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Investigative Reports

FOR IMMEDIATE RELEASE
December 9, 2004

U. S. Attorney's Office
Northern District of Georgia
75 Spring Street, S.W. - Suite 600
Atlanta, Georgia 30303

Tel: 404-581-6000
Fax: 404-581-6181

Former Morris Brown President, Financial Aid Director Indicted by Federal Grand Jury in $5 Million Fraud Scheme

David E. Nahmias, United States Attorney for the Northern District of Georgia; Lester Fernandez, Special Agent In Charge, Department of Education, Office of Inspector General; and Gregory Jones, Special Agent in Charge, Federal Bureau of Investigation, announce that PARVESH SINGH, 62, of Valparaiso, Indiana, and DOLORES EVELYN CROSS, 68, of Chicago, Illinois, have been charged in a 34-count federal indictment related to a $5 million fraud scheme at Morris Brown College, a private, non-profit college in Atlanta. According to Nahmias:

The indictment charges that from August 1999 to approximately February 2002, PARVESH SINGH and DOLORES EVELYN CROSS defrauded the United States Department of Education (DOEd), Morris Brown College, students of the College and potential students of the College, to obtain federal financial aid funds to which the College was not entitled, by means of false and fraudulent pretenses and representations.

CROSS was the interim and then permanent President of the College from November 1998 until February 2002. She controlled and was responsible for the overall financial management of the College, and reported to the College's Board of Trustees. The indictment charges that CROSS hired SINGH and later promoted him to the dual roles of Financial Aid Director and Director of Enrollment Services in August 1999. SINGH thus had control over both the procurement and disbursement of federal financial aid funds. CROSS and SINGH had a duty to ensure that the financial aid funds they obtained were for eligible College programs and for eligible students attending the College.

The indictment charges that CROSS substantially overspent on college operations, giving the impression that she was achieving a higher level of success as President of Morris Brown, which has traditionally operated on a limited budget. To generate funds to support the extensive spending, CROSS and SINGH fraudulently obtained institutional grant funds from the Department of Education, and unlawfully used such funds. They also fraudulently obtained student loans and grants from DOEd and private lenders for ineligible students, who included students who never attended the college and students who attended the college at one time but were no longer in attendance at the time of the financial aid request. In addition, CROSS concealed the scheme and acts done in furtherance of the scheme from, among others, DOEd, the College's Board of Trustees and the College's students and potential students.

"Hundreds of students were victims of the defendants' alleged fraud," U.S. Attorney David E. Nahmias said at a news conference today. Many of those loans went into default status, which negatively impacted the students' and their parents' ability to obtain credit. In many cases, unauthorized student loans inhibited the students' ability to obtain financial aid at other schools."

Morris Brown College relied on federal financial aid funds to operate. Those funds came from the US Department of Education, through institutional and student grants, and from private lenders through student loans guaranteed by DOEd. Colleges are required by law to confirm and document the eligibility of students in whose names they seek financial aid. The indictment alleges that SINGH, aided and abetted by CROSS, failed to document student eligibility for financial aid over the course of several years. As a result, the defendants obtained financial aid funds in the names of many students who never attended Morris Brown College.

The indictment charges that in her first year as President, CROSS drastically increased spending, inflating overall operating costs by more than $8 million in her first year. CROSS increased payroll by $5 million, almost double her personal staff, and incurred additional expenses for housekeepers, speech writers and book editors. She also caused Morris Brown to fund business and personal trips, including 50 trips for herself, friends and family members.

The indictment charges that while interim President, CROSS allegedly caused the College to expend $4.8 million dollars of a credit line, without securing it with financial aid funds as required by the bank. Instead, CROSS spent the financial aid funds as well. When the bank found out, it called the note. CROSS and SINGH discussed the urgent need to generate financial aid funds to pay the note. SINGH immediately requested $2 million institutional grant funds that the College was not eligible to receive, which CROSS used to pay the bank note. CROSS then continued to request institutional grant funds through false certifications. CROSS continued to tell SINGH that the college needed more money to keep up with her operating expenditures. From August 1999, through January, 2002, SINGH obtained more than 1800 disbursements of federally insured loans, and Pell grants for ineligible students, totaling approximately $3.4 million. Morris Brown was not entitled to those funds because those students never attended the school, no longer attended the school or attended the school less than half-time. The indictment charges that most of those students were unaware that the College had requested student loans in their names and that they would be responsible for repaying those loans. Many of those loans went into default status, which negatively impacted the students' and their parents' ability to obtain credit. In addition, in many cases, unauthorized student loans inhibited the students' ability to obtain Financial Aid at other schools.

