Department Decision Bars Proprietary-School Firm From Receiving Most Forms of Federal Assistance

January 18, 1989 1 min read

Washington--The Education Department has placed the Wilfred American Educational Corporation, a proprietary-school firm that has been indicted for fraud in connection with student-aid programs, on a list of individuals and organizations that in most cases are barred from receiving money from any federal agency.

A spokesman for the department said that this is the first time it has sought to place anyone on the list since “debarment and suspension’’ regulations went into effect in October. Those added to the list because of illegal or improper actions are ineligible for any federal aid except Social Security and other entitlements. (See Education Week, June 15, 1988.)

Critics Fear Abuses

Critics of the regulations have warned of potential abuse of the rules, which afford federal officials broad authority and limit possible defenses. Theoretically, entire organizations could be debarred for the actions of individuals or for doing business with debarred persons or organizations.

Indictment is specifically listed in the regulations as an adequate basis for the temporary suspension of eligibility.

Wilfred, which operates a chain of hair and beauty schools, was indicted in October in connection with three schools it operates in Florida. The company is accused of making false statements to the Education Department and misappropriating student-aid funds, as well as wire fraud and racketeering.

The company is appealing the proposed debarment.

Other E.D. Actions

In a related development, six other Florida trade schools have been excluded from federal student-aid programs because of allegedly fraudulent practices.

The Robert Fiance Corporation, which operated the schools, also will pay a $1.5-million fine as part of a settlement agreement.

The Education Department’s office of postsecondary education and office of inspector general found that Fiance officials had falsified attendance records for students, forged their signatures on aid applications, and obtained aid for ineligible students.

The schools involved include Computech Institute in Miami, American Hi-Tech Business School in Tampa, and four Robert Fiance Institutes in Miami and Hialeah. The inspector general’s office is continuing to investigate possible criminal violations.--jm

A version of this article appeared in the January 18, 1989 edition of Education Week as Department Decision Bars Proprietary-School Firm From Receiving Most Forms of Federal Assistance