In the Matter of Docket No. 93-93-DA
The Proposed Debarment of
This DECISION is issued by the United States Department of
Education (Department) pursuant to 34 CFR § 85.314. I have
jurisdiction to act in this matter by virtue of a Delegation of
Authority from the Secretary to me to act as the Department's
Designated Deciding Debarment and Suspension Official. The
regulations, 34 CFR Part 85, and the Nonprocurement Debarment and
Suspension Procedures mailed to Mr. Riendeau with the notice of
proposed debarment govern this action.
On April 8, 1993, Mr. Curtis Riendeau, President of Dudley Hall
Career Institute (Institute) of Worcester, Massachussets, was
issued a "Notice of Proposed Governmentwide Debarment from
Federal Nonprocurement Transactions" pursuant to 34 CFR § 85.312.
The notice informed Mr. Riendeau that the proposed debarment was
based upon the adverse findings of an October 1991 program review
conducted by the Massachusetts Higher Education Assistance
Corporation (MEHAC), and Department's Region I, jointly. The
violations uncovered therein were attributable to him under the
provisions of 34 C.F.R. § 85.325(b)(2). Mr. Riendeau was also
given notice of his right to submit information and argument in
opposition to the proposed debarment.
Mr. Riendeau did not request a hearing but submitted a written opposition to his proposed debarment and the Department's Notice Official, represented by Jennifer L. Woodward, Esq., of the Office of the General Counsel submitted a brief in support of the proposed debarment. I have considered both these presentations as well as the evidence contained in the official case file and have determined that there is no dispute as to material facts.
As stated earlier, the Department's action is based primarily on
the joint Department and MEHAC findings. The allegations
include: repeated failures to make required tuition refunds of
guaranteed student loans (GSL), pursuant to 34 C.F.R. §
682.607(c)(1); failure to implement adequate procedures to
evaluate satisfactory progress, in violation of 34 C.F.R. §
668.7(c); and failure to adhere to the fiduciary standards
required in administering the programs authorized under Title IV
of the Higher Education Act of 1965, as amended, 20 U.S.C. § 1070
et seq. (Title IV), as specified at 34 C.F.R. § 668.13(c).
Specifically, the Department alleges that at least 68 refund
checks claimed as having been issued by the Institute, were
voided. Moreover, the Department imputes the failure of the
Institute in its administration of the Title IV Programs to Mr.
Riendeau. I find that the evidence included in the file is
sufficient to establish each of the violations enumerated above.
The Department argues that the violations are serious and that Mr. Riendeau knew or should have known of them. Also, the Department argues that since he was in a position of authority he should be debarred so as to preclude the possibility that he will again be put in a position where he could jeopardize federal funds.
In his written presentation, Mr. Riendeau argued that he was hired as Director of Admissions in October 1989, with no responsibility for financial aid. In February 1991, he was appointed Director and President of the School. Therefore, he asserts it was impossible for him to have corrected the problems at the Institute between that time and the time of the program review. He iterated that he should not be held personally responsible for those failings at the Institute.
Based on the presentations of the parties and evidence submitted,
I find that Mr. Riendeau knew of serious violations of
regulations applicable to the programs authorized under Title IV.
He was the titular manager of the institute, exercising control
over the school's operations. He was in a position to have
effectuated some amelioration of the problems, and, as such, he
is fully responsible for the violations of federal student
financial assistance program requirements. It is abundantly
clear that these violations were serious, significant, and
resulted in the loss of program funds. Consequently, I find that
the Department has established, by a preponderance of the
evidence, that Mr. Riendeau is subject to debarment under 34
C.F.R. § 85.305 (b) and (d). In reaching this conclusion, I have
considered only those violations which occurred during Mr.
As stated in 34 C.F.R. § 85.115, it is the policy of the Federal
Government to conduct business only with responsible persons. It
seems clear that in order to support the governmentwide debarment
from federal nonprocurement transactions of an individual, some
degree of personal culpability must be shown. My review of the
facts and circumstances in this case reveals the seriousness of
the violations and the degree of personal wrongdoing envisioned
by the debarment process have been established. Mr. Riendeau was
responsible for the violation of provisions dealing with his
responsibility to account for federal funds. This adversely
affects his present responsibility to participate in federal
programs. See generally, Sellers v. Kemp, 749 F.Supp. 1001
(W.D.Mo. 1990). I note as significant that the failure to pay
refunds in the Title IV Program can now lead to criminal
penalties. 20 U.S.C. § 1097(a). I also note, that during the
period of time when refunds were not made, Dr. Carl Simmons,
Institute's co-owner, paid the Institute's funds to other
companies owned by him for sundry reasons, and that therefore he
is probably more culpable than Mr. Riendeau. This fact, however,
does not excuse Mr. Riendeau, who had an independent
responsibility to act as a fiduciary and account for the federal
funds entrusted to his care.
In light of the foregoing, I find that the Department has met its
burden of proof and persuasion that the debarment of Mr. Riendeau
is warranted. Under the provisions of 34 C.F.R. § 85.320, the
period of debarment is to be commensurate with the seriousness of
the cause(s) of debarment, generally not to exceed three years.
Based upon the circumstances here, I have determined that the
period of debarment shall be three years.
I order that Curtis Riendeau be DEBARRED from initiating,
conducting, or otherwise participating in any covered transaction
under the nonprocurement programs and activities of any Federal
agency, and is ineligible to receive Federal financial and
nonfinancial assistance or benefits from any Federal agency under
nonprocurement programs and activities. He may not act as a
principle, as defined in 34 C.F.R. § 85.105(p), on behalf of any
person in connection with a covered transaction. This debarment
is effective for all covered transactions unless an agency head
or authorized designee grants an exception for a particular
transaction in accordance with 34 C.F.R. § 85.215.
ERNEST C. CANELLOS,
Deciding Debarment and
Dated: April 20, 1994