U.S. Department of Justice

United States Attorney
Middle District of Pennsylvania

May 3, 2010

BLOOMSBURG UNIVERSITY OF PENNSYLVANIA AGREES TO PAY CIVIL SETTLEMENT OF $38,000 TO THE U.S. GOVERNMENT AND ESTABLISH NEW INTERNAL OPERATING PROCEDURES AIMED AT INCREASING ACCOUNTABILITY IN THE ADMINISTRATION OF ITS STUDENT FINANCIAL AID PROGRAM AS A RESULT OF IMPROPER HANDLING OF FEDERAL WORK STUDY FUNDS

Dennis C. Pfannenschmidt, United States Attorney for the Middle District of Pennsylvania, announced today a settlement of potential civil claims against the Bloomsburg University of Pennsylvania. According to U.S. Attorney Pfannenschmidt, beginning in the summer of 2000 and continuing for a number of years thereafter, members of Bloomsburg’s administration were aware of the fact that one of their assistant baseball coaches, a student named Walter Watkins, was engaged in the fraudulent acquisition of Federal Student Aid through the Federal Work Study program. Despite being aware of Watkins’ conduct, and despite the school's own Director of Financial Aid recommending that over $30,000 be returned to the United States Department of Education, Bloomsburg failed to either report Watkins fraudulent acts or return any improperly disbursed Federal Student Aid funds voluntarily.

As part of this settlement of all potential civil claims arising out of the above conduct, Bloomsburg has agreed to pay the United States the sum of $38,000 in damages and penalties. In addition, Bloomsburg has agreed to effectuate an extensive series of internal policy changes aimed at increasing the transparency of Bloomsburg’s Federal Student Aid program and ensuring that accountability for proper use of Federal Student Aid funding exists at all levels of the school’s administration. These changes include the establishment of new lines of communication between Bloomsburg'’ President and Director of Financial Aid, as well as the installation of a system to identify and resolve discrepancies in Federal Student Aid related information received by various school offices. All of these policy changes must be submitted to the United States Department of Education within 180 days.

This settlement follows the 2007 conviction upon guilty plea of Watkins, who was ultimately sentenced to twenty-four months probation and ordered to pay $1,200 in restitution for his role in obtaining Federal Work Study funds to which he was not entitled.

U.S. Attorney Pfannenschmidt noted that, in many ways, the internal changes that Bloomsburg has agreed to undertake are more significant than the financial aspects of the settlement. He added that, “there are few things in life more valuable than a quality education. With rising tuition costs and a still-recovering economy, the demands on Federal Student Aid programs are greater than ever. With this settlement agreement, we have taken a significant step towards ensuring that Federal Student Aid funding only goes to those students who are in genuine need of assistance and sent a clear message that institutions of higher learning have an obligation to play an active role in helping us achieve that goal.” U.S. Attorney Pfannenschmidt also thanked Inspector General Kathleen Tighe of the Department of Education and her agents for their hard work and support in pursuing this investigation.

This case was handled by Assistant U.S. Attorney Stephen R. Cerutti, II.