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Concerns Raised Over Education Theft

September 19, 2000

WASHINGTON (AP) _ House lawmakers are demanding that Education Department officials explain how $1.9 million meant for children who live on Indian reservations and military bases apparently was diverted to buy a Maryland house, a Cadillac and other items.

It’s the second time this year that department officials have had to contend with large-scale fraud allegations.

``It just makes you furious,″ said Rep. Pete Hoekstra, R-Mich., a longtime critic of department bookkeeping who’s seeking to legislate a congressional audit. ``This is just one more time that shows the need for somebody to get serious about cleaning up Department of Education finances.″

In a civil action filed in July, the Justice Department alleges that $1.9 million intended for two school districts in South Dakota was diverted on March 31 into two bank accounts in Upper Marlboro, Md.

The Justice Department filing says the money placed into those two accounts was used to draw cashier’s checks to pay $46,900 for a Cadillac Escalade, more than $50,000 for a Lincoln Navigator and $135,000 for a house in Maryland. The document says the rest was diverted into other bank accounts.

Education Department officials said Monday they could not comment on ongoing cases, but department investigators were expected to testify Tuesday before the House Education and Workforce Committee about auditing problems at the department.

``We didn’t have to empty the pop machines to make payroll, but it came close,″ said Chris Anderson, superintendent of the 600-student Bennett County Schools system in Martin, S.D., which along with Wagner Community Schools in Wagner, S.D., was left waiting a month for its funds.

Impact Aid is a $906 million department-run program meant to help school districts educate children living on Indian reservations or military installations. Such places are federal lands that don’t generate the local property taxes that usually fund local school programs. In Bennett County schools, Anderson says, the money helps pay for special programs such as universal preschool and alternative classrooms for children with behavior problems.

The Justice Department did not specify criminal charges in its civil complaint, and Justice officials reached Monday could not immediately confirm whether criminal actions had been initiated. The civil complaint filed in U.S. District Court in Washington also did not allege that Education Department employees were involved in the theft.

In May, federal officials discovered an employee theft ring that bilked the department of more than $1 million in stolen equipment and falsely reported overtime. Some employees have pleaded guilty in the case; officials say other charges are pending.

``We have been cooperating with Justice officials,″ said Roberta Heine, Education Secretary Richard Riley’s spokeswoman.

In June, House lawmakers approved a bill directing the General Accounting Office, Congress’ auditing arm, to study department accounts particularly prone to abuse. A Senate committee will consider a similar move Wednesday.

Aides for the Senate sponsor of the bill, Tim Hutchinson, R-Ark., say Senate leaders back the bill. It’s not clear whether President Clinton would sign it.

``I think he has no choice; the litany of corruption in the agency is just getting to be too long,″ said Hoekstra, who blames past failed audits for creating an environment ripe for ``waste, fraud and abuse.″

The bill would be the only main education legislation to reach Clinton’s desk this year. The renewal of $15 billion in Education Department programs, including Impact Aid, is caught in an election-year deadlock.


On the Web:

The House bill is H.R. 4079.

The Senate bill is S. 2829.

Congress: http://thomas.loc.gov

On the Net: Education Department budget page: http://www.ed.gov/offices/OUS/budget.html

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