Court aids student loan prosecutions Prosecutors need only prove knowledge of misuse

November 05, 1997|By SUN NATIONAL STAFF

WASHINGTON -- The Supreme Court made it easier yesterday for federal prosecutors to win criminal cases against colleges or trade schools that embezzle or steal government-guaranteed student loan funds.

To gain a conviction on a charge that those funds have been appropriated for personal use, prosecutors need prove only that those involved knew they were misusing the money, the court ruled unanimously.

There is no need for prosecutors to prove, in addition, that the defendants intended to defraud the government as the backer of student loans, the court said. A criminal fraud intent, it said, is not part of the law.

Under federal law, banks and others issue loans to students for college or trade school education, and the federal government ensures that the loans will be repaid. If a student drops out, the school must refund the loan money not used.

Garrit Bates of South Bend, Ind., was charged with diverting loan money into management fees for his consulting firm, which managed several technical and vocational schools. Bates sought to have the charges dismissed because he was not accused of fraud against the government as loan insurer.

Yesterday's ruling clears the way for his trial.

Pub Date: 11/05/97

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