Ex-Student Loan Chief Convicted
TAMPA, Fla. (AP) _ A former Florida Federal Savings Bank executive has been convicted in federal court of bilking the government-backed student loan program out of $18 million.
Jeffrey A. Flatten was convicted Thursday of fraud and conspiracy in connection with 17,000 false insurance claims seeking $35 million from the federally guaranteed program. The government paid out about $18 million before the fraud was discovered.
Flatten, who was vice president in charge of student loans, faces up to 135 years in prison and more than $6 million in fines. Sentencing was set for Nov. 14 by U.S. District Judge Ben Krentzman.
Flatten, 39, is the third ex-Florida Federal official convicted in a scheme to defraud the program by submitting false claims for reimbursement of defaulted student loans in 1986 and 1987.
Robert O. Harmas, former vice president of operations for the student loan division, and James J. LaMantia, former manager of collections and claims for student loans, were convicted May 1 for their part in the fraud.
Harmas was sentenced to two years in prison and ordered to pay $2,150 in court costs. LaMantia was placed on three years probation, assigned 300 hours community service and ordered to pay $1,500 court costs.
The St. Petersburg-based thrift also was convicted of similar charges and forced to pay $19 million in fines and restitution. It was penalized by being denied the right to file insurance claims on hundreds of millions of dollars in delinquent student loans.
Company officials estimate the student loan case cost the company up to $100 million. Florida Federal, once the state’s biggest thrift, is an apparent candidate for a government takeover.
Normally, loan collectors are supposed to make a series of telephone calls and write letters to deadbeat borrowers. Each attempt is supposed to be recorded.
But under Flatten, loan collectors faked collection efforts and made false entries on telephone logs and entered copies of letters in files that were never mailed out, the government claimed.
On the stand, Flatten said he knew nothing about the falsification of documents and said it was the work of people he supervised.
Assistant U.S. Attorney Terry Flynn contended in closing arguments that, as department head, Flatten ″was the quarterback and the team does what the quarterback tells them to do.″
He was convicted of conspiracy, 15 counts of filing false statements to the U.S. Department of Education, four counts of mail fraud, three counts of filing false claims and two counts of theft of government funds.