oversight

Husband and Wife Charged with Bilking PELL Grant Program - Alleged Fraud Yielded $13 Million. Philadelphia, PA, June 30, 2005

Published by the Department of Education, Office of Inspector General on 2005-06-30.

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

OIG Investigative Reports, Husband and Wife Charged with Bilking PELL Grant Program -- Alleged Fraud Yielded $13 Million
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FOR IMMEDIATE RELEASE:
June 30, 2005
U.S. Department of Justice
United States Attorney
Eastern District of Pennsylvania
615 Chestnut Street - Suite 1250
Philadelphia, Pennsylvania 19106-4476
(215) 861-8200
Husband and Wife Charged with Bilking Pell Grant Program - Alleged Fraud Yielded $13 Million
PHILADELPHIA – United States Attorney Patrick L. Meehan, F.B.I. Special
Agent-in-Charge Jack Eckenrode, and U.S. Department of Education Inspector General
Jack Higgins, today announced the filing of an Indictment1 charging Alexander
Lebed and Larisa Lebed with 26 counts of wire fraud, eight counts of mail fraud,
and 95 counts of money laundering. The indictment alleges that the defendants,
Alexander Lebed and Larisa Lebed (husband and wife), owned CSC Institute, a
school with campuses in Southampton and Philadelphia, PA and Cherry Hill, NJ,
that offered vocational training for adult students in business, medical and
computer fields, and in English as a second language; that from 1998 to 2005,
the defendants engaged in a scheme to defraud the U.S. Department of Education
of federal student financial aid, specifically, Pell Grant funds; and that as
a result of the defendants’ fraud, CSC Institute received approximately $13
million in Pell Grant funds from the Department of Education, of which the defendants
personally received approximately $4.3 million.
“The Pell Grant program represents a brighter future for thousands of people.
It changes lives and provides hope. But to the defendants, that program represented
a seemingly endless supply of cash,” said Meehan. “They tricked and manipulated
a system that was put in place to help people improve their lives through education
and, in a sense, took the taxpayers to school.”
The indictment alleges that the defendants perpetrated their fraudulent scheme
by making misrepresentations to the Department of Education, CSC’s accrediting
agency, and CSC’s independent financial auditor in order to obtain Pell Grants
for students who were ineligible for such grants, and in order to retain Pell
funds which CSC was required to refund to the Department of Education. Specifically,
the indictment includes allegations that:
The defendants obtained Pell Grants for students whom the defendants knew
were ineligible for such grants;
The defendants obtained Pell Grants by misrepresenting that students were
enrolled in Pelleligible educational programs, although the defendants knew
the students were enrolled in programs that were ineligible for Pell Grants;
The defendants created fake student attendance records which falsely reflected
that students were present in class, when in fact those students were not
enrolled in the class, or had never enrolled in, did not attend, or had dropped
out of CSC;
The defendants created fake tests reflecting that students had completed
and passed such tests, when in fact those students were not enrolled in the
class, or had never enrolled in, did not attend, or had dropped out of CSC;
The defendants violated conditions imposed by CSC’s accrediting agency,
in order to obtain accreditation that would render CSC eligible to receive
Pell Grants;
The defendants falsely represented the point at which students had dropped
out of class, in order to retain Pell funds that CSC was required to refund
to the Department of Education; and
The defendants paid recruiting bonuses to CSC employees in violation of
Department of Education regulations, and concealed such bonuses from the Department
and CSC’s auditor by paying bonuses with checks written on the account of
an unrelated chiropractic business owned by the defendants.
INFORMATION REGARDING THE DEFENDANTS
NAME
ADDRESS
AGE OR DATE OF BIRTH
1. Alexander Lebed
102 Providence Drive Richboro, PA
November 5, 1968
2. Larisa Lebed
102 Providence Drive Richboro, PA
July 3, 1971
If convicted, each defendant faces a maximum possible sentence per count of
20 years imprisonment, a $250,000 fine, and three years supervised release.
The case was investigated by the Federal Bureau of Investigation, the United
States Department of Education, the Department of Education Office of Inspector
General, and has been assigned to Assistant United States Attorneys Judson Aaron
and Andrea Foulkes.
UNITED STATES ATTORNEY'S OFFICE
EASTERN DISTRICT, PENNSYLVANIA
Suite 1250, 615 Chestnut Street
Philadelphia, PA 19106
Contact: RICH MANIERI
Media Contact
215-861-8525
COPIES OF NEWS MEMOS AND RELATED DOCUMENTS CAN ALSO BE FOUND
AT HTTP://WWW.USDOJ.GOV/USAO/PAE
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Last Modified: 11/16/2005
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