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Investigative Report

For Immediate Release:
April 12, 2006



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United States Department of Justice
U. S. Attorney, Eastern District of Louisiana


Jim Letten
United States Attorney

500 Poydras Street, Suite B210
New Orleans, Louisiana 70130

Contact:
Kathy English (504) 680-3068

MOLER BEAUTY COLLEGE CORPORATION ALONG WITH OWNERS AND EMPLOYEES SENTENCED FOR FEDERAL FRAUD VIOLATIONS

NEW ORLEANS, LOUISIANA - Jim Letten, United States Attorney for the Eastern District of Louisiana, announced that a Louisiana corporation, along with owners and employees have been sentenced for conspiracy to commit fraud against the United States Department of Education. According to a recently unsealed indictment returned on January 27, 2005, MOLER BEAUTY COLLEGE, INCORPORATED, DALE KOEHL, 51, of Metairie, LA, TIM KOEHL, 48, of Metairie, LA, CLARENCE KOEHL, 84, Metairie, LA, MICHELLE HARDY, 34, of Arabi, LA, and ALLISON SMITH, 45, of Hammond, LA were charged in an one count indictment with conspiring to steal Title IV Higher Education funds from the U. S. Department of Education. "The defendants employed a number of schemes and artifices to defraud the Government of monies they were not entitled to," explained U. S. Attorney Letten. He added,

"The defendants, along with the corporation, administered admission tests to students when they were not qualified to administer those tests; an independent test administrator certified tests as complying with the Department of Education standards when in fact those tests were not proctored by independent test administrators; employees and owners had failing tests scores of prospective students changed in order to qualify for federal funding; students that had dropped out of MOLER college program were maintained on school records that were submitted to the Department of Education in order to avoid refunding monies owed.

This crime affects all students that depend upon the resources of the Department of Education to reach their higher educational goals. What the defendants did in this case is unconscionable because they actually took education resources out of the pockets of those who need it and earned the right to receive Pell Grants and other funding resources."

According to the indictment and the factual basis filed with the United States District Court, the conspiracy began in January, 2002 and resulted in a loss of more than $200,000 of Title IV Higher Education funds, namely in the form of Pell Grants and Federal Supplemental Education Opportunity Grants (FSEOG). United States District Judge Kurt Engelhardt sentenced the MOLER BEAUTY COLLEGE (MBC) to five (5) years probation and a $400 special assessment. DALE KOEHL was sentenced to serve eighteen (18) months imprisonment, two (2) years supervised release and a special assessment of $100; TIM KOEHL was sentenced to serve twenty-seven (27) months imprisonment, two (2) years supervised release and a special assessment of $100; and CLARENCE KOEHL was sentenced to serve twelve (12) months and one day imprisonment, two (2) years supervised release and a special assessment of $100. Judge Engelhardt also ordered that the defendants pay $164,700 in restitution, which the defendants have already paid.

Further, On June 15, 2005, defendants ALLISON SMITH and MICHELLE HARDY both pled guilty to Misprision of a Felony. Judge Engelhardt sentenced both SMITH and HARDY to two (2) years probation for their participation in their role in the criminal activity surrounding the fraud against the Department of Education.

The four year investigation was conducted by Special Agent Patricia Gonzalez of the Federal Bureau of Investigation and Special Agent Christopher Cooper of the United States Department of Education Inspector General Office. The case was prosecuted by Assistant United States Attorneys Abram McGull, II, Michael Simpson and Albert J. Winters, Jr.


 
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Last Modified: 04/17/2006