In 2001, the indictment alleges, DOEd placed stricter conditions on the college and its financial aid requests. Knowing he did not have the required authorization from DOEd, SINGH allegedly directed his staff to obtain federally insured student loans, including over $980,000 of loans for ineligible students. CROSS converted those funds to the use of the College. CROSS allegedly misrepresented and hid the actions from the DOEd and the College's Board of Trustees when she had a fiduciary duty to be honest about the College's true financial condition. As a result of her concealment, the indictment charges a scheme to defraud the Board of its right to CROSS' honest services.

By December 2002, Morris Brown lost its accreditation as a result of financial mismanagement, including the failure to comply with financial aid requirements. The College also was disqualified from participation in federal financial aid programs, and student enrollment dropped from over 2,000 full-time students to approximately 80 students. Ultimately, the names and financial information of hundreds of the college's students, and potential students (some of whom never attended the college), as well as their parents, were used to obtain loans they did not authorize and for which they received no benefit.

Nahmias said in announcing the indictment, "When the financial aid system is abused and corrupted through fraud, as alleged in this case, enormous harm can result, to the Department of Education and the taxpaying public, but even more to the College and its students. The current staff and administration of Morris Brown have been tremendously cooperative and supportive in this case. The strength that Morris Brown has shown throughout this ordeal is an indication of its ability to survive this alleged criminal activity from within, and to remain a vital and proud institution of higher learning in Atlanta."

Department of Education-Office Of Inspector General Lester Fernandez said of the case, "The Inspector General of the U. S. Department of Education, John P. Higgins, Jr., would like for me to express that he is proud of the work of OIG Special Agents and their commitment to protecting the integrity of federal education funds. We would like to thank the professionals from the United States Attorney's Office, the FBI, and the Department of Education Program Offices who worked tirelessly with the OIG special agents on this investigation. We will continue to work with others in law enforcement to safeguard federal education dollars. The Atlanta Regional Office for Federal Student Aid has designated a voice message box for students and parents who may have questions regarding their federal student aid at Morris Brown College. There are two telephone numbers where students and parents can call to leave a message for a Department of Education representative. The telephone numbers are: 404-562-6053 or 404-562-6090."

FBI Special Agent In Charge Greg Jones said, "The FBI takes very seriously allegations of abuse of the public's trust. When private organizations receive government funds, they are in fact receiving money from the pockets of American taxpayers, who rightfully expect their money will be used within the constraints of the law. When such is not the case, those same taxpayers can and should expect that those violating their trust will be held accountable, as we have seen in this case. I would like to thank our colleagues at the U.S. Department of Education for their assistance throughout this investigation."

CROSS and SINGH are charged with 22 counts of wire fraud, which each carry a maximum penalty of 30 years in prison. Additionally, CROSS and SINGH are charged with 5 counts of stealing Title IV Financial Aid Funds, which each carry a maximum penalty of 5 years in prison. And CROSS and SINGH are charged with 6 counts of stealing Title III Financial Aid Funds, which each carry a maximum penalty of 2 years in prison. CROSS is also charged with one count of honest services mail fraud, which carries a maximum penalty of 5 years in prison. The defendants are also the subject of a forfeiture allegation for all proceeds they obtained from the alleged fraud.

Members of the public are reminded that the indictment contains only charges. A defendant is presumed innocent of the charges and it will be the government's burden to prove a defendant's guilt beyond a reasonable doubt at trial.

This case was investigated by Special Agents of the Department of Education, Office of Inspector General, and the FBI.

Assistant United States Attorneys Phyllis Sumner, Lynn Adam, and Melanie Wilson are prosecuting the case.

For further information please contact David E. Nahmias, United States Attorney or F. Gentry Shelnutt, Chief, Criminal Division, through Patrick Crosby, Public Affairs Officer, U.S. Attorney's Office, at (404) 581-6016. The Internet address for the HomePage for the U.S. Attorney's Office for the Northern District of Georgia is www.usdoj.gov/usao/gan.


 
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Last Modified: 03/02/2005