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OIG: Office of Inspector General
   Current Section

Investigative Reports

FOR IMMEDIATE RELEASE:
Harrisburg, PA June 1, 1999

David M. Barasch
United States Attorney
Middle District of Pennsylvania
Federal Building, Suite 220
P.O. Box 11754
228 Walnut Street
Harrisburg, Pennsylvