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Facilitator of $1 million Department of Education Fraud and Theft Scheme Pleads Guilty
Washington, D.C. - United States Attorney Roscoe C. Howard, Jr., Inspector General for the Department of Education Lorraine Lewis, and Van Harp, Assistant Director in Charge of the FBI's Washington Field Office, announced that Elizabeth C. Mellen, 54, of Washington, D.C., the leader and facilitator of a wide-ranging conspiracy to defraud the Department of Education pleaded guilty to one count of conspiracy to defraud the United States and one count of theft of government. The guilty plea is the seventh by family members of Mellen who have pled guilty in United States District Court before the Honorable Emmet G, Sullivan in this wide-ranging scheme of theft from the Department of Education.
On January 16, 2002, Joanne Burch, 58, of Mechanicsville, MD, who is Mellen's sister, pled guilty to one count of conspiracy to defraud the United States. That same day Joanne Murphy, 36, and Audrey Hawkins, 38, both of Mechanicsville, MD, and both nieces of Mellen, pled guilty to one count of conspiracy to receive stolen government property. Immediately after pleading guilty, Ms. Murphy and Ms. Hawkins resigned their positions with the Department of Education. Tina Burroughs, 25, of Mechanicsville, MD, who is Mellen's daughter-in-law, pled guilty on January 11, 2002, to one count of conspiracy to defraud the United States. On January 10, 2002, David Gray, 28, who is Mellen's son-in-law, and Elizabeth Burroughs Gray, 26, who is Mellen's daughter, both of Mechanicsville, MD, also pled guilty to one count of conspiracy to defraud the United States.
These guilty pleas arose from the defendants' respective participation in a scheme through which the United States Department of Education was eventually defrauded of more than $1,000,000. The conspiracy to defraud the United States counts are felonies that carry a statutory maximum of five years and fines up to $250,000. The theft of government property carries a ten year statutory maximum sentence and a fine of $250,000. Ms. Murphy and Ms. Hawhins' pleas were to charges carrying a statutory maximum sentence of one year and fines up to $100,000. The defendants will be sentenced later this year.
According to the government's evidence, Elizabeth Mellon, a Telecommunications Specialist with the United States Department of Education (Department), was the Department's contracting officer on a large telecommunications contract between the Department and Bell Atlantic Federal Systems (now Verizon). At some point in time in the 1990s, she began ordering materials on the Bell Atlantic contract that were unrelated to the performance of the Bell Atlantic contract. These orders were placed through a Bell Atlantic technician, Robert Sweeney, who was assigned full-time to the Department of Education to install telephone systems, Mr. Sweeney has previously pled guilty to charges of conspiracy and theft of government property for his role in this scheme. Initially, these orders were limited to telephones and/or answering machines for personal use. Sweeney would order the items as Mellen requested, pick the items up from the Bell Atlantic warehouse, and deliver them to Mellen. Mellen would in turn distribute these items to co-workers and/or family members for their personal use. These items were charged to and paid for by the Department of Education.
Over time, Elizabeth Mellen's requests for items escalated and began to encompass more expensive items. For example, in 1997, Elizabeth Mellen requested that Bell Atlantic order numerous items unrelated to the contract, including, but not limited to, a Gateway Destination computer that was used in Elizabeth Mellen's home, a bell laptop computer, and a Gateway Destination computer. During that year, the Department paid Bell Atlantic nearly $60,000 for items ordered on the Bell Atlantic contract that were unrelated to the contract and its purpose and that were distributed to Mellen's family members for their personal use.
In 1998, the ordering escalated further as Mellen requested and received through the Bell Atlantic contract, among other things, 3 Gateway computers, a 61-inch screen television, 2 Dell laptop computers, 4 SONY Handycam camcorders and 4 SONY video Walkmans to show the videos from the cameras. During that year, the Department paid Bell Atlantic and Amstar nearly $125,000 for items purchased on their respective contracts that were unrelated to the contracts and for personal use by members of Mellen's family and others.
In 1999, the ordering increased once again as Elizabeth Mellen requested and received through the Bell Atlantic contract 5 Gateway computers, 2 UMAX laptop computers, 4 Dell laptop computers, 8 printers, 7 Palm Pilots, 4 scanners, 50 Motorola Talkabouts, 75 cordless telephones, 8 digital cameras, 2 compact disc players, and numerous other items. These items cost the Department over $134,000. None of these items were for official Department use and were distributed to members of Mellen's family and others for their personal use.
Elizabeth Mellen let her family members know that she could order the electronic items they desired. They would research the items and then call or e-mail Elizabeth Mellen at work and let her know what they would like. She would then order the items requested and the Department of Education would pay the bills.
In addition to ordering items for herself and family members, Elizabeth Mellen provided other services for her family members. She provided cellular telephones to her son and daughter-in-law and her daughter and son-in-law that were paid for by the Department of Education. They used these telephones to make thousands of calls -- all of which were paid for by the Department of Education.
Finally, Elizabeth Mellen used the Bell Atlantic and a Lucent Technologies technician to perform personal services for her and her family. For example, she sent the technicians during the business day to drive her daughter to doctors' appointments, to buy her crab cakes from Baltimore, install phone jacks at family members home, and other personal errands. She knew that the technicians were "on the clock" at the time and their time was being charged to the Department of Education while running these errands.
To date, 15 individuals have pled guilty to criminal charges in relation to this scheme and six Department of Education employees have resigned their positions. The two Bell Atlantic technicians and a technician from Lucent Technologies have been fired as a result of the investigation.
In announcing the guilty pleas, U.S. Attorney Howard, Inspector General Lewis, and Assistant Director Harp commended members of the Department of Education's Office of Inspector General and the Federal Bureau of Investigation's Government Fraud Squad. In particular, they praised the outstanding investigative efforts of OIG Special Agent Brian Hickey and FBI Special Agent Thomas Chadwick. In addition, they commended Assistant U.S. Attorney Barbara A. Grewe of the Public Corruption/Government Fraud Section, who is handling the prosecution of these cases