Trade-School Official Pleads Guilty to $25-Million Student-Aid Fraud

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Washington--A former top official of a New York City trade school has pleaded guilty to defrauding the Education Department of about $25 million by creating false high-school diplomas for students to allow them to obtain federal grants and loans.

Leonard Hausman, 50, former vice president of the Hausman Computer School, pleaded guilty Feb. 24 to one count of conspiracy to defraud and one count of defrauding the government of Pell Grants and Guaranteed Student Loans, according to the U.S. Attorney's office in Manhattan.

Mr. Hausman is the second employee of the computer school to plead guilty in the case. Maria Faughaner, former recruitment director at the school, pleaded guilty Dec. 6 to charges of conspiring to defraud the Education Department and making false claims for student aid.

Mr. Hausman is to be sentenced April 27 before Judge Pierre N. Leval. He faces maximum penalties of 15 years in prison and $500,000 in fines. Ms. Faughaner is scheduled to be sentenced March 30 before Judge Robert W. Sweet. She faces a maximum sentence of 10 years in prison and $500,000 in fines.

Other company officials remain under investigation, said Deirdre8Daly, assistant U.S. attorney in charge of the case.

According to federal officials, the school provided training in data processing and computer programming at two locations, with approximately 800 students enrolled. Many of those were not high-school graduates, and thus were ineligible for federal financial aid.

In addition, the operating license issued to the school by the state stipulated that only high-school graduates could participate in a program leading to a degree.

Mr. Hausman admitted in his guilty plea that employees of theschool created false high-school diplomas for students. Using the fraudulent credentials, the school made claims for federal grants and loans totaling $25 million, prosecutors said.

$1.5-Million Salary

During the course of the fraud, from 1983 to 1987, Mr. Hausman received a total salary of roughly $1.5 million, officials said. The school closed in September 1987, after losing its accreditation.

The criminal investigation resulted from an audit performed by the Education Department's office of the inspector general.--mw

Vol. 08, Issue 25

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