UNITED STATES
DEPARTMENT OF EDUCATION
WASHINGTON, D.C. 20202
________________________________________
In the Matter of Docket No. 98-153-SP
EVERGREEN BEAUTY COLLEGE, Student
Financial
Respondent. Assistance
Proceedings
________________________________________ PRCN:
199740914105
Appearances: Alfred W. Wright, Esq., San Jose,
California, for Respondent.
Denise Morelli, Esq., Office of the General Counsel, U.S.
Department of Education,
Washington, D.C., for Student Financial Assistance Programs.
Before: Frank
K. Krueger, Jr., Administrative Judge.
DECISION
The Student Financial Assistance Programs (SFAP), U.S. Department of
Education, conducted a program review at the Evergreen Beauty College
during August and September 1997. SFAP
concluded that Evergreen lacked the administrative capability to continue
participation in the student financial assistance programs authorized under
Title IV of the Higher Education Act of 1965, as amended, and imposed an
emergency action immediately terminating the school=s authority to award Title IV
assistance. The school did not appeal
the emergency action and voluntarily withdrew from the Title IV programs.
On November 4, 1998, SFAP issued a final program review determination
in which it concluded as follows:
Due
to the institution=s
practice of providing false certifications on Ability to Benefit [ATB] tests
and on statements regarding high school graduation, the Department questions
the veracity of all documents presented in support of students= eligibility for Title IV funds. Although the ATB tests were certified by the
test administrator, Ms. Ethie Campagna, the tests were actually given by school
officials, who in some cases, provided answers to the students. In the case of high school graduation
certifications, many of the students verified that they had not provided such
information to the school and that many times school officials gave them blank
forms to sign. Many of the students
were not aware of the contents of the information that was reported on the
certifications.
Based
to [sic] the serious violations and acts of fraud committed by the institution,
the Department has determined that all Title IV funds the institution received
since its initial participation in the Title IV programs, February 13, 1996,
[$206,998] are liabilities which must be repaid to the Department. This blanket liability is due to the
institution=s inability to provide valid, correct, and
complete records to support the eligibility of the students for whom the
institution disbursed Title IV Federal funds.
Due to the numerous instances of fraud and lack of valid documents, it
is not possible to determine the exact amount of the liability under each
finding.
ED Exhibit 4-2 to
4-3.
Attached to the final program review determination is the program
review report. The program review
report makes a number of additional findings which are not the basis for SFAP=s liability determination, except that
the program review report concluded that Evergreen was giving its ATB tests in
languages other than English, i.e., Vietnamese and Spanish, which it was not
authorized to do. This latter allegation is discussed and relied on by the SFAP
brief, although it is not cited in the final program review determination
letter. To the extent that the other
alleged violations are not relied on by SFAP in its liability determination,
and are not addressed in its brief, I will not address them in this
decision.
As discussed below, the law and the evidence does not support all of
SFAP=s liability determinations. Thus, I find in part for SFAP and in part
for Evergreen.
DISCUSSION
SFAP alleges that the facts of this case establish a Aclear pattern of fraud and deceit.@ SFAP brief at 8. Because of this pattern of fraud and deceit, SFAP argues that
Evergreen is liable for all Federal student assistance it awarded since
becoming eligible to participate in the Title IV programs. SFAP cites no authority for this
position. My independent research has
uncovered no such authority, and I question the legality of SFAP=s position. It is not necessary for me to reach a
conclusion regarding the validity of SFAP=s legal theory, however, since the
record does not reveal a Aclear pattern of fraud and deceit.@
According to SFAP, the school
improperly administered the ATB test to five students (Students 30, 31, 49, 50,
and 53); the certifications in three of these student files indicate that the
tests were given by the school=s certified test administrator but that the tests were actually given
by a school employee;
school employees allowed five students (Students 31, 37, 50, 54 and 55) to take
the ATB tests in Spanish and Vietnamese in violation of Federal regulations;
and the school fabricated high school documentation for three students
(Students 30, 40, and 46). Thus,
according to SFAP=s
brief, there were a net total of ten student files with irregularities
identified.
Alleged Improper
Administration of ATB Test by School Employees and False Certifications by
Independent Test Administrator.
Student 30:
In the case of Student 30, SFAP alleges that the school official
administering the test gave her all of the answers. This allegation is based on ED Exhibit 12-1, which is
presumably an English translation of a signed statement made by Student 30 in
Vietnamese. However, the statement is
not accompanied by any declaration or other statement as to who prepared the
translation. The translation is not
signed. The statement states that a Mr.
