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Published in Print: February 6, 2002, as Seven More Sign Guilty Pleas In Ed. Agency Fraud Case

Seven More Sign Guilty Pleas In Ed. Agency Fraud Case

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The leader of a scheme to defraud the Department of Education of more than $1 million has pleaded guilty on two criminal counts.

The Jan. 17 plea by Elizabeth C. Mellen, 54, on charges of conspiracy and theft of government property, brings to 15 the number of individuals who have pleaded guilty to criminal charges under the plot, according to the U.S. attorney's office in Washington. Six Education Department employees have resigned as a result of the investigation; Ms. Mellen is currently on leave without pay.

The guilty pleas stem from the purchase of a variety of electronic equipment—such as computers, a 61-inch television, digital cameras, and cordless telephones—for personal use with agency money. The illegal actions also include false regular pay and overtime pay billed to the department.

Those and other instances or allegations of fraud have come under scrutiny from federal investigators, members of Congress, and the department itself.

Shortly after his arrival at the agency last year, Secretary of Education Rod Paige pledged to dramatically improve the department's financial- management practices, with one of the key goals being to put in place stricter internal controls that would protect against waste, fraud, and abuse. In late October, the department unveiled a detailed report outlining steps it would take to assert tighter controls over financial matters. ("Report: Ed. Dept. Financial Steps Will Halt Abuses," Nov. 7, 2001.)

Six other members of Ms. Mellen's family likewise pleaded guilty last month in the U.S. District Court here on charges related to the Education Department scheme. The defendants will be sentenced later this year, according to the U.S. attorney's office in Washington.

Computers and Crab Cakes

According to the government's evidence, Ms. Mellen, a telecommunications specialist at the department, was the contracting officer on a large telecommunications pact between the agency and Bell Atlantic Federal Systems. She began ordering materials on the contract with Bell Atlantic (now Verizon) that were unrelated to the contract. Those orders were placed through a Bell Atlantic technician, Robert Sweeney, who was assigned full time to the Education Department to install telephone systems.

Mr. Sweeney pleaded guilty in 2000 to a count of conspiracy and theft of government property for his role in the scheme.

Over time, the requests from Ms. Mellen escalated and involved more expensive items, according to federal prosecutors. Ms. Mellen ordered the equipment for herself and family members. In 1999, for instance, Ms. Mellen illegally purchased five Gateway computers, eight printers, eight digital cameras, 75 cordless telephones, two compact disc players, and numerous other items. In each case, the department would pay the bills.

Ms. Mellen also used technicians at Lucent Technologies and Bell Atlantic to perform personal services for her and her family, such as driving her daughter to doctors' appointments, buying crab cakes from Baltimore, and installing phone jacks at family members' homes.

Channing Phillips, a spokesman for the U.S. attorney's office here, said that related cases concerning four other individuals are still pending, and could go to trial as soon as this month. In a separate case, a federal grand jury in Miami returned a 17-count indictment last month charging several individuals with embezzling more than $720,000 in funds from the federal Pell Grant program for low-income college students.

The individuals and the Beacon Career Institute in Miami-Dade County are charged with conspiracy to cause the Education Department to wrongfully pay Pell Grant funds to the institute. The defendants are also charged with embezzling money under the Department of Labor's Job Training Partnership Act program.

Vol. 21, Issue 21, Page 23

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