Former recruiters claim fraud at Academy of Art in California

FROM TIMESSTANDARD.COM

Four former recruiters at the Academy of Art University in San Francisco are accusing school officials of using an illegal compensation plan to cheat the federal government out of millions of dollars in financial aid, the San Francisco Chronicle reports.


In a so-called "whistleblower" lawsuit filed in federal court, the former employees claim the school adjusted their pay up or down, depending on how many students they registered. The suit also claims the school offered bonus trips to Hawaii as an incentive, then lied to the government about the incentives, the newspaper said.
The former recruiters—Scott Rose, Mary Aquino, Mitchell Nelson and Lucy Stearns—are suing under the False Claims Act, a federal law that allows individuals to sue on behalf of the government, and receive 15 to 30 percent of any settlement or money recovered, said their attorney, Stephen Jaffe.

The government outlaws so-called "incentive compensation" so that schools won't try to entice unqualified applicants or those who can't afford their student loans.

But offering incentives can be tempting for schools because of federal financial aid payments, which are paid directly to the college. And once a student is enrolled for 60 percent of the term, the school can keep the payment.

"It's just gravy," said Jaffe. "Schools have a tremendous incentive to enroll as many students as possible."

In legal papers filed Thursday, school officials denied any wrongdoing, while saying the compensation plan was legal.


"At all times, the Academy of Art complied with the regulations regarding compensation of admissions representatives, said Steve Gombos, a Virginia attorney representing the art school, told the Chronicle.

The school has tried to have the suit thrown out ever since it was filed in 2009, arguing that the compensation plan was legal because of a loophole at the time that permitted incentives under some circumstances.

Known as "safe harbor," the loophole let colleges pay recruiters based on the number of students they enrolled as long as the recruiters also were judged on other performance criteria, and if their pay was not adjusted more than twice a year.

Though federal prosecutors have declined to intervene, instead allowing private attorneys to litigate the case, last month U.S. District Court Judge Phyllis Hamilton ruled that the case could go forward.

Teacher accused of embezzling from graphic arts club in California

FROM http://www.pe.com/ -

An Elsinore High School teacher, accused of misappropriating about $500 from a school graphic arts club he advised, pleaded not guilty Thursday to misdemeanor embezzlement.

Scott Bammes, 49, has been on paid administrative leave from his job at the Wildomar school since spring because of the investigation, Lake Elsinore Unified School District spokesman Mark Dennis said. Bammes was charged last month, court records show.

District officials in December reported a possible embezzlement from the Tiger Graphix program after an audit suggested several thousand dollars were unaccounted for, according to a Riverside County Sheriff's Department investigator's statement in support of an arrest warrant.

Defense attorney Matthew Singer said Bammes has provided documentation to authorities showing that much of the money the district thought was missing had been used for legitimate expenses.

Tiger Graphix is a vocational program in which students learn graphic arts and business skills, Dennis said. Students take orders for pay, primarily for silk-screening of items such as T-shirts and hats. The money the class brings in belongs to the district, Dennis said. About 150 students participate in the program each year.

Concerns were raised after Bammes asked a Tiger Graphix customer to make a check payable to him instead of Elsinore High School, the investigator's statement said. In December, Bammes tried to give a district official a check for about $500, saying "he had done some wrong things," the statement said. In April, he tried to give the high school bookkeeper a $500 check, saying he borrowed money and wanted to pay it back, the statement said. Neither check was accepted.

