In the Matter of The Proposed Debarment of CARL SIMMONS
Docket No. 93-95-DA
DECISION OF GOVERNMENTWIDE DEBARMENT
FROM FEDERAL NONPROCUREMENT
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 Dr. Simmons with the
notice of proposed debarment govern this action.
On April 8, 1993, Dr. Carl Simmons, co-owner and Chairman of the Board, 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 Dr. Simmons that the proposed debarment was based
upon the adverse findings of an October 1991 program review conducted jointly by the
Massachusetts Higher Education Assistance Corporation (MEHAC), and Department's
Region I. Dr. Simmons was also given notice of his right to submit information and
argument in opposition to the proposed debarment.
On September 15, 1993, and October 14, 1993, pursuant to Dr. Simmons' request, I held
hearings on this matter in Washington, D.C. At such hearings, Dr. Simmons appeared Pro
se while the Department's Notice Official was represented by Jennifer L. Woodward,
Esq., of the Office of the General Counsel. At the hearing, evidence was introduced and
both Dr. Simmons and Ms. Woodward presented oral argument. The hearing was recorded
by a court reporter and a transcript was made.
Page 2 - Decision
As stated earlier, the Department's action is based primarily
on the joint Department and MEHAC findings. Those findings
include: 1) repeated failures to make required tuition refunds
of guaranteed student loans (GSL), pursuant to 34 CFR .
682.607(c)(1); 2) failure to implement adequate procedures to
evaluate satisfactory progress, in violation of 34 C.F.R. .
668.7(c); and 3) failure to adhere to the fiduciary standards
required in administering the student financial assistance
program authorized under Title IV of the Higher Education act
of 1965, as amended, 20 U.S.C. . 1070 et seq. (Title IV). The
evidence presented at the hearing established the violations
enumerated above. The Department argues that the violations
are serious, that Dr. Simmons participated directly in them,
and that, therefore, he should be debarred.
During his presentation, Dr. Simmons argued that prior to 1989
he was not personally involved in the operations of the
Institute. Moreover, he argued that some of the allegations
against the Institute pre-dated his management. He asserted
that a cash-flow problem resulting from a declining enrollment
caused the refund problem. After the program review, MEHAC
terminated the Institute's GSL participation, and the
Department put the Institute on the Pell Grant cash
reimbursement system. The combination of those activities made
it impossible for the Institute to pay its refunds. As a
result, the Institute closed and filed for bankruptcy
As stated in 34 CFR . 85.115, the policy of the Federal
Government is 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. Merely establishing the violation
of program regulations which could constitute the violation
of the fiduciary status conferred upon Title IV participants,
thereby leading to termination of eligibility, is not
Page 3 - Decision
My review of the facts and circumstances in this case reveals
that the seriousness of the violations and the degree of
personal wrongdoing envisioned by the debarment process has
been established. Dr. Simmons was directly responsible for the
violation of provisions dealing with his responsibility to
account for federal funds. This clearly and 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. Simmons paid the Institute's
funds to other companies he owned. This is as clear a
violation of a fiduciary duty as one can imagine.
In light of the foregoing, I find that the Department has met
its burden of proof and persuasion that the debarment of Dr.
Simmons 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 Carl Simmons 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.