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Posted on 1/20/2003, 9:24:15 PM by knak
WASHINGTON (AP) - The Y'Hica Institute for the Visual Arts in London appeared to have all the credentials for certification in a student loan program administered by the U.S. Department of Education - a Web site, a school president, a consulting firm and students who needed financial help.
Unknown to federal officials who certified Y'Hica, the school didn't exist.
But this wasn't just another fraud on the government. This school was an undercover sting operation by congressional investigators, who wanted to learn how closely education officials monitored aid applications from foreign schools.
The investigators from Congress' General Accounting Office had little trouble gaining U.S. certification of the school and obtaining loan approvals for three students from two of three lending institutions contacted.
The undercover agents even tried to leave a clue to unravel the scheme, identifying one of the ``students'' as Susan M. Collins.
Sen. Susan M. Collins, R-Maine, was the lawmaker who asked for the investigation. She is now chairwoman of the Senate Governmental Affairs Committee, and was its ranking minority member when the inquiry began.
Terri Shaw, chief operating officer for the Education Department's Federal Student Aid Office, acknowledged that officials should have verified the school's existence. In this case, the officials ``did not completely follow every step of the procedure which resulted in Y'Hica obtaining preliminary approval for one year.''
Shaw maintained that officials would have caught the scheme before money actually was loaned out, because one lender noticed irregularities in the student applications and notified the department.
The department now is conducting on-site visits of all foreign schools applying for eligibility in loan programs, and also is working with the State Department to verify a school's existence.
The fictitious Susan Collins and the two other ``students'' each were approved by two institutions for $55,000 in loans under the Federal Family Education Loan Program. The investigators had the payments stopped before any money was sent.
The investigators went through a series of steps to create the school, including submission of counterfeit documents.
A school catalogue was printed. Certified financial statements were created for fiscal years 1998 and 1999, signed by a non-existent accountant residing at a phony London address. A fake letter indicated a real university in the United Kingdom validated Y'Hica's academic program. And a fictitious letter from educational authorities in England stated the school was a non-profit institution with degree-granting authority.
After the school was certified, the investigators created identities, addresses and telephone numbers for the applicants. They logged on to the Education Department's web site to obtain Personal Identification Numbers and online applications were completed.
The applications for $18,500 per student then were submitted to Nellie Mae Student Lending Inc., the Sallie Mae Servicing Corp. and Bank of America. Only Bank of America became suspicious and rejected the application.
Congress in the past has criticized the Education Department as doing a poor job of managing its multi-billion-dollar budget, including student loans.
In 2001, the department began using a government database of people who recently found jobs to locate people who defaulted on student loans and initiate collection efforts.
The department's internal watchdog, the inspector general, reported last fall in a semiannual report that investigators spend considerable time tracking down student loan fraud.
In one case, the leader of one fraud scheme and six associates created a fictitious school in New York City to collect federal grants and other assistance. When the scheme was uncovered, the leader was given a six-year prison term and ordered to pay more than $11 million in restitution.
They should be forced to pay for any losses due to their incompetence..........then you would see the pursestrings tied tight!!
He pledged US taxpayer to do that.
Terri Shaw, chief operating officer for the Education Department's Federal Student Aid Office, acknowledged that officials should have verified the school's existence.
OK, she acknowledged it. All is forgiven. No need to fire anybody.
In fact, she forgot to do the really important part – she’s supposed to claim that they couldn’t investigate because they were underfunded. That’s the trick that ensures government incompetence will not only be forgiven but rewarded with additional funding.
Government sucks.
That community voted something like 96% for Hillary, though no deal was made, of course.
Typical that AP would leave out those juicy details.
Wasn't that one of Hillary's friends who Bubba pardoned?
Because all they have to do is keep raising the National Debt.
Notice how close the name is to BOHICA. I either have an overactive imagination or somebody there has a sense of humor. :-)
Of course, their answer: spend more money! They'll now travel to exotic destinations for red carpet treatment vacations, at taxpayer expense. I'm sure the bureaucrats will get dibs on the trips.
If these schools want certification, they should send a cashiers check to cover the expense.
why is the government even sending our tax dollars to foreign schools anyway
Well Duh?!?! Because we've evily siphoned off the wealth of vast areas of the planet and we need to redistribute it back ...</sarcasm
The real question here is why did this Senator decide someone in government needed to be held accountable. Since when did politicians ever give a rats ass about how wasteful, inefficient and corrupt government bureacracy is? What's the real motiviation here?
In my opinion, it's more likely to about exerting power and influence over someone or some organization for their own political sake, revenge, spite, etc. I don't have much confidence most politicians really care about us citizens or how our government wastes our tax dollars. And stepping on other politicians toes by exposing government waste does not often lead to your political career enhancement.
Perhaps I need to study up on this Sen. Collins. Anyone here know where she's coming from?
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Senator Susan Collins (R)
Maine
Republican, Years of Service: 5
| ACU Ratings for Senator Collins: | |
| Year 2001 | 64 |
| Year 2000 | 76 |
| Lifetime | 58 |
2001 Congressional Vote Breakdown:
This bill was: supported
The vote was: 58-45
This Senator voted: In Support of ACU
This bill was: adopted
The vote was: 61-37
This Senator voted: In Support of ACU
This bill was: defeated
The vote was: 22-77
This Senator voted: In Support of ACU
This bill was: adopted
The vote was: 69-31
This Senator voted: In Opposition of ACU
This bill was: adopted
The vote was: 60-40
This Senator voted: In Opposition of ACU
This bill was: adopted
The vote was: 57-43
This Senator voted: In Opposition of ACU
This bill was: passed
The vote was: 84-16
This Senator voted: In Support of ACU
This bill was: supported
The vote was: 57-43
This Senator voted: In Support of ACU
This bill was: passed
The vote was: 53-47
This Senator voted: In Support of ACU
This bill was: defeated
The vote was: 27-73
This Senator voted: In Opposition of ACU
This bill was: defeated
The vote was: 47-51
This Senator voted: In Support of ACU
This bill was: adopted
The vote was: 58-33
This Senator voted: In Support of ACU
This bill was: defeated
The vote was: 41-58
This Senator voted: In Opposition of ACU
This bill was: passed
The vote was: 53-45
This Senator voted: In Support of ACU
This bill was: adopted
The vote was: 53-45
This Senator voted: In Opposition of ACU
This bill was: defeated
The vote was: 42-54
This Senator voted: In Support of ACU
This bill was: adopted
The vote was: 79-20
This Senator voted: In Support of ACU
This bill was: adopted
The vote was: 67-33
This Senator voted: In Support of ACU
This bill was: adopted
The vote was: 65-33
This Senator voted: In Support of ACU
This bill was: defeated
The vote was: 56-44
This Senator voted: In Support of ACU
This bill was: adopted
The vote was: 53-47
This Senator voted: In Opposition of ACU
This bill was: adopted
The vote was: 50-50
This Senator voted: In Opposition of ACU
This bill was: defeated
The vote was: 48-51
This Senator voted: In Support of ACU
This bill was: adopted
The vote was: 51-47
This Senator voted: In Opposition of ACU
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GAO loves to pull stunts like this. One of their standard ones is to submit time cards for Mickey Mouse and Donald Duck, and then wait to see if pay checks get issued. Often as not, they are... at which point they walk into the controller's office and throw them on the desk.