Charter School Operators in California Appear in Court on Embezzlement Case

The operators of a charter campus in the San Fernando Valley made their first court appearance today on charges of embezzling more than $200,000 in school funds.Yevgeny "Eugene" Selivanov, 38, and his wife, Tatyana Berkovich, 32, who run Ivy Academia charter school, are accused of taking the money between 2004 and 2009.They are charged with five felony counts of misappropriation of public funds, embezzlement by a public or private officer and filing a false tax return, along with a misdemeanor count of failing to file a statement of their economic interests for 2008, according to the criminal complaint.Selivanov is additionally charged with six counts of misappropriation of public funds, embezzlement by a public or private officer, money laundering and filing a false tax return, while Berkovich is also charged with a misdemeanor count of conflict of interest.If convicted as charged, Selivanov faces a possible maximum prison term of 14 years and two months, while his wife faces up to nine years behind bars, according to the District Attorney's Office.
The Tarzana couple started the school in 2004. Ivy Academia has four campuses, in Woodland Hills, West Hills, Winnetka and Chatsworth, and bills itself on its website as "one of the highest performing charter schools in California."The couple also own a private "for public" preschool, Academy Just for Kids, which shares a campus with the charter school, according to the District Attorney's Office.The complaint against them alleges that a school district auditor "identified several areas which appeared to involve commingling of public with private funds and failure to accurately report financial transactions in the school's accounting records."Los Angeles Superior Court Judge Hilleri G. Merritt ruled that the two will be allowed to remain free on their own recognizance on the condition that they make arrangements to be booked by June 18. They are scheduled to be arraigned July 19 at the downtown Los Angeles courthouse.The judge also ordered the couple not to use any Ivy Academia charter school or support funds or credit cards for personal use, including groceries, restaurant meals, gifts and clothing, and not to open any new bank accounts, credit cards or credit lines on behalf of the school."We expect that they will be fully exonerated in this matter and be able to continue to serve the students," defense attorney Janet I. Levine said outside court.In a statement released after the couple were charged Thursday, Levine said they are "educators and innovators, and are confident that any fair and complete review of the facts will show they acted honorably, ethically and legally in administering Ivy."In a letter sent to Ivy Academia parents, the school noted that the charges "will in no way interrupt Ivy's day-to-day operations" and that Selivanov and Berkovich will "continue to work at the school."The Los Angeles Unified School District's Office of the Inspector General began an audit of Ivy Academia charter school in June 2006 as one of several charter schools to be audited.The case was referred to the district's Office of Investigations in August 2006, then to the District Attorney's Public Integrity Division in May 2008. The state Franchise Tax Board also investigated the case. Charter schools are operated with public funds.

Murrieta, California woman sentenced in school embezzlement case

The former treasurer of the Murrieta Elementary School parent teacher committee, who was convicted earlier this year of embezzling from the organization, has been sentenced to jail time and probation, court records show. Samantha Babbitt, 40, was sentenced Friday to 210 days in jail and five years probation by Judge Kelly Hansen at the Southwest Justice Center in French Valley, court records show.
Hansen ordered Babbitt to surrender June 4 to serve 30 straight days in jail, with the remainder of her sentence to be served on weekends, court records show.
Babbitt was arrested by Murrieta police in September after nearly $43,000 was discovered missing from the committee's account, police said at the time.
Though Babbitt pleaded guilty to embezzling, she said the amount taken was significantly less than reported, prosecutor Arthur Chang said.
A hearing is set for June 4 to determine the total amount Babbitt will be required to pay back.
Babbitt was the committee treasurer for two years until her term ended last summer.
The discrepancy in the books was discovered when they were handed over to the current president and treasurer, Murrieta Valley Unified School District spokeswoman Karen Parris said at the time.

Sutter, California school employee arrested for embezzlement

A Sutter Union High School District employee was arrested Sunday on suspicion of embezzling from the district.  Christopher Lawrence Crabtree, 37, of the 2100 block of Pepper Street, Sutter, was arrested by the Sutter County Sheriff's Department at 3 p.m. at his home. He was booked into Sutter County Jail, where bail was set at $15,000. He was no longer being held Monday.
Crabtree used a school district charge account to buy new auto parts for his personal use, according to Sheriff's Department spokeswoman Brenda Baker. He worked in the custodial and transportation departments, according to a jail booking sheet.
Crabtree is scheduled to be arraigned at 9 a.m. April 12 in Sutter County Superior Court.
Custodian Crabtree lists the same Sutter address in the 2100 block of Pepper Street as Larry Crabtree, a former teacher at Sutter High School.
Larry Crabtree works as a consultant preparing the orchard at the high school for harvest and supervising students' agricultural projects. He is the father of Tim Crabtree, 44, a trustee for the Sutter Union High School District and the target of a recall that Larry Crabtree supports.
Backers of the recall, which goes before voters in June, contend that Tim Crabtree "has demonstrated that he has a personal vendetta against the school district" and certain personnel including his father.
Tim Crabtree has said that he faces the recall for asking questions about school district policies and because he is not a rubber stamp for the district administration.
Neither Tim nor Larry Crabtree could be reached Monday for comment.

3-year term for Fresno school embezzlement

A former business manager who has admitted to stealing $422,000 from a tiny southwest Fresno school district was sentenced Tuesday in Fresno County Superior Court to three years in prison.
Leonard Robinson, 52, wrote in a letter to Judge Jonathan Conklin that he was sorry for his actions.
Attorney Glenn LoStracco, who represented Robinson, had sought probation, arguing that Robinson stole from Orange Center Elementary School District to feed a gambling habit, not to live a lavish lifestyle.
But Conklin stuck to a three-year prison sentence that he had indicated in September when Robinson pleaded guilty to grand theft and second-degree burglary.
Robinson had faced a maximum term of five years and eight months in prison.
Prosecutors say Robinson, who was the business manager for 21 years, embezzled the money from October 2005 to January of this year. The burglary charge stems from stealing a district computer's hard drive in an attempt to cover up the theft, prosecutors say.
The Orange Center school district on Cherry Avenue has one school that serves about 310 students in kindergarten through eighth grade



Read more: http://www.fresnobee.com/2010/03/02/1843961/fresno-school-embezzlement-nets.html#ixzz0iSirydkC

Police investigate theft case at San Diego State

The San Diego State Police Department is officially investigating an embezzlement case from within Associated Students Business Services.

The incident was first reported in the Jan. 20 campus police media bulletin. According to the bulletin, an employee who received refunds reportedly deposited the money into a separate account he created for himself instead of entering them into customer credit card accounts.
Police Capt. Lamine Secka said no one has been charged.
Because of the ongoing investigation, Secka said he could not disclose how long the employee had supposedly been embezzling money, how the office discovered the situation or what the employee was supposed to be refunding.
Secka added that police do not yet know how much money may have been embezzled.
While the police report was taken to the A.S. Business Services office, a source who wishes to remain anonymous confirmed that the incident occurred in the Aztec Recreation Center.
A.S. Associate Executive Director Christina Brown said only one employee is being investigated.
“At this point I just want to say they are no longer with us,” she said.
Brown said A.S. discovered the situation, but she could not explain how or disclosed the amount supposedly embezzled.
“To tell you the truth, we don’t know for sure,” Brown said. “We’re investigating that. We have an idea, but we’re still looking into it.”
A.S. is pursuing a legal case, so Brown said she did not want to say anything that would jeopardize the investigation.
“This isn’t me trying not to be transparent; this is literally just the legal system at this point,” Brown said. “This person has rights and they’re only a suspect at this time because nothing has been proved legally.”
In fact, Brown feels the media bulletin disclosed too much information.
“I can’t tell you any more than what it said in that log,” she said. “To tell you the truth, too much was said in that log. We are pursuing this legally and so we’re already a little bit frustrated at how much was put in that log because of the person’s rights.”
While the bulletin gives the impression that customers were affected, A.S. believes that wasn’t the case, Brown said.
“(The bulletin) is not really accurate,” she said. “It circles around what happened, but that’s not exactly what happened. I see where it makes it look like customer credit cards could have been affected and I think it’s very important to say we believe they were not.”
Brown said A.S. is the victim and that customers should not be concerned.
“At this time we do not believe that any of our customers or credit card information has been compromised in any way and we take that very seriously and have all of the policies and procedures in place to protect that,” she said. “If there does prove to be any type of a loss, it would be a company loss that we believe would be covered under insurance.”
In cases such as these, Secka suggests customers contact their financial institution or the organization customers have their account with if they suspect any wrongdoing.
“If (customers) have reason to believe that something occurred, then yes, they can contact their police department,” he said.
Secka said customers should also take precautions to ensure their bank accounts are safe.
“What we recommend people do periodically regardless is to keep an eye on your account,” he said. “Make sure that the transactions you’re expecting are actually taking place. We make that recommendation when you’re talking about identity theft and all kinds of things.”
Secka said embezzlement cases do not frequently occur on campus. He could not guess what the potential penalty could be, but that it could extend anywhere from “just being reprehended and / or fired to serving jail time and having to repay the money.”
The total value of the allegedly embezzled money would greatly affect what kind of punishment the suspect would receive if the investigation proves the employee guilty.
According to California Penal Code 487, if the value of the allegedly embezzled property exceeds $400, prosecutors can file grand theft charges.

EX-UC DAVIS STAFFER UNDER NEW SCRUTINY IN EMBEZZLEMENT PROBE

A former University of California, Davis, employee whom officials have accused of inflating crime statistics may have funneled university money into a private account and paid her mortgage with it, campus police said in a court document released December 29, 2009.
As part of their embezzlement probe of Jennifer Beeman, investigators also raised the question of whether she had appropriately paid $540,000 to a Bay Area woman and her companies over a seven-year period.
Reached at home Thursday, Beeman declined to comment.
Police detailed their suspicions regarding Beeman, the former director of the UC Davis Campus Violence Prevention Program, in court papers filed as they sought a search warrant in early December.
Yolo Superior Court made the statement available this week.
In it, UC Davis Police Sgt. Paul Henoch wrote that Beeman, 52, first came under scrutiny in September 2008 for overstating her travel expenses.
Further investigation showed that she had asked for reimbursement for airfare to San Diego when her ticket had already been paid for by an outside group. She had also submitted travel mileage for meetings she did not attend, Henoch wrote
University officials requested an internal audit and placed Beeman on administrative leave
In February 2009, the audit concluded that Beeman had improperly submitted travel expenses of more than $1,000.
In October, campus officials said she had repaid $1,372 and retired in June.
On the same day, they also revealed Beeman had grossly inflated the number of forcible sexual offenses in three years of mandatory reports to the federal government. No reason was given.
Administrators also said in October that police were pursuing a second investigation into Beeman's finances.
Details of that investigation were spelled out in a Dec. 1 statement by Henoch. He wrote that investigators had learned in early 2009 that Beeman had a "secret" checking account for a campus program called Take Back the Night.
Beeman told a co-worker that she had paid her home mortgage from the account, he wrote.
The account was located in July at the USE Credit Union, with Beeman listed as the only signatory, the police sergeant said in his statement.
Auditors found that nearly $12,000 in university funds had been deposited into the account, and Beeman had withdrawn $5,400 for personal use between January 2002 to March 2009, Henoch wrote.
The auditors also found that Beeman had authorized $25,000 in payments of federal grant funds to a company run by a woman named Granate Sosnoff to produce a campus anti-violence guide that was never completed, he wrote.
In November, Henoch said he discovered that the Campus Violence Prevention Program had paid Sosnoff and various media and marketing firms that she controlled more than $540,000 between May 2000 and April 2007.
"At this time it is unknown what type of relationship Beeman and Sosnoff have over the years," he wrote, "if it is strictly business or if monies have exchanged hands between them.
Sosnoff, who lives in Oakland, did not respond to a phone message Thursday.
The 47-year-old woman developed a series of acclaimed rape awareness posters for the university that were paid for with federal grant dollars.
The striking posters for the campaign, called "Voices Not Victims," were featured in Ms. magazine and sought by other universities and the Ford Foundation's office in Africa, according to a university press release from 2001.
The search warrant approved in December by Yolo Superior Court Judge Thomas Warriner sought bank records for both Beeman and Sosnoff.
UC Davis Police Chief Annette Spicuzza said Thursday that, to her knowledge, the banks have not yet returned the requested records.
No decisions about whether to charge Beeman or Sosnoff will be made until they do, she said.
"This is an open investigation," Spicuzza said. "We're going to look at everything."

