In the Matter of
ART OF BEAUTY
COLLEGE, (New Orleans, LA)
Docket No. 95-72-ST
Student Financial Assistance Proceeding
Appearances: Jack L. Simms, Esq., Leesville, Louisiana, for Art of
Denise Morelli, Esq., Office of the
General Counsel, United States Department of
Education, Washington, D.C., for Student Financial Assistance Programs.
Before: Judge Ernest C. Canellos
The pertinent facts are not in dispute in this case. On April 21, 1994, Patricia Dianne Ford, the majority owner of Art of Beauty College, New Orleans, Louisiana, filed a Voluntary Petition under Chapter 13 of the Bankruptcy Act, with the United States Bankruptcy Court for
the Western District of Louisiana.See footnote 1
In addition, the College had not submitted the financial and compliance audits for award
years 1990 - 1992, as required by 34 C.F.R. § 668.23. The New
Orleans campus of College has since closed.
The applicable law in this case is abundantly clear -- if a previously
institution files for bankruptcy, the institution is no longer eligible to participate in the federal
student financial assistance programs and, on that basis, ED may terminate its eligibility. 20
U.S.C. § 1088(a)(4)(A), 34 C.F.R. § 600.7(a)(2). See also, In the Matter of
Wheeling College of Hair Design, Docket No. 95-68-ST, U.S. Dep't of Educ. (Initial
Decision, July 31, 1995). It is likewise clear that an institution which fails to timely file its
required audits is subject to a
termination action and, in such a case, the hearing official must find that termination is
warranted. 34 C.F.R. § 668.90(a)(3)(iv). See also, In the Matter of Putnam Technical
Center, Docket No. 94-155-ST, U.S. Dep't of Educ. (Initial Decision, August 28,
Consistent with the above, I find that College has filed for
bankruptcy and failed to file
required audits. As a consequence, I find that SFAP has met its burden of persuading me that the
eligibility of College to participate in the Title IV programs should be terminated. In addition to
termination of eligibility, SFAP seeks a fine of $7,250 for the failure to file audits violation. The
College is characterized as a small school by SFAP. This is considered a mitigating
circumstance when determining whether, and to what extent, a fine should be imposed. See
generally, In re Puerto Rico Technology and Beauty College, and Lemec, Inc.,
Docket No. 90- 34-ST, U.S. Dep't of Educ. (June 11, 1993). In view of the fact that I have
ordered termination of eligibility, and in the absence of any aggravating circumstances, I find
that no fine is appropriate.
On the basis of the foregoing, it is hereby ORDERED that the
eligibility of the Art of
Beauty College, New Orleans, to participate in the student financial assistance programs
authorized under Title IV of the Higher Education Act of 1965, as amended, be terminated.
Judge Ernest C. Canellos
Dated: August 31, 1995
On August 31, 1995, a copy of the attached initial decision was sent by certified mail, return
receipt requested, to the following:
Jack L. Simms, Esq.
P.O. Box 1554
Leesville, LA 71446-1554
Denise Morelli, Esq.
Office of the General Counsel
U.S. Department of Education
600 Independence Avenue, S.W.
FB-10, Room 5442
Washington, D.C. 20202-2110