Issue link: http://viewer.e-digitaledition.com/i/671794
14 April 28 • 2016 T he U.S. Department of Education (DOE) stuck by its decision ear- lier this year to deny the Michigan Jewish Institute (MJI) in West Bloomfield recertification to federal Title IV financial aid programs. MJI filed a 33-page response to DOE alle- gations of widespread and long-term misuse of Pell Grants after the federal department first denied the school recertification in a letter it sent to Rabbi Kasriel Shemtov, MJI president, on Feb. 25. In an 11-page letter sent to Shemtov April 15, the DOE said the denial is now "a final agency decision" and that MJI is ineligible to participate in Title IV programs. Pell Grants are federal aid given to low- income students to help the pay for college costs. Unlike loans, they do not have to be repaid. For the current academic year, a maximum Pell Grant is $5,775. MJI has pre- viously stated it retains about $2,650 (45.9 percent) of each grant for administrative costs. According to the Federal Student Aid Data Center, an office of the U.S. Department of Education, from academic years 1999-2015, Pell Grant disburse- ments associated with the Michigan Jewish Institute have totaled $59,920,600 to 8,931 recipients. Based on what MJI previously stated, the school would have retained about $27.5 million to cover administrative costs. The nonprofit Michigan Jewish Institute is part of Chabad of Michigan, which maintains the Campus of Living Judaism in West Bloomfield, also home to The Shul, an Orthodox synagogue headed by Kasriel Shemtov. A nearly completed three- story MJI headquarters, funded by private donors, is also located on the campus. Started in 1994, MJI at first focused on the Orthodox community and Jewish Russian immigrants. The school launched its online program in 2006 and received accreditation in 2009. Rapid growth occurred because of the online program, with the majority of its estimated 2,000 stu- dents studying in Israel in its Study Abroad Program. Most are engaged in religious studies at yeshivot or seminaries there. The alleged misuse was discovered by DOE during MJI's routine application to renew its Title IV eligibility. In its letter, the DOE stands by its reasons for denial of recertification: MJI breached its fiduciary duty to the DOE by awarding Pell Grant funds to students who were not "regular students" as required; MJI failed to exercise required standards of administrative capability by not maintaining consistent and reliable student records; and MJI presented false information to its accrediting agency, the Accrediting Council for Independent Colleges and Schools (ACICS) in Washington, D.C. "The Department's requirements are real- ly not all that remarkable," the letter stated. "Nor are they difficult to understand. For an institution to be eligible to receive Title IV funds, it must award those funds only to eligible students. And for a student to be eligible to receive federal student financial assistance, he or she must intend to receive a degree from the institution where he or she has enrolled." The DOE noted in its letter that "nearly 2,000 U.S. citizens, who are Israeli residents, received Pell Grants for 'studying abroad' at Israeli institutions from 2006-2012 without ever studying or graduating from MJI." After reviewing 337 transcripts submit- ted by MJI, the DOE stated in its letter that metro » Rabbi Kasriel Shemtov Michigan Jewish Institute no longer certified for federal financial aid programs. continued on page 16 Federal Financial Aid Protection P ell Grant abuse falls under the College Scholarship Fraud Prevention Act of 2000 that legislates a maximum of five years in prison or fines of up to $20,000 for perpetrators. The act places the Federal Trade Commission, the U.S. Department of Justice (DOJ) and the U.S. Department of Education jointly as watchdogs of student financial assistance programs. Each year, the three agencies present a report to Congress outlining public awareness efforts as well as dispensation of criminal cases. "The Act gives them the ability to actu- ally pursue sentencing enhancement where there are examples of criminal behavior," said James Densley, a Pell Grant fraud expert and an associate law profes- sor at Metropolitan State University in Minneapolis. "The Act also created an FTC website to educate the public about the most com- mon scams for scholarships as well as a way to alert authorities if they suspect something. And the annual reports enable people to look at trends in financial aid complaints and see it's reasonably flat — about 150 cases a year across the board. The cases they are dealing with are quite sophisticated ... On average, 10 cases annu- ally are prosecuted by the government [DOJ]." Mark Kantrowitz, a national expert on student financial aid based in Chicago who has written numerous books on the topic and testified before Congress, says the DOE's Office of the Inspector General handles a fair number of fraud cases a year. So far in 2016, he says, there have been six cases — some included prison time, some called for financial restitution, some required both. By way of example, both experts out- lined several kinds of financial aid fraud schemes. Densley said Pell Grant fraud is a "spe- cialized access crime," where employees at a college or in a financial aid office have specialized access to Social Security num- bers, addresses, names, dates of birth and can apply for a grant without an applicant's knowledge." Kantrowitz says institutional cases are not uncommon. There is supposed to be a separation of duties at a school. "The per- son awarding aid must be different from the one who disperses aid, but sometimes they collude," he said. He also speaks of Pell Grant fraud rings, where financial information from people in nursing homes or prisons is used to apply for grants. "The ringleader gets the lion's share and those whose info is used get kickbacks," he said. * For details on federal financial aid fraud and avoid- ing scams, visit www.1.usa.gov/1SMvKH2. Appeal Lost Keri Guten Cohen | Story Development Editor