraud. According to the indictment, CIT systematically falsified records relating to student eligibility for financial aid and records essential to CIT's ability to maintain its accreditation. CIT enrolled students through telemarketing, visits to unemploy-ment offices, and door-to-door canvassing, and allegedly paid those individuals stipends to attend the school. When students withdrew or dropped out of school, CIT allegedly failed to refund unearned portions of grants and loans to program accounts or lenders. CIT obstructed auditors and reviewers sent to determine whether the school was in com-pliance with the federal program regulations. In addition, the indictment alleged that the officers obtained $300,000 in bank loans through fraudulent pretenses and engaged in a "kiting" activity involving more than $10,000,000 in checks, with a bank losing more than $500,000 in the scheme. Further, the officers filed falsified bankruptcy petitions to try and force the Education Department to pay out on a false $1,900,000 claim filed by CIT. Northeast Institute of Education Scranton, Pennsylvania Gregory Walker, chief executive officer Gregory Walker pled guilty to three felony counts as follows: fraud involving education programs, theft concerning programs receiving Federal funds, and bank fraud (non-ED issue). Our investigation developed evidence that Walker failed to refund student credit balances and illegally received Title IV funds after the school's March 1994 reinstatement with ED. In violation of the reinstatement terms, Walker continued his involvement in fiscal and financial aid matters at the school and the school illegally received about $574,000 in Title IV funds. Programming and Systems, Incorporated Cleveland, Ohio Irwin Mautner, chairman and chief executive officer Ronald Sundick, national financial aid director A Federal grand jury in Cleveland, Ohio returned a three-count indictment against Irwin Mautner, Ronald Sundick, and Programming and Systems, Incorporated (PSI). PSI was a publicly traded corporation that owned and operated proprietary schools in Ohio, New York, Michigan, Indiana, Florida, North Carolina, Pennsylvania, Maryland, and Washington, D.C. Mautner was chairman and chief executive officer of PSI and Sundick was the corporate national financial aid director. The three-count indictment, which charged the defendants with mail fraud, conspiracy and false statements, alleged that they had engaged in a scheme to defraud the Department by engaging in improper recruiting practices and deceiving the schools' accrediting agency by misrepresenting one of its schools' high withdrawal rates in order to maintain eligibility for Title IV funds. During the time period charged in the indictment, the schools received in excess of $140 million of Title IV funds. Business Careers, Incorporated d.b.a. Allied Schools of Puerto Rico Puerto Rico Business Careers, Incorporated, d.b.a. Allied Schools of Puerto Rico, pled guilty to a one-felony-count information in U.S. District Court, San Juan, Puerto Rico. The information charged the corporation with unlawfully converting to its own use $180,000 in Pell Grant funds. The corporation drew down Pell Grant funds in excess of student needs, and sub-sequently reported those funds as Pell Grant expenditures on quarterly reports to the Department of Education. Inves-tigation revealed that $180,000 of the funds had been converted to personal use by the school's president. As part of the plea agreement, the corporation made restitution of $180,000 to the Department. Allied Schools was a proprietary institution offering instruction in the areas of electronics, travel, tourism, and computer skills. In 1995 Allied was terminated from Title IV participation. Ron Thomas Schools of Cosmetology and Barbering Baltimore, Maryland Ron Thomas and Von Thomas A Federal grand jury for the District of Maryland issued a nine-count indictment charging Von Thomas and Ron Thomas with wire fraud and aiding and abetting. The Thomases owned and operated three Ron Thomas Schools of Cosmetology and Barbering (RTSC) in Baltimore, Maryland. The indictment alleges that from June 1991 through May 1995, the Thomases and RTSC employees defrauded the Department by falsifying documents and records to fraudulently obtain student financial aid funds. According to the indictment, the Thomases falsified and caused and directed RTSC employees to falsify student attendance records and academic performance records, including punching student time cards, adding hours to student attendance, and manufacturing student examinations and grades, for students who never attended or who attended only briefly. The indictment states that the reason these records were falsified was either to avoid making a refund to the Department of Education and/or to obtain additional Pell Grant disbursements. The indictment also alleges that the Thomases falsified and directed RTSC employees to falsify and fabricate ability-to-benefit admissions examinations, and to falsify and fabricate student documents such as high school diplomas and transcripts, Social Security cards and driver's licenses. More than five hundred student admissions, financial aid, academic, attendance and personal records were fraudulently altered, falsified or