Former Trade School Officials Indicted in Fraud Case
A federal grand jury indicted the former owner and chief financial aid officer of a large Southern California trade school Friday, charging that they had stolen more than a million dollars in federal scholarship funds.
The indictment alleges that Sergio Stofenmacher, 38, and Kenneth Williams, 37, conspired to defraud the U.S. Department of Education by fraudulently obtaining Pell grant funds. The indictment charges the pair with conspiracy, theft, money laundering and making false statements to a federal agency.
The 20-count indictment alleges that the scheme lasted from 1991 to March 1995, when Los Angeles-based IADE American Schools, which had six Southland campuses and one in Florida, shut down after it was raided by federal investigators, responding to complaints from students and employees of the company.
At the time, Stofenmacher fled to his native Argentina, where he is a fugitive, according to Assistant U.S. Attorney Nathan Hochman, the lead prosecutor on the case. It is not clear whether the United States will be able to persuade Argentina to extradite Stofenmacher for trial. Williams, a Venice resident, is expected to be arraigned before a federal magistrate on Feb. 24. The Times was unable to reach either defendant for comment.
In July 1995, the U.S. Senate Permanent Subcommittee on Investigations issued a report on IADE describing it as a paradigm of how the Pell grant program could be abused. The report noted that IADE collected over $58 million in Pell grants, starting in 1989, and by the 1993-94 fiscal year was the nation’s 16th-largest recipient of such grants. The report said:
* Instruction in IADE courses was “woefully inadequate due to a lack of books and equipment, unqualified instructors and deficiencies in course design.”
* IADE engaged in abusive and possibly fraudulent practices, including the falsification of student records, in order to obtain Pell grants for students who either had never attended or who had withdrawn.
* IADE’s owners used the school’s Pell grant money to lease Mercedes-Benz and BMW automobiles, trips to Club Med and child support payments.
Start your day right
Sign up for Essential California for news, features and recommendations from the L.A. Times and beyond in your inbox six days a week.
You may occasionally receive promotional content from the Los Angeles Times.
