11 Charged in Education Department Fraud

Authorities charged 11 people in what a federal prosecutor called a million-dollar fraud scheme against the Education Department.

The suspects, all of whom live in Maryland and the District of Columbia, defrauded the government of more than $300,000 in property and more than $700,000 in false overtime claims, U.S. Atty. Kenneth L. Wainstein said Wednesday.

The indictments are part of a long-term investigation into the department, in which several people, among them three former employees, have already pleaded guilty.

Wainstein said one suspect, Elizabeth Mellen of Washington, a department employee, ordered computers, cellular telephones, video cameras and other electronic equipment on department accounts but kept the items for herself, friends and family members.

Wainstein also alleged that Mellen routed a department toll-free telephone number to a friend’s home so relatives could call long-distance; gave friends department cell phones on which they made “hundreds or thousands” of personal calls; and approved thousands of dollars in overtime pay for employees who either didn’t work the hours or used the time to shop for Mellen or install telephone wiring at her home and the homes of others.

On one occasion, Wainstein said, workers claimed work time for driving to Baltimore to buy crab cakes for Mellen.

Congress has been scrutinizing the department’s books since learning last year of schemes in which $3 million in grants was stolen.

Education Secretary Rod Paige last month said he would appoint an eight-person “strike team” to uncover waste, fraud and errors in the department. Paige promised to deliver “a clean audit” in 18 months.

The department has a $44.5-billion budget and manages billions of dollars more in student loans. In the last three years of the Clinton administration, the department lost track of $450 million, the department’s chief inspector told lawmakers last April, although $250 million of it eventually was accounted for.