Khiem (presumably, Mr. Khiem Quach, an officer and employee of Evergreen) gave
her the ATB test and all of the answers because she did not know English. The statement is ambiguous as to whether Mr.
Khiem actually gave her all of the answers, or told her where to place the
answers on the English translation of the test after the student chose her
answers on the Vietnamese version of the test.
The school, of course, denies any wrongdoing, and states that a school
employee administered the test, not as an ATB test, but as an admissions test
since the student claimed to have a high school diploma. See affidavits of Khiem Quach and
Helena Tran contained in a document entitled AEvergreen Beauty College Program Review Finding #3.@ ED
Exhibit 12-1 states that the school told the declarant to put down that she
graduated from high school in Vietnam, but that she lost her diploma when she
came to the U.S. The school argues that
any statement from Student 30 is inherently unreliable since the student was
suspended from the school. However, the
student was suspended on November 5, 1997, but gave her statement to SFAP on
October 24, 1997, before she was suspended.
Notwithstanding, I find that the evidence submitted by SFAP too
unreliable to conclude that the documentation in the school=s file for Student 30 is false.
Student 31:
Student 31 was interviewed by Ms. Martina Fernandez-Rosario, an
institutional review specialist from SFAP=s office in San Francisco. SFAP
relies on Exhibit 10 in support of its position concerning this student. Exhibit 10 is a sworn declaration by Ms.
Fernandez-Rosario stating that the student told her during the interview that
Mr. Khiem gave her the test, even though the attached Wonderlic test for this
student is signed by Ethie Campagna, the Wonderlic independent test
administrator. Mr. Khiem submitted a
sworn statement stating that he never administered the Wonderlic test unless
the student in question was a high school graduate. Again I find that SFAP=s evidence is unreliable, especially in light of Mr. Khiem=s sworn statement to the contrary. The declaration by the SFAP institutional
review specialist is dated March 17, 1999, and the interview on which the
declaration is based took place several years before the declaration was
prepared. The notes upon which the
interviewer relied in preparing the declaration are not in the record.
Student 49:
SFAP supports its contentions concerning Student 49 with a handwritten
sworn statement by the student in English.
The statement itself (ED Exhibit 11-1 to11-2) is very difficult to
read. In the statement the student
states that she was given her ATB test by an individual identified only as AKim.@ The school states that the
test was administered by the independent test administrator, and attaches a
copy of the test signed by the administrator.
Although the statement is somewhat confusing, in that it refers to a Kim
as the test administrator, it does directly contradict the certification in the
file signed by the administrator. The
school has made no attempt to contradict the statement other than to state that
the test certification speaks for itself.
Since the school bears the burden of proof, I find that the statement
raises questions, which remain unrebutted, as to who administered the test, and
find that the school is liable for the Federal assistance awarded to this
student.
Student 50:
For Student 50, SFAP relies on a statement given by the student in
Vietnamese and translated into English by Ms. Anhdoa Dang, a computer
programmer with the Department. Ms.
Dang is presumably fluent in English and Vietnamese, although the declaration
is silent on this point. (Respondent
never challenged the validity of the translations.) See Ed Exhibit 6-1, & 4, and 6-14 to 6-15. In the
statement the student states that she was administered the test by Mr. Khiem,
and not the person who signed the attached Wonderlic test. The test is certified by the Wonderlic
tester, but it is impossible to tell which student took the test since the
student=s name is not legible
and the test does not appear to be signed.
See Ed Exhibit 6-21. Again, we
have conflicting declarations. Mr.
Khiem states that he only gave tests to students who were high school
graduates, but this student=s application indicates that she was not a high school graduate. Although the SFAP exhibits are hard to read
and poorly organized, they do contradict Mr. Khiem=s statement.
Since the school has the burden of proof, I find the school liable for
this student.
Student 53:
For Student 53, SFAP relies upon a declaration, dated May 18, 1999,
signed by Ms. Martina Fernandez-Rosario, the institutional review specialist,
which is based on notes she took during the interview in 1997. ED Exhibit 14-1. Ms. Fernandez-Rosario states that the student told her that she
was not a high school graduate, and that an instructor, Mr. Thompson, gave her
the test. The school never rebuts this
declaration other than to state that the test was administered by the
independent test administrator and states that the test certification is
attached. Respondent=s brief at 3. However, there is no test or certification attached for this
student in either the Respondent=s or SFAP=s
exhibits. Since the Respondent bears
the burden of proof, I resolve this dispute in favor of SFAP and find that the
school is liable for the Federal funds awarded to this student.
Alleged Improper
Administration of ATB Tests in Vietnamese and Spanish.