FULLERTON, CALIFORNIA PASTOR ACCUSED OF SELLING STUDENT VISAS

 A judge agreed on December 23,2009 to electronic monitoring for a Fullerton pastor facing federal charges for allegedly using a religious university as a front to sell student visas that netted him thousands of dollars a month.
Samuel Chai Cho Oh, the owner of California Union University, surrendered to U.S. Immigration and Customs Enforcement agents on Tuesday, according to ICE spokeswoman Virginia Kice.
Oh, who is also the pastor of the Union Church on the university's campus, is accused in a criminal complaint of conspiracy to commit visa fraud and faces a maximum of five years in prison if convicted, Kice said.
Oh, 65, made his initial court appearance this afternoon before U.S. District Judge Marc L. Goldman, who agreed to home confinement but ordered him to post a $30,000 bond.
Defense attorney Adriaan F. Van Der Capellen requested that his client be released without having to post bail, but Assistant U.S. Attorney Rob Keenan said he wanted some sort of guarantee that Oh will appear in court because he has contacts in South Korea.
Van Der Capellen surrendered Oh's passport after the hearing. The attorney said Oh could not post bail because the government has seized most of his assets.
He was hospitalized for high blood pressure Tuesday before being cleared to stay overnight in the Santa Ana jail, Van Der Capellen said.
"He's a good man, an honest man," Van Der Capellen said before the hearing.
If there was a scheme to sell student visas at the university, Oh was not aware of it, Van Der Capellen said. The Korean-born Oh's English is "rough," Van Der Capellen said.
He needed an interpreter in court today.
Oh, a naturalized U.S. citizen who has lived in Garden Grove the past 13 years, is a Presbyterian minister who has traveled all over the world with his ministry, Van Der Capellen said.
The government alleges that Oh collected $40,000 to $50,000 monthly from people posing as foreign students. The "students" were given forms that allowed them to go to a U.S. Embassy or consulate abroad and apply for a student visa, Kice said.
The university's federal certification was revoked Oct. 18, but until then, the school at 905 Euclid St. was authorized to accept foreign students pursuing religious and biblical studies as well as learning English as a second language and Oriental medicine, Kice said.
During their 10-month investigation, ICE agents arrested and questioned more than 30 foreign nationals who claimed they paid Oh anywhere from $600 to more than $10,000 for the documents allowing them to get student visas and sometimes bogus degrees, Kice said.
Kuy Nam Ko, who was an Interpol fugitive, is named in court papers as a witness. Ko, who was arrested Aug. 13 by ICE agents, was wanted in South Korea for an alleged embezzlement scheme in 2003, according to ICE.
He was accused of fleeing to the United States with $650,000 from the sale of a church in Seoul, according to court papers.
Ko told authorities he met Oh in 2007 through a close friend in South Korea, and he worked for Oh as a pastor at his church on the university campus, according to ICE. Ko told investigators he never saw any students or teachers on campus and thought it was a fraud, according to the ICE official.
Many of the university's students told agents they never attended class nor saw any teachers or other students on campus, Kice said. One man said he received a bachelor's degree in education and detailed to agents how Oh allegedly staged a phony graduation ceremony on campus last May, Kice said.
ICE agents paid an unannounced visit to the university March 26 and found little evidence of scholastic activity, according to court papers. While waiting for Oh to arrive, the agents toured the campus and found 14 mostly empty classrooms, according to court documents.
The agents only found an English-as-a-second-language class and a computer class in session, and both classes were associated with the church, according to court papers. A schedule on the bulletin board was from 2007, according to authorities.
Federal agents seized computers and more than 300 student files from the university in October, Kice said. The agency has also seized more than $400,000 in two separate bank accounts maintained by Oh and an associate, she said.
Oh accepted mostly Korean students, but the university also had foreign nationals from more than 20 countries.