Millions Recovered in Student Aid Probe

Investigations of federal college student aid and other Education Department programs have recovered more than $11.8 million in misused taxpayer dollars in six months, the department reported Thursday.

The department’s inspector general, James B. Thomas Jr., who is responsible for monitoring fraud, waste and abuse in departmental programs, said the misused funds included fraudulently obtained student financial aid, false claims of eligibility by aliens and embezzlement and theft by college and bank officials.

A number of cases, the department said, concerned false claims of eligibility by aliens who did not qualify for student aid. For example, a Kansas resident organized a “marriage ring” in which alien men paid local prostitutes $300 for sham marriages designed to qualify them for student aid.

Vulnerable Areas

The semiannual report, for the period from April 1 through Sept. 30, said that the Education Department collected $10.1 million as a result of audits and recovered $1.7 million from its investigations.

Thomas said that his office focused its efforts “on susceptible or vulnerable areas,” particularly college student aid. Its findings, he said, “should not be considered indicative of conditions throughout the department’s programs and operations.”

As a result of the six-month review, the inspector general recommended that an additional $23.1 million be pulled back by the department from certain states, colleges, local school districts and banks because of their “apparent mismanagement” of federal funds.

The inspector general’s report covered a wide range of departmental activity but concentrated on grant, loan and work-study programs for college students, which cost $9.5 billion--about half of the department’s budget--in fiscal 1985.

79 Convictions

Investigations by the inspector general’s office during the six months, the report said, resulted in 98 criminal indictments and 79 convictions. Of these, 87 indictments and 68 convictions involved college student aid programs.

Among cases cited in the report:

--Two high officials at an unidentified college were indicted on charges of theft, perjury and conspiracy in August after they directed employees to falsify student records, resulting in a loss of about $163,000 in state and federal funds.

--A former student financial aid assistant at a community college in Pittsburg, Calif., pleaded guilty in August to fraud charges after she made grants and loans to non-existent students. The scheme netted the woman $35,916, the report said.

--A San Francisco woman was sentenced in July to two years in prison for using 10 false identities at two colleges to obtain $29,000.

--A student received more than $100,000 in student aid from several federal programs after falsely declaring that he was eligible. The man, a doctor now practicing in Massachusetts, pleaded guilty to the charges in October and is awaiting sentencing.