SFAP notes that Evergreen enrolled many students of Vietnamese and
Hispanic descent who spoke little or no English. SFAP contends that classes are given only in English and thus the
ATB test must be given in English. SFAP
states that this is required by 34 C.F.R.
' 668.148(a)(2). School officials, according to SFAP, permitted students to take
the test in their native language, or have a copy of the native language
version with them when they took the test.
SFAP brief at 6.
There is no legal basis for SFAP=s position. The regulations
relied on by SFAP provide as follows:
(2) In the case of a [ATB] test developed for
a non-native speaker of English who is enrolled in a program that is taught in
his or her native language, the test must be B
(i) Linguistically accurate and culturally
sensitive to the population for which the test is designed, regardless of the
language in which the test is written; . . . .
34 C.F.R. ' 668.148(a)(2) (1996). The regulation is inapposite to the case at
hand. There is nothing illegal, or even
inappropriate, to allow students to take ATB tests in their native language.
Alleged
Fabrication of High School Documents.
SFAP contends that Evergreen fabricated documentation regarding high
school status for three students (Students 30, 40, and 46).
Student 30:
The translated statement upon which SFAP relies states that Student 30
was not a high school graduate and that she was told by Evergreen officials to
put down on her application that she was a high school graduate. As noted above, the statement relied on by
SFAP is inherently unreliable.
Student 40:
The evidence concerning Student 40 includes the student=s signed registration application which
indicates that this student completed high school, and a signed statement which
states that the student lost her diploma.
Both the application and the statement are of poor quality and hard to
read. Ed Exhibit 6-42 to 6-44. In addition, the record contains a
handwritten unsigned copy of a statement which SFAP says was given to them by
Student 40. The statement was given in
Vietnamese and, according to Ms. Kathleen Hochhater, an SFAP paralegal
specialist, was translated into English by Ms. Dang, the Department=s computer programmer who also translated a
number of other statements. Exhibit
7-1. (It is not clear why SFAP chose to
establish the authenticity of this document through a paralegal specialist,
rather than through the translator.)
In the translated, unsigned statement, the student supposedly states
that she never indicated in her application that she graduated from high school
and that she never saw the statement that she lost her high school diploma. ED Exhibit 7-2 to 7-3. The statement asserts that the student was
assisted in filling out the application by a Ms. Ann, the sister of the school=s owner.
The school denies that it ever fabricated any documents concerning high
school graduation for its students, and submitted a sworn declaration signed by
Ms. Sophia Tran to that effect. The school never specifically rebuts the
alleged statements in Exhibit 7-2 to 7-3.
Although I find Exhibit 7 unreliable, it does have the evidentiary value
of shifting the burden onto the school to come forward with rebuttal
evidence. The school=s blanket denial, along with a declaration
signed by someone other than Ms. Ann, is not enough to sustain the school=s burden of proof. Thus, I find that the school is liable to return the Title IV
assistance it awarded to Student 40.
Student 46:
For Student 46 SFAP submits a copy of what purports to be this student=s high school diploma which contains her
picture. Also submitted is what
purports to be a copy of this student=s driver=s license which also contains her
picture. Ed Exhibits 6-38 and
6-39. SFAP submits a copy of this
student=s statement, again translated by Ms. Dang,
which states that although she completed the twelfth grade in Vietnam, she was
not a high school graduate because she did not take the national test; that she
has Alooked at both pages of Exhibit B and they
are not mine.@ Ed
Exhibit 6-33. The photo copy of the
student=s high school diploma and the driver=s license are marked Exhibit B (presumably
Exhibit B to her statement). Student
46 does not actually state that the school fabricated her high school
diploma. In fact, there is nothing in
the record which states where these documents came from. The quality of the copies is very poor, and
one cannot tell, as presumably SFAP would argue, that the picture on the driver=s license and that on the high school diploma
are the same. Thus, I am unable to
conclude, as SFAP contends, that Evergreen fabricated the high school diploma
by copying the student=s
picture from her driver=s license and placing it on the high school diploma.
ORDER
ORDERED, that Respondent reimburse SFAP for all Federal student
financial assistance awarded by Respondent to Students 40, 49, 50, and 53.
_________________________________
Dated: August
10, 1999 Frank K. Krueger, Jr.
Administrative Judge
SERVICE
A copy of the attached decision was sent by certified mail, return
receipt requested, to the following:
Alfred W. Wright
Attorney and Counselor at Law
1485 Park Avenue
Suite 200
San Jose, California 95126
Denise Morelli, Esq.