manufactured at RTSC as part of the fraud scheme, and the total amount of Federal student aid received by the schools as a result of the scheme was well in excess of $3 million dollars. Pat Goins Beauty School Bossier City and Shreveport, Louisiana Pat Goins, president Pat Goins, president of Pat Goins of Bossier, Incorporated, entered a plea of guilty on behalf of the corporation to one count of wire fraud, in Federal District Court, Western District of Louisiana, Shreveport, Louisiana. The plea, the result of an earlier plea agreement and one-count information filed on May 31, 1996, involved the falsification of a general equivalency degree (GED) for an ineligible student and the subsequent draw of Pell Grant funds. Pikeville College Pikeville, Kentucky Bobbie G. Price, director of financial affairs Bobbie G. Price was sentenced in the Eastern District of Kentucky to 12 months incarceration, 24 months probation, and was ordered to pay restitution totaling $219,961 after entering a plea of guilty to one count of student financial assistance fraud. The case was initiated based upon a referral by an attorney representing Pikeville College. The attorney advised that Price had falsified several federally guaranteed student loan applications between September 1992 and November 1995. A subsequent OIG/FBI investigation revealed that Price had obtained approximately $223,000 in fraudulent student loan proceeds by using seven different false names and Social Security numbers. In addition, Price obtained several loans under his own name. Valerie Carr Sawyer College Hammond, Indiana Valerie Carr was charged in a criminal information with embezzling SFA funds totaling $468,976. An OIG investigation disclosed that during April 1992, Carr, a business office employee at Sawyer College who was charged with the responsibility of receiving and depositing checks, began embezzling student financial aid checks. It was discovered that the SFA funds received by the college were applied to the student accounts, but were not deposited to the college's account. Until about December 1994, Carr continued to cash various student financial aid checks, keeping the proceeds for her own use. Carr agreed to plead guilty to the information charging her with embezzlement of $468,976 in student financial aid funds. United Academies of Cosmetology Chicago, Illinois Paul Scardino, owner Salvatore Scardino, owner Diane Scardino, secretary and manager Joseph Roberts, Jr., general manager A Federal grand jury returned a 54-count indictment against the owners, secretary, general manager, recruiters, financial aid officers and a school manager of two for-profit cosmetology schools that were part of the United Academies of Cosmetology chain: Riviera School of Beauty Culture and MidAmerica Beauty School. The indictment is the result of a criminal investigation by the Office of Inspector General and the Postal Inspection Service. The owners are charged with wire fraud, student financial assistance fraud, and engaging in monetary transactions in criminally derived property. The indictment also seeks criminal forfeiture of numerous real properties, cash, securities and vehicles of the school owners which they derived from the proceeds of the alleged wire fraud and illegal monetary transactions. The indictment alleges a scheme to defraud whereby the defendants obtained in excess of $l.3 million in Pell Grant funds for persons who were not in fact students and did not attend class, and therefore were not eligible to receive the funds. In some cases, the purported students came to the schools only for an "orientation" during which they filled out student financial aid paperwork and received a cosmetology kit, but during which no class instruction was given. In many cases, the purported students never came to the schools at all; some of them never even heard of the schools. Investigators found evidence that employees and commissioned recruiters falsified high school diplomas, GEDs, student aid reports and attendance records as part of the scheme. The investigation disclosed that the schools received the maximum first disbursement of Pell Grant funds $1,200 for each of the sham students by including in the Pell Grant calculation a grossly inflated charge for the cosmetology kits that bore no relation to the cost of the kits. The owners used commissioned recruiters to target economically disadvantaged areas, drug rehabilitation clinics and unemployment offices to recruit purported students. International Business College El Paso, Texas This period International Business College (IBC) entered into a compromise settlement agreement with the Department of Education in which IBC agreed to repay the Department $178,750 for losses incurred as a result of fraudulently disbursed Stafford loans during the period 1985 through 1987. In addition, IBC agreed to pay a $5,000 administrative fine resulting from a prior program review. Evidence developed during an OIG investigation served as the basis for the settlement. The OIG investigation established that a former finance director for IBC, Charles McCollum, had fraudulently obtained more than $733,000 in guaranteed student loans by creating bogus identities for non-existent borrowers. Subsequent to McCollum's 1992 conviction on mail fraud charges stemming from this scheme, the OIG determined that ED had incurred additional losses of more than $230,000 in the form of interest and special allowance payments and for default claims paid on the fraudulent loans. The findings of our investigation were referred to ED for administrative action. In accordance with the terms of the settlement, IBC has made an initial payment of $36,750 to be followed by 36 monthly payments of $4,406. Failure to comply with the terms of the agreement will result in the termination of IBC's eligibility to participate in Title IV programs. Donnie Sasser Georgia Medical Institute Atlanta, Georgia Donnie Sasser, a financial aid director at Georgia Medical Institute, Atlanta, Georgia, was sentenced to one year in prison after pleading guilty to embezzling $114,000 in Federal student aid funds. Sasser was also sentenced to perform 200 hours of community service and ordered to pay full restitution. Sasser had previously pled guilty to embezzling funds from the Federal Family Education Loan Program. An investigation conducted by the OIG revealed that Sasser embezzled 44 refund checks which were intended to reduce various students' outstanding balances on their student loans. Yeshiva of New Square Village of New Square, New York This period, the Yeshiva of New Square, a religious corporation operating religious schools in the Village of New Square, New York, paid the United States $1 million to settle a $3.225 million judgment entered against the Yeshiva. In 1995, a U.S. District Court judge imposed $3.255 million in fines against the Yeshiva and other organizations and appointed a Federal receiver to control the Yeshiva's finances. The fines were imposed because of the Yeshiva's failure to comply with Federal grand jury subpoenas calling for the production of financial records. Civil Actions AmSouth Bank of Alabama Birmingham, Alabama This period, pursuant to a civil fraud settlement reached by the United States Attorney's office, Birmingham, Alabama, and AmSouth Bank, and agreed to by the Department of Education, AmSouth Bank agreed to pay ED a total of $5.7 million in restitution and penalties and withdraw $1.4 million in pending default claims against the Department in settlement of allegations regarding the mishandling of federally guaranteed student loans. An OIG investigation was initiated after AmSouth voluntarily disclosed to Federal officials that its employees falsified collection efforts on insured student loans submitted to ED for default payment. The investigation revealed that AmSouth employees apparently falsified records to show that the required collection efforts had been made on approximately $2.2 million in defaulted student loans, an estimated $1.4 million in pending default claims, and an estimated $1.3 million in future default claims. The $5.7 million payment by AmSouth included $2.2 million for default payments received by AmSouth; $1.3 million to cover anticipated future defaults for student loans tainted by the falsified collection records; and a civil fraud fine of $2.2 million. AmSouth also agreed to withdraw and never file claims for $1.4 million in pending default claims tainted by false collection efforts. Other Investigative Cases California crime ring PLUS loan fraud An investigative team consisting of agents from the ED/OIG, the Social Security Administration (SSA)/OIG, the Internal Revenue Service (IRS), the Small Business Administration (SBA), and the Department of Housing and Urban Devel-opment, as well as the California State Departments of Justice and Motor Vehicles, has been investigating a criminal enterprise organized to defraud the foregoing agencies' programs. The crime ring is believed to consist of approximately 15 individuals, including both Federal and State employees as well as doctors and tax preparers. The investigation developed evidence that the enterprise defrauded ED by filing more than 30 applications for Federal PLUS loans, using a tax-preparation service as a front. This period ED, SSA and IRS agents arrested Yolanda Carthon, a 15-year SSA employee. Investigators found evidence that Carthon had accepted cash payments in return for the issuance of fraudulent Social Security cards. Once obtained, the cards were allegedly used to apply for and receive Federal PLUS loans and IRS tax refunds. Also this period, James E. Shead surrendered to U.S. marshals in response to a criminal complaint charging him with bank fraud and Social Security fraud in connection with his involvement in the scheme. During this reporting period, arrest warrants were issued for Clarence Weekes, Ricky Griffin and Beatrice Scott for their alleged part in obtaining fraudulent PLUS loans. Evidence recovered during the investigation included the fraudulent driver's licenses and Social Security cards, loan applications and other documents used to obtain and cash the PLUS loan checks. Elissa R. Kurland Fort Myers, Florida Elissa R. Kurland, attorney and former treasurer of the Florida Future Business Leaders of America/Phi Beta Lamda Association and Foundation, Incorporated, pled guilty to one count of false statements and one count of embezzlement. A joint investigation by ED/OIG, IRS and Florida Department of Law Enforcement developed evidence that from May 1993 through June 1995, Kurland embezzled $110,000 from the Florida Future Business Leaders of America/Phi Beta Lamda Association and Foundation, Inc.. Kurland's scheme allegedly involved the altering of payee names on Foundation checks. The Foundation receives funding from the Department through the Carl D. Perkins Vocational Act as a community-based organization. Cynthia Phillips Northern Indiana Default Project Cynthia Phillips was sentenced in federal district court, Northern District of Indiana, to three years supervised proba-tion, and was ordered to pay restitution of more than $7,800 to ED. A joint ED/OIG and U.S. Postal Inspection Service investigation found that Phillips received $8,300 in federal Pell and Supplemental Educational Opportunity funds by con-cealing a prior defaulted student loan. Wanjiru Gathira Boston, Massachusetts Wanjiru Gathira was sentenced to two years probation and ordered to pay restitution of $38,596 in connection with her fraudulent receipt of Federal Family Education Loans and Federal Work Study funds. Gathira, who was a law student at Suffolk University Law School, Boston, Massachusetts, completed all of her financial aid paperwork to falsely indicate that she was a citizen of the United States when in fact she was a citizen of Kenya. During the time period that Gathira was claiming to be a U.S. citizen on her financial aid applications, she was also applying for asylum in the United States. Officials at Suffolk University Law School did not allow Ms. Gathira to graduate because of the false statements on her financial aid applications, even though she had successfully completed all of the required course work. Olajide Awotona Columbia Teachers College New York, New York Olajide Awotona was sentenced in U.S. District Court, Southern District of New York to six months home confinement and two years probation. Awotona was also ordered to make restitution to the Department in the amount of $14,773. Awotona, a former student at Columbia Teacher's College, pled guilty in March 1996 to two counts of student financial assistance fraud involving failure to disclose prior student loan defaults on FFEL applications. Trend Colleges, Inc. Oregon and Washington Trend Colleges, Inc. (TCI), a proprietary institution with seven locations in Oregon and Washington, ceased operations in August 1994. Just prior to ED's close-out review of TCI, the school received a large drawdown of Title IV funds. At the time, it was suspected that TCI had not returned all Title IV funds to ED upon its closure, as required. In 1995, ED was able to more than $846,000 from TCI and its escrow agent, Perkins & Co., C.P.A. At the time, the $846,000 was believed to represent all Title IV funds in TCI's SFA accounts under control of the escrow agent, although it was suspected that additional federal funds were missing. The OIG uncovered the missing funds in June 1996 during an interview with a partner of Perkins & Co., escrow agent for TCI. The partner disclosed that in July 1991, as part of its escrow agreement, Perkins & Co. took control of all TCI SFA bank accounts, and that his company still had control of TCI accounts containing Title IV funds amounting to more than $1.44 million. The OIG took action to recover the $1.44 million in Title IV funds and have them returned to ED. Gail Thomas Federal employee New York, New York Gail Thomas, a former U.S. Department of Labor (DOL) employee, was arrested in February 1996 for fraudulently obtaining approximately $40,000 from various federally funded entitlement programs, including Aid to Families with Dependent Children, Food Stamps, Public Housing and Pell Grants. In April 1996, in the Southern District of New York, Thomas pled guilty to a one-count felony information charging her with theft of public assistance funds. As part of her plea agreement, Thomas agreed to make restitution to all of the above-mentioned programs, including ED's. A joint investigation by DOL and ED/OIG developed evidence that Ms. Thomas provided false income information on her Free Application for Student Aid, thereby illegally obtaining approximately $10,000 in Federal SFA funds. Julie M. Marr Brigham Young University Provo, Utah Julie M. Marr, a former Brigham Young University (BYU) employee, was sentenced in U.S. District Court, District of Utah to serve two years probation, fined $1,000 and ordered to pay more than $6,700 in restitution. Marr had pre-viously pled guilty in June 1996 to a one-count information charging her with student aid fraud. An OIG investigation disclosed that during 1993, Marr applied for and fraudulently received approximately $7,000 in student loan funds. BYU policy allowed a full-time employee to register for up to six hours of classes with no tuition cost. Marr, who worked in BYU's financial services department and whose responsibilities included receiving student loan checks from lenders and recording the checks into BYU's computer system, enrolled in classes and submitted four loan applications which were certified by BYU. After each loan application was processed, Marr would withdraw from classes, dropping below half-time status and thus becoming ineligible for the Title IV funds. Marr's position at BYU allowed her to manipulate the computer data and destroy supporting documents used by BYU officials to identify ineligible recipients such as herself. UPDATE on Previously Reported Cases Unilex College San Francisco, California Theo Karen Nelson, owner/president Keith Watson, chief financial officer Two California attorneys, Keith Watson and Theo Karen Nelson, were sentenced by a Federal judge in Sacramento, California. The two will each serve 4 months in prison followed by 36 months of supervised release, and together must pay $36,950 to ED. Upon release, they will serve six months in a residential community corrections center and provide 100 hours of community service. The two will face proceedings for debarment against practicing law. A joint investiga-tion and audit, with assistance by ED's Internal Review Branch and the California Student Aid Commission, developed evidence that the owners defrauded students by not making proper refunds, retained living-expense money, and embezzled Pell funds for personal use. The investigation resulted in a 10-count indictment. The owners concealed relevant school business records, fled the State, then used mail drops and false identities to avoid prosecution. When the two were located and served grand jury subpoenas for records, they claimed that all subpoenaed documents had been provided. A year later, during a court hearing related to debt collection actions they had filed against former students to recover funds, an OIG agent observed the owners produce original documents previously subpoenaed by the government. Nelson and Watson also claimed that certain records were stolen in a residential burglary. Later, these records were discovered in their possession during a search executed at their residence after their arrest. Both Nelson and Watson were board members of ACCET, the school's accrediting agency. (Semiannual Report No. 32, page 29) Interamerican Business Institute Chicago, Illinois Diego Aguirre, owner Diego Aguirre was issued a superseding indictment in the Northern District of Illinois with three counts of mail fraud and seven counts of student financial assistance fraud. This indictment superseded an earlier indictment from the prior reporting period. Between 1989 and 1992, Aguirre, owner of Interamerican Business Institute (IBI), cashed 232 student loan checks totaling $291,490 which had not been endorsed by IBI students. Investigation showed 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. Aguirre cashed the loan checks for these students without the students' signatures, and converted the funds for his own use. Aguirre also destroyed the files for these students before he closed the school in 1992, thereby hindering the investigation. (Semiannual Report No. 32, page 18) National Education Center, Temple School Baltimore, Maryland Arthur F. Nelson III, director Edward Kleinman, admissions director Barbara Taylor, director of finance Three former officials of National Education Centers were sentenced in U.S. District Court, Baltimore, Maryland:  Arthur F. Nelson III was sentenced to 12 months in prison, 4 months of home detention with electronic monitoring, and 2 years of probation, and was ordered to pay a $50 special assessment fee. An OIG investigation developed evidence that Nelson was directly involved in, or was specifically aware of, and approved of, various unlawful and fraudulent activities in the admissions, financial aid, and academic departments at the school. The amount of fraud attributable to his actions was between $500,000 and $800,000. Nelson pleaded guilty to one count of wire fraud in January 1996.  Edward Kleinman was sentenced to 10 months incarceration, including 5 months home detention. He also received a 2-year supervised release order and was ordered to serve 250 hours of community service, and to pay a $50 special assessment fee and a fine of $5,000, remitting $210 a month over his period of supervised release.  Barbara Taylor was sentenced to an eight-month split sentence consisting of four months incarceration and four months home confinement, as well as two years supervised release, and was ordered to pay a special assessment fee of $50. (Semiannual Report No. 32, page 23) George I. Conroy Peabody, Berkeley-Rives Owings Mills, Maryland George I. Conroy pled guilty in U.S. District Court, District of New Jersey, to a one-count indictment charging him with embezzlement. An OIG investigation developed evidence that Conroy, president of Peabody Berkeley- Rives, Owings Mills, Maryland, embezzled more than $300,000 from five colleges in central North Carolina, from the Department's Title III Strengthening Institutions grant program. Conrad Cortez El Paso, Texas During this period, Conrad Cortez was sentenced to serve five months in jail, five months in a community facility (half-way house), three years supervised release, make restitution of $61,587 and pay a special assessment of $100. Cortez's sentencing followed a plea agreement with the United States Attorney's Office, El Paso, Texas in which Cortez pled guilty to one count of 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 30 fraudulent applications for guaranteed student loans, PLUS loans and SLS loans totaling approximately $220,000. The investigation was initiated based upon receipt of an allegation received from the Texas Guaranteed Student Loan Corporation. (Semiannual Report No. 32, page 20) Okinaka Ihu Memphis, Tennessee Okinaka Ihu was found guilty of one count of attempting to use a false, forged, counterfeited or altered passport, three counts of false statements, and one count of student aid fraud. The investigation was predicated upon information from the Immigration and Naturalization Service indicating that Ihu attempted to use a false passport to obtain resident alien status. The investigation further revealed that while claiming to be a United States citizen, Ihu obtained approximately $12,000 from five different universities in Georgia and Tennessee. (Semiannual Report No. 32, page 21) Sandra Moorer Waco, Texas Sandra Moorer was sentenced in U.S. District Court, Waco, Texas, to five years probation, ordered to pay $9,159 in restitution, fined $1,000, and ordered to pay a special assessment fee of $200. In August 1994, Sandra Moorer signed a pretrial diversion agreement with the United States Attorney's Office, Western District of Texas, Waco, Texas. An OIG investigation found that Moorer had obtained $6,713 in PLUS loan funds by forging the signature of the University of Houston's financial aid director. Moorer was placed on 18 months probation and agreed to pay restitution of $9,719 (principal and interest) in monthly installments, as directed by the pretrial diversion officer, during the period of the program. This period it was discovered that Moorer had only made one restitution payment to United Student Aid Foundation, and that she stopped reporting to Pretrial Services. Because she had failed to comply with the 1994 pretrial diversion agreement, Moorer was indicted on four counts of student financial aid fraud. (Semiannual Report No. 32, page 22) Charles Donovan and Maureen Donovan Boston, Massachusetts Charles Donovan was sentenced in U.S. District Court, Boston, Massachusetts, to 37 months incarceration to be followed by 3 years of supervised probation. He was also fined $35,000; ordered to pay restitution of $5,112; and assessed court fees of $150. Donovan's sentencing followed his February 5, 1996 guilty plea to racketeering (unlawful extension of credit), bank fraud and credit-card fraud. In a related case, Donovan's wife, Maureen Donovan, pled guilty to federal financial aid fraud in connection with her attendance at Suffolk University, Boston, Massachusetts. On her financial aid applications, Ms. Donovan stated that she was separated from her husband. She also failed to disclose Mr. Donovan's assets and income which were derived from his racketeering activity. During the time period investigated, Mr. and Mrs. Donovan enjoyed a lavish lifestyle. Mrs. Donovan was to be sentenced in Boston in early October 1996. Additionally, an evidentiary hearing is upcoming regarding a pending forfeiture action against a 1990 Ferrari owned by Mr. Donovan. (Semiannual Report No. 32, page 20) Lauren Beauty College Parma, Ohio Stephanie Smigelski, former president/owner Stephanie Smigelski pled guilty to a misdemeanor for "unlawful use of property" in the Cuyahoga County Court of Com-mon Pleas, Cleveland, Ohio, after being charged with grand theft in a one-count indictment. An OIG investigation deter-mined that Smigelski falsified the number of hours students attended the school and thereby obtained $21,105 in Pell Grant funds for students who did not earn enough hours to qualify for a second Pell Grant disbursement. (Semiannual Report No. 32, page 17) American Truck Driving School, Inc. Waco, Texas American Truck Driving School, Inc. (ATDS) was sentenced in United States District Court for the Western District of Texas (Waco Division) and was ordered to pay a fine of $100,000 plus a $200 special assessment fee. No additional restitution was ordered since the judge had previously directed, under a judgment of forfeiture signed in November 1995, that ATDS properties valued at an estimated $2,235,000 were to be forfeited to the United States government. (Semiannual Report No. 32, page 27; Semiannual Report No. 31, page 25; Semiannual Report No. 30, page 28) USA Training Academy Newark, Delaware As a result of a civil action initiated against USA Training Academy, Inc. and its primary shareholder, Robert L. Teeven, the Department of Education has credited $3.6 million to the loan accounts of former students of the school. An additional $2.3 million should be refunded during the next reporting period. The funds to pay these refunds resulted from an OIG investigation that found fraud and misrepresentations by the school and its owner in the administration of the Title IV program. As part of a civil settlement reached with the Department of Justice, the defendants agreed to liquidate their assets and distribute most of the proceeds to the Department of Education. The Department agreed to use part of these proceeds to pay refunds due to USA Training Academy students. The Department has received nearly $12 million from the liquidation and expects to recover a total of about $14.4 million by the time the defendants' properties are completely liquidated under a liquidation process specially mandated by the settlement agreement to maximize the return to the United States. (Semiannual Report No. 32, page 26)