Former school official indicted Director, four others accused of falsifying aid eligibility data

January 06, 1996|By Marcia Myers | Marcia Myers,SUN STAFF

A federal grand jury has indicted the former director of a private Baltimore vocational school, who is accused of falsifying more than 500 school records to make the school eligible for federal aid in excess of $1 million.

Arthur Nelson III, 54, of Harrisburg, Pa., was fired from the Temple School in 1993. He is charged with six counts of wire fraud.

Also charged were four other employees of the school, which provided vocational training in electrical repair, medicine, business, accounting and secretarial skills, until it was closed in 1994 in the wake of the irregularities.

Over a three-year period, until March 1993, Mr. Nelson is alleged to have directed employees to change income and dependency information on student applications. Prosecutors say the staff falsified IRS forms, omitted marital status information and fabricated supporting documents, including faking notarized statements supposedly signed by relatives of students.

Student signatures also were forged on financial aid documents to meet application deadlines, and records were altered to reflect higher student retention rates, according to court records.

"It was a concerted effort to defraud the government," said U.S. Attorney Lynne A. Battaglia. "The students didn't necessarily know what was happening."

The problems were reported to the government in 1993 by the school's operator, National Education Centers (NEC) of Irvine, Calif., which discovered the irregularities during an audit.

Mr. Nelson's lawyer, Geoffrey Garinth-er, said the former director was not aware of the problems, and was shocked when NEC fired him "without explanation" in early 1993.

"If any mistakes were made during his tenure as director of the Temple School, they were the result of his zeal to educate students who were not being served by mainstream institutions, and by financial pressures exerted by his employer, NEC," Mr. Garinther said.

"He is confident that when this matter is concluded, it will be clear that his motivation was to serve those students."

Also charged with one count of fraud each were: Edward Kleinman, director of admissions; Barbara Taylor, finance director; Gigi Reid, financial aid officer; and Sharon Hodge, director of education. All were fired in 1993.

"These were very serious allegations, and we treated them as such," said Connie McCluskey of the National Education Corp., which ran NEC. "It was very improper conduct."

NEC had paid Mr. Nelson more than $44,000 in bonuses based on records he supplied. The company has repaid $1.8 million to )) the U.S. Department of Education and about $650,000 to the Maryland Higher Education Loan Corp., and the Maryland Department of Education to compensate for the fraud.

National Education Corp. provides education and training services nationwide, primarily to schools, educational publishing companies and consumers.

Temple School, in the 3600 block of O'Donnell St., was closed in 1994, and the company has gotten out of the business of vocational training.

Although the school is closed, Ms. Battaglia said it has caused difficulties for other schools trying to obtain federal assistance for students.

"It's affected institutions throughout this area that are legitimate, because the Department of Education has been even more stringent in monitoring this," she said.

If convicted, Mr. Nelson could get up to five years in prison and a $250,000 fine for each count.

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