WASHINGTON, D.C. 20202


In the Matter of                         Docket No. 96-59-SA

AERO-SPACE INSTITUTE,                Student Financial Assistance Proceeding
____________________________                ACN: 05-51213




    The Respondent, Aero-Space Institute, participated in the student financial assistance programs authorized under Title IV of the Higher Education Act of 1965, as amended. Respondent closed on September 30, 1992. On March 8, 1996, the Student Financial Assistance Programs (SFAP), U.S. Department of Education (ED), issued a final audit determination dealing with the Respondent's close-out audit, in which it assessed a liability of $5,235. By letter dated April 26, 1996, the Respondent, through counsel, requested an administrative review of the SFAP audit determination.

    In its brief, Respondent does not question the merits of the final audit determination, but argues that Mr. Lawrence W. Schumacher, who signed the Title IV Program Participation Agreement as the Chief Executive Officer of the Aero-Space Institute and otherwise represented himself as the head of Aero-Space Institute (see SFAP exhibit 2), is not personally liable for any assessments against the Respondent. In response, SFAP moved to dismiss the appeal and for default judgement on the basis that the Respondent has not met its burden of proof and that any questions concerning Mr. Schumacher's personal liability are beyond the scope of this proceeding.

    I have reviewed the audit findings at issue in this case and find that they sufficiently articulate allegations that require the Respondent to demonstrate that the expenditures questioned by SFAP were proper and that the Respondent complied with applicable program requirements. See 34 C.F.R. § 668.116(d) (1995); see also In re Sinclair Community College, 75 Ed. Law Rep. 1296, 1299 (1991) (dealing with evidentiary value of SFAP audit reports in satisfying SFAP's burden of production). Since Respondent has submitted no evidence or argument concerning the merits of the SFAP determination, I find that the Respondent is liable for the $5,235 assessed in the final audit determination.

    Concerning the issue of Mr. Schumacher's personal liability, I agree with counsel for SFAP that the issue is beyond the scope of this proceeding and jurisdiction. See Cosmetology College, Docket No. 94-96-SP, U.S. Dept. of Educ. (Aug. 23, 1995)


    ORDERED, that Respondent pay ED $5,235.

                             Frank K. Krueger, Jr.
                             Administrative Judge

Dated: August 26, 1996


    A copy of the attached initial decision was sent by certified mail, return receipt requested to the following:

Paul F. Schofield, Esq.
Siebel, Whipple & Schofield
Two First National Plaza
Suite 800
20 South Clark Street
Chicago, Illinois 60630

Edmund J. Trepacz, II, Esq.
Office of the General Counsel
U.S. Department of Education
600 Independence Ave., S.W.
Washington, D.C. 20202-2110