Office of the General Counsel
U.S. Department of Education
400 Maryland Avenue, SW
Washington, D.C. 20202-2110
This
tribunal has suggested that systemic failure of a participating school to
comply with program regulations can result in a liability for all funds awarded
by the institution. See, e.g., Long
Beach College of Business, Docket No. 92-132-SP (July 14, 1994) (lowering
of ATB passing score from that stipulated by test publisher); Chauffeur=s Training School, Docket No. 92-113-SP (Sept. 9, 1994)
(systemic failure to comply with ATB requirements may lead to total liability,
although judge declined to impose such liability, finding that the violations
were isolated). This tribunal has held
that the failure of a participating school to comply with an SFAP request that
the school conduct a full-file review may result in a total liability for all
Federal assistance awarded during the period covered by the program review. Such reviews are often requested after SFAP
discovers numerous violations upon reviewing a sample of student files. See, e.g., Classic Beauty Colleges,
Docket Nos. 96-147-SP, 97-33-SP, 97-58-SP, & 97-59-SP, U.S. Dept. of Educ.
(September 30, 1997). However, under
both legal theories, a school can avoid total liability by demonstrating that
specific individual awards were proper.
In the present case, SFAP seeks to go further than the mere shifting of
the burden of coming forward with evidence, and hold the Respondent liable for
all funds awarded even if the school could show that they were properly
awarded, because it does not trust the school=s veracity. Such a legal theory
appears beyond my authority and the scope of a Subpart H proceeding. Cf. Liberty Academy of Business,
96-132-SP ( Interim Decision and Order, December 8, 1997) at 2, note 1.
SFAP=s brief actually states that Athe tests in most of the student=s [sic] files have a certification from a Ms. Ethie Campagna stating
that she personally administered the tests.
ED Exs. 6 at 18-21; 10 at 2-6; 11 at 3-4.@ SFAP brief at 5-6; emphasis
added. However, the evidence cited only
concerns three students. ED Exhibit 6
at 18-21 is a Wonderlic test, but one cannot tell which student it belongs to,
as the student=s name is obliterated and it does not appear
to be signed. ED Exhibit 10 at 2-6 is
Student 31. ED Exhibit 11 at 3-4 is
Student 49.
The record is silent on how many students
Evergreen enrolled during the period covered by the program review. Appendix A of the program review report
identifies fifty-seven students in SFAP=s sample. Thus, 17.5 percent
of the files contained in the sample were defective. The record is also silent on how many files
in the sample were reviewed. If SFAP
reviewed all fifty-seven, then forty-seven presumably contained
no problems. However, under SFAP=s theory, the school would still be liable
because the school=s
files are untrustworthy. As noted
above, I have reservations concerning the legality of SFAP=s theory.
Assuming the theory has some legal support, I do not find an error rate
of 17.5 percent high enough to give rise to a presumption that all of Evergreen=s files are unreliable. The 17.5 percent may be sufficient to
trigger a demand by SFAP that a school conduct a full-file review, which it did
not do in this case.
The Order Governing Proceeding issued on
January 6, 1999, required that all exhibits be legible. There are several exhibits submitted by SFAP
which do not comply with this order.
SFAP actually suggests that these students
are mere examples. SFAP brief at
7. SFAP never states how many students
it contends the school fabricated documents for, but suggests that fabricated
documents were found for ten other students.
Id., note 6 (note 6 refers to twelve students, but two of the
students referred to are Students 30 and 40).
The brief simply cites to the program review report, which simply makes
the allegation repeated in the brief without attaching any supporting
documentation.
It is not clear from the record who owns
Evergreen. SFAP=s final program determination letter is
addressed to Ms. Sophia Tran and Ms. Helena Tran, as Aowner.@ In Ms. Sophia Tran=s affidavit, she states that she is Aan officer and employee of Evergreen Beauty
College, Inc.@
The evidence for this student demonstrates
why SFAP=s theory -- that the appearance of alleged
fabricated documents in Title IV files can lead to a determination that all of
a school=s files are unreliable and thus the school is
liable for all Title IV assistance awarded B is not appropriate for a Subpart H proceeding. Subpart H proceedings, in which there is no
evidentiary hearing with live testimony, are not equipped to deal with issues
in which witness credibility is at stake.
The student statements relied upon by SFAP, in which the students
contradict sworn statements by school officials, should be subjected to
cross-examination, and the finder of fact should be given an opportunity to
observe the witness testify under oath.
SFAP put no evidence in the record
concerning the precise amount of Title IV assistance awarded to each
student. Consequently, I am unable to
construct a dollar amount of liability.
