11 People Indicted in Education Department Fraud Probe

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Four Department of Education employees and seven other individuals were indicted last week on federal charges stemming from a year-old probe into an alleged fraud and theft scheme that prosecutors say has cost taxpayers more than $1 million.

The 64-page indictment, handed up by a federal grand jury here on May 23, alleges that the four department employees conspired over several years with representatives of two telecommunications contractors to order computers, telephones, digital cameras, and other goods at government expense for their personal use or for delivery to family members.

Federal law-enforcement authorities announced the criminal investigation a year ago, when a telephone technician for Bell Atlantic Federal Systems assigned to the Education Department pleaded guilty to two felony charges for his role in the alleged conspiracy. ("Federal Contractor Pleads Guilty To Theft, Conspiracy," May 17, 2000.)

Federal authorities said that as a result of the lengthy investigation, seven people, including three former department employees, have already pleaded guilty to charges in the case.

The indictments come as Secretary of Education Rod Paige is vowing to improve the management of the department he has headed since late January. In a May 22 letter to Congress, the secretary said the department was working to correct "long-standing management problems" inherited by the Bush administration. He did not mention the alleged fraud and thefts by agency employees, but said that "it is my mission to see that taxpayers' money is protected and spent on educating children."

Secretary Paige initiated an effort last month to draw up a plan for addressing financial mismanagement and abuses in the department.("Paige Announces Plan To Address Mismanagement," April 25, 2001.)

Family Members Charged

The four department employees indicted last week were Elizabeth C. Mellen, 53, a telecommunications specialist who oversaw contracts with Bell Atlantic, now known as Verizon Communications Inc., and a second company for the department's chief information officer; Joanne C. Murphy, 36, a program assistant in the department's student-financial- assistance office and a niece of Ms. Mellen's; Audrey E. Hawkins, 38, a program assistant in the office of the department's chief financial officer and also a niece of Ms. Mellen's; and Jeffrey L. Morgan, 28, a technology specialist in the student-financial-assistance office and Ms. Mellen's nephew.

The others indicted were Luther E. Mellen III, 47, Ms. Mellen's husband; Philip C. Burroughs Jr., 27, her son; Tina M. Burroughs, 26, Mr. Burroughs' wife; Elizabeth Burroughs, 26, Ms. Mellen's daughter; David Gray, 23, Elizabeth Burroughs' boyfriend; Joanne E. Burch, 57, Ms. Mellen's sister; and Maurice W. Hayes, 53, a Bell Atlantic employee who was assigned to the Education Department.

The indictment charges that Ms. Mellen worked closely with Robert J. Sweeney, the Bell Atlantic technician who pleaded guilty last year, to order equipment such as computers and telephones through the company for her three family colleagues in the department and other relatives.

Allegedly, the family members contacted Ms. Mellen to order high-end desktop and laptop computers for themselves or as graduation or birthday gifts for their children, as well as phones, digital cameras, and video equipment.

In 1998, when Ms. Mellen ordered a 61-inch television set, a Bell Atlantic supervisor questioned the $6,481 purchase, according to court documents. But, according to the court papers, Ms. Mellen faxed an authorization on Education Department stationery and the TV was later delivered to her son and daughter-in-law's home.

The indictment also alleges that Ms. Mellen ordered cellular phones at the request of family members, with the charges for the telephone calls billed to the government. She also allegedly ordered cordless phones for several family members and arranged for a toll-free number paid for by the department to ring in her sister's home.

According to the indictment, Ms. Mellen also would sometimes order Bell Atlantic employees under her supervision to perform work at the homes of her family members. At other times, the indictment says, she dispatched Mr. Sweeney to run personal errands, such as driving to Baltimore to buy crab cakes for her.

The total value of the goods in the alleged conspiracy was more than $300,000, authorities said, but many of the items have been recovered. False regular and overtime pay billed to the government as part of the conspiracy exceeded $700,000, they said. That pay allegedly went to phone-company employees.

Ms. Mellen is charged with conspiracy to defraud the government, theft of government property, and conspiracy to submit false claims to the government. Mr. Hayes is charged with conspiracy to submit false claims and theft of government property. The other defendants are all charged with conspiracy to defraud the government and receipt of stolen property.

Philip and Tina Burroughs and Elizabeth Burroughs are also charged with theft of government property. Mr. Gray is also charged with theft of government property and one count of selling stolen property.

The defendants had not been arraigned as of May 24. A lawyer for Ms. Mellen did not return a phone call late last week.

Jim Bradshaw, a spokesman for the Education Department, said the indicted agency employees have been on indefinite suspension without pay since last year.

Vol. 20, Issue 38, Page 25

Published in Print: May 30, 2001, as 11 People Indicted in Education Department Fraud Probe
Web Resources
  • Read the letter Secretary of Education Rod Paige sent to congress on May 22, 2001, detailing the investigation into mismanagement of funds at the Education Department. Secretary Paige announced the department's plan for addressing the mismanagement of funds in a speech delivered April 20, 2001.
  • The Education Department has developed management priorities that aim to prevent the mismanagement of funds.
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