oversight

Former Morris Brwon President, Financial AID Director Plead Guilty to Fraud Charges Just Before Trial. Atlanta, GA, May 1, 2006

Published by the Department of Education, Office of Inspector General on 2006-05-01.

Below is a raw (and likely hideous) rendition of the original report.

OIG Investigative Reports, Former Morris Brwon President, Financial Aid Director Plead Guilty to Fraud Charges Just Before Trial
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Investigative Report
FOR IMMEDIATE RELEASE
May 1, 2006
http://www.usdoj.gov/usao/gan/
U. S. Attorney David E. Nahmias
Northern District of Georgia
75 Spring Street, S.W. - Suite 600
Atlanta, GA 30303-3309
Contact: Patrick Crosby
Tel: 404-581-6016
Fax: 404-581-6160
Former Morris Brown President, Financial Aid Director Plead Guilty to Fraud Charges Just Before Trial
Atlanta, GA — DOLORES EVELYN CROSS, 69, of Chicago, Illinois, and PARVESH
SINGH, 64, of Valparaiso, Indiana, have both pleaded guilty to charges relating
to a financial aid fraud scheme at Morris Brown College, a private, non-profit
college in Atlanta. Trial for CROSS was scheduled to begin on Monday. SINGH
entered his plea last week. CROSS entered her guilty plea late this morning.
Both pleaded guilty before United States District Judge Julie Carnes.
"The federal financial aid crimes committed by Morris Brown College's former
President, Delores Cross, and financial aid director, Parvesh Singh, almost
destroyed an important institution of higher education in Atlanta," United States
Attorney David E. Nahmias said after the plea hearings. "Morris Brown is a historic
college that has educated thousands of students and has particularly provided
opportunities to disadvantaged and minority students. The defendants' criminal
conduct hurt the college's students, faculty, staff, and alumni, and even students
who never enrolled but had their good credit impaired. It is important to note,
however, that the current staff and administration of Morris Brown have been
fully cooperative and supportive in this case. The strength that Morris Brown
College has shown throughout this ordeal is an indication of its ability to
survive this criminal activity from within, and to remain a vital and proud
institution of higher learning in Atlanta."
Department of Education Inspector General John P. Higgins, Jr., said of the
case, "It is particularly disturbing that the fraud was carried out by the highest,
most trusted officials of the school. I am proud of the work of OIG Special
Agents in bringing these individuals to justice. I also would like to thank
the professionals from the United States Attorney's Office, the FBI, and the
Department of Education Program Offices who worked tirelessly with the OIG special
agents on this investigation. We will continue to work with others in law enforcement
to see that federal student aid dollars benefit students and parents as intended."
According to U.S. Attorney Nahmias and the information presented in court:
Defendant Cross served as president of Morris Brown College from November 1998
through February 2002. Before she became president of Morris Brown, Dr. Cross
had a lengthy career in higher education, including significant experience in
the administration of federal financial aid programs. Dr. Cross had served for
8 years as the head of a New York state guaranty agency that processed federal
student loans, and she had served as president of Chicago State University before
joining Morris Brown.
Dr. Cross and Parvesh Singh first met and developed a professional relationship
in New York in the late 1980s. In 1995, when Dr. Cross was president of Chicago
State, she hired Singh for the position of Financial Aid Director. In 1998,
when Dr. Cross became president of Morris Brown, she immediately hired Singh
as a consultant for financial aid. In August 1999, Cross hired Singh as the
permanent Director of Financial Aid and also Dean of Enrollment Management at
Morris Brown College. By placing Singh in these dual roles, Dr. Cross gave him
authority over student enrollment and student accounts, as well as financial
aid.
When she was hired, Dr. Cross promised the Board of Trustees, the students,
staff and faculty of the school that she would increase enrollment, improve
the school's academic standing, and make the school a leader among historically
black colleges and universities.
With respect to financial aid, in 1999 Dr. Cross decided to have Morris Brown
participate in the Federal Family Education Loan Program, known as the FFEL
program. Under this program, private lenders make federally insured loans to
college students. The United States Department of Education administers the
program and insures the loans so that any loans that go into default ultimately
are repaid by the federal government.
In February 1999, Dr. Cross signed a program participation agreement under
which she promised to abide by the federal laws governing student financial
aid, specifically including an assurance that she would make timely refunds
of student loan funds which the College was not entitled to retain. Morris Brown
College was heavily dependent on financial aid. Ninety percent of its students
received financial aid, primarily in the form of federal student loans under
the FFEL program. During Dr. Cross's tenure, Morris Brown received financial
aid funds each academic year ranging from approximately $15 million to $25 million.
The FFEL program worked as follows: Students would apply for loans, and Morris
Brown would certify that they were eligible to receive them. Among other requirements,
federal regulations state that a student must be enrolled at least half time
in a degree or certificate program in order to receive a loan. Lenders would
transfer loan funds for student borrowers to Morris Brown on the disbursement
dates specified by the College. Upon receiving the funds, Morris Brown was required
to deliver them to the intended student recipients, by either posting them to
the students' accounts as a credit towards tuition and other costs or by paying
it to them directly, or, if the student failed to enroll, to return the funds
to the lender within 30 days of receipt.
At Morris Brown, enrollment was a two-step process. Students first registered
for classes and then had to settle their account using financial aid funds and/or
private funds to cover tuition and other costs. A student was considered officially
enrolled only after he or she had registered for classes and paid for school.
If a student failed to enroll by a certain date, usually the deadline to drop
or add classes, the Registrar's Office would eliminate that student's classes
from the school's computer system.
Student Accounts was the office that officially enrolled students in the college.
The normal enrollment process required a face-to-face meeting between the student
and an employee in Student Accounts. The employee would verify that the student
was registered for classes, which determined the amount of tuition, and review
the student's account to determine whether the student had sufficient funds
available to pay tuition and fees. Again, Dr. Cross had placed Mr. Singh in
charge of enrollment and Student Accounts.
Morris Brown received student loan funds on behalf of students and then was
required to confirm that students had actually enrolled. Before the school was
lawfully entitled to spend the loan funds, federal regulations required the
school to deliver the loan funds to the student borrower – by posting a credit
on the student's account after the student had enrolled. If the student had
not enrolled for any reason, Dr. Cross was required by law to ensure that the
student's loan funds were returned to the lender.
The evidence would have shown that Dr. Cross closely monitored enrollment levels
and the amount of student loan money coming in to Morris Brown because those
funds were critical to meeting operating expenses. Dr. Cross set specific enrollment
goals each academic year, and she budgeted what she could spend based on those
goals.
When, after the normal registration and enrollment process was complete, the school
had not met Dr. Cross's enrollment goals, she directed Mr. Singh to enroll enough students
to ensure she would achieve her enrollment goal and have the revenue for her budget. She
began this practice in the fall of 1999 and continued it throughout her tenure.
In the Fall of 1999, Singh began a practice of enrolling large numbers of students
who had registered for classes (or merely pre-registered the preceding semester)
but had not completed the enrollment process by physically going to Student
Accounts and satisfying their bill. Singh requested that employees of the Registrar's
Office and/or Student Accounts prepare spreadsheets listing all students who,
according to the college's records, were registered but had not enrolled. He
then directed these employees and others to change these students' enrollment
status on the school's computer system to indicate that they were "enrolled."
The effect of this practice, as Singh knew and intended, was to enable Morris
Brown to transfer the students' loan funds from the restricted federal loan
account to the operating account and then to spend the funds. Witnesses would
testify that Singh referred to this practice as "blanket enrollment."
The Government stated before Judge Carnes that the evidence would show that
Singh knew, based on his long career in higher education, that students who
pre-registered for classes for the next semester often did not actually attend
the next semester. The evidence would further show that Singh came to learn
that students at Morris Brown frequently registered for classes but failed to
enroll for financial and other reasons and as a result stopped attending classes
or never began attending classes in the first place. Based on this knowledge,
and the timing of when he directed blanket enrollments to occur, which was after
the normal registration period and often late in the semester, Singh knew that
at least some portion of the students he was causing to be enrolled were not
actually at Morris Brown attending classes and that Morris Brown was therefore
not entitled to keep the funds. The evidence would further show that Singh knew
that Morris Brown would spend all of the loan funds, once they were transferred
into the operating account, and that due to the College's financial condition
it would not be able to later return the loan funds received for ineligible
students.
Singh engaged in this practice of causing lists of "registered not enrolled"
students to be officially enrolled at Morris Brown, so that the College could
take and use their student loan funds, every semester he was there, including
the Fall of 2001.
The Government also stated that evidence would have shown that Singh's actions
were in response to pressure from defendant Cross who pressed him continuously
to make sure he brought in enough financial aid money to cover Morris Brown's
payroll and other expenses. Additionally, the evidence would show that Cross
herself also personally directed other employees at the College to "blanket
enroll" students so that, in her words, they would not have to return the students'
loan money.
With respect to Count 26 in particular, to which Singh pleaded guilty, the
Government stated its evidence would have shown at trial that on or about August
20, 2001, student loan funds were disbursed to Morris Brown College from three
lenders: Chase Manhattan Bank, SunTrust Bank and American Express Education
Assurance. The Government would have further shown that of those funds which
were disbursed, approximately $92,708 were for students who, according to Morris
Brown's transcript records, took no classes that semester or were enrolled for
less than half-time and thus were not eligible to receive the aid. The Government
would also have had at least two of the intended student recipients testify
and confirm that they took no classes that semester and were not enrolled when
loans were disbursed to the College in their names.
Dr. Cross did increase enrollment at Morris Brown, as she had promised; however,
the additional students brought additional costs. By 2001, the College's expenses
far exceeded its revenues. Dr. Cross was faced with a situation in which the
school had trouble meeting payroll, and was forced to choose which vendors to
pay because they could not pay all of the debts as they came due. The evidence
at trial would have shown that Dr. Cross was desperate to maintain the appearance
of success even in spite of these failures.
By September 2001, Dr. Cross knew that the college owed close to $6 million
to vendors, and more than half of the debt was over 4 months old. The school
was practically insolvent.
In October 2001, Dr. Cross was told that approximately 600 students had registered
for classes but had not enrolled. Dr. Cross was told that diligent efforts had
been made to contact the students with no success. As Dr. Cross well knew, the
school had received student loan funds for the majority of the students but
was not authorized to retain and use the funds unless the students were actually
enrolled at Morris Brown. In fact, the school had already spent the funds. Dr.
Cross directed an employee of the college to enroll the 600 students. That is,
she instructed the employee to bypass the normal enrollment process which required
a face-to-face meeting to ensure the student in fact was attending classes and
wanted to be enrolled. Dr. Cross directed the employee instead to simply enroll
the long list of students; otherwise, she said, she would have to return $3
million in student loan money.
This particular employee refused to do a blanket enrollment because she knew
many of the 600 students on the list were not in fact at Morris Brown, and she
knew it would be wrong to enroll them just to keep their student loan money.
Dr. Cross therefore approached another, more junior employee, and directed him
to do a blanket enrollment. He complied with her orders.
The Government stated that its evidence would show that Dr. Cross knew, based
on her long career in higher education, that students frequently pre-registered
or registered for classes but failed to enroll for financial and other reasons
and as a result stopped attending classes or never began attending classes in
the first place. Based on this knowledge, and the fact that Dr. Cross directed
this blanket enrollment to occur in October, which was in the middle of the
semester, Dr. Cross had to know that at least some portion of the students she
was causing to be enrolled were not actually at Morris Brown attending classes
and that Morris Brown was therefore not entitled to keep their student loan
funds.
In the 2001 Fall semester, the school received and retained a substantial amount
of loan funds from students who were not enrolled. With respect to Count 27
in particular, to which Dr. Cross pleaded guilty, the Government's evidence
was that on or about December 27, 2001, Morris Brown College received student
loan funds from several lenders. Of those funds, approximately $14,000 were
for students who were not enrolled in the fall semester of 2001. The Government
was prepared to have a number of the intended student recipients testify at
trial and confirm that they took no classes that semester and were not enrolled
when loans were disbursed to the College in their names.
CROSS and SINGH are scheduled to be sentenced at a later date by Judge Carnes.
CROSS and SINGH face a maximum penalty of 5 years in prison. A sentencing date
has not yet been set by the Court.
This case was investigated by Special Agents of the Department of Education,
Office of Inspector General, and the FBI.
Assistant United States Attorneys Lynn Adam and R. Joseph Burby IV prosecuted
the case.
For further information please contact David E. Nahmias, United States Attorney
or F. Gentry Shelnutt, Chief, Criminal Division, through Patrick Crosby, Public
Affairs Officer, U.S. Attorney's Office, at (404) 581-6016. The Internet address
for the HomePage for the U.S. Attorney's Office for the Northern District of
Georgia is www.usdoj.gov/usao/gan.
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Last Modified: 09/11/2006
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