In the Matter of Docket No. 94-53-DA
RABBI JACOB ROSENBAUM, Proposed Debarment
Russell B. Wolff, Esq., of the Office of the General Counsel, Washington, D.C., for the Notice Debarment and Suspension Official, U.S. Department of Education.
Before: Judge Ernest C. Canellos
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 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 the Respondent with the notice of proposed debarment
govern this proceeding.
On January 27, 1994, Rabbi Jacob Rosenbaum, Administrator, Beth
Rochel Seminary (Beth Rochel) of Monsey, New York, was issued a
Notice of Proposed Governmentwide Debarment from Federal
Nonprocurement Transactions pursuant to 34 CFR § 85.312. The
proposed debarment was based on alleged violations of Title IV of
the Higher Education Act of 1965, as amended, at Beth Rochel
which were imputed to him. 34 CFR § 85.305(b) and (d). These
alleged violations were: disbursement of Pell Grant funds to
students who were not eligible because they were simultaneously
enrolled in high school, 34 C.F.R. § 688.7(a)(2); establishment
and maintenance of false and inaccurate student records;
expenditure of Pell Grant funds for fictitious students; and
failure to use student's home address on Pell Grant applications,
34 C.F.R. § 690.12(b). Rabbi Rosenbaum was also given notice of
his right to submit any information and argument in opposition to
the proposed debarment.
Rabbi Rosenbaum filed a timely opposition to the debarment.
Briefs, supplementary briefs, and documentary evidence were
submitted by both parties. On July 14, 1995, I closed the record
and took the case under advisement for issuance of a decision.
As indicated above, the Department seeks to attribute violations
of Title IV regulations by Beth Rochel to Rabbi Rosenbaum
personally. 34 C.F.R. § 325(b)(2). These violations had resulted
in an Emergency Action under 34 C.F.R. § 668.83 and in a
Termination and Fine Action under 34 C.F.R. § 668.86. I was the
Hearing Official in the Termination and Fine proceeding which
included an evidentiary hearing. At the conclusion of that
hearing process, I issued a Decision in which I terminated the
eligibility of Beth Rochel to participate in the Title IV
programs and fined the school $74,000. As it is pertinent to
this debarment proceeding, I found that Beth Rochel: disbursed
Pell Grant funds to students who were ineligible because they
were simultaneously enrolled in high school; established and
maintained erroneous records; and breached its duties as a
fiduciary. I also determined that these violations were
aggravated by the fact that the high school students had been
certified by the school to receive state aid (subsidized
transportation, books, and lunches) at the same time they were
receiving federal postsecondary aid.
In addition, as part of its proof in this proceeding, the Notice
Official tendered a report from the General Accounting Office
(GAO) which detailed, in a case study, violations of Title IV
which its agents uncovered at Beth Rochel. In his defense, Rabbi
Rosenbaum asserts that the GAO report is a one-sided report
relying on hearsay information which is clearly unreliable. As
such, I should not consider it. Contrariwise, a report generated
by the independent investigative arm of the government has an
indicia of reliability and, where probative, is entitled to some
evidentiary weight. I find that the GAO report is corroborative
of the evidence which was presented in the termination hearing
and, despite its hearsay nature, I will consider it.
The Notice Official seeks to attribute the violations at Beth
Rochel to Rabbi Rosenbaum personally by pointing out he was the
hands-on administrator of both Beth Rochel and the high school to
which the aforementioned students were enrolled. In addition, it
was shown that these two schools were co-located. As such, Rabbi
Rosenbaum knew, or should have known, of these serious violations
and, as a result, he should be debarred. I agree.
I find that Rabbi Rosenbaum participated in the violation of
Title IV of the Higher Education Act of 1965, as amended, 20
U.S.C. § 1070 et seq. It is abundantly clear that these
violations were substantial and resulted in the loss of program
funds. Consequently, I find that the Notice Official has
established, by a preponderance of the evidence, that causes for
the debarment of Rabbi Rosenbaum do exist. 34 C.F.R. §85.305(b)
and (d). I note that 34 C.F.R. § 85.325(b)(2), which is cited by
the Department as a basis for attributing the wrongdoing at Beth
Rochel to Rabbi Rosenbaum provides that the fraudulent, criminal,
or other seriously improper conduct of the participant (Beth
Rochel) may be imputed to any officer who participated in, knew
of, or had reason to know of that conduct. See generally In re
Marcus Katz, Docket No. 93-115-EA, U.S. Dep't of Educ. (January
18, 1994). Although Rabbi Rosenbaum argues that the evidence of
violations by Beth Rochel should not be used to debar him
personally, I find that such imputation is appropriate in this
The debarment of an individual has serious consequences. The
individual is precluded from participating in any way in a
covered transaction under the nonprocurement programs and
activities of any Federal agency, and is not eligible to receive
any Federal financial and nonfinancial assistance or benefits
from any Federal agency under nonprocurement programs and
activities. Also, such individual may not act on behalf of any
person in connection with any covered transaction.
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, a degree of personal culpability must be shown.
Applying that standard, 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
has been established. Rabbi Rosenbaum was responsible for the
failure to properly account for federal funds. This adversely
affects whether he is a responsible person so as to be eligible
to participate in federal programs. See generally Sellers v.
Kemp, 749 F.Supp. 1001 (W.D.Mo. 1990).
In light of the foregoing, I find that the Department has met its burden of proof and persuasion that the debarment of Rabbi Rosenbaum is warranted. The period of debarment is to be commensurate with the seriousness of the cause(s) of debarment, generally not to exceed three years. 34 C.F.R. § 85.320. Based upon the circumstances here, I have determined that the period of debarment shall be three years from the date of this decision.
I order that Rabbi Jacob Rosenbaum 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: July 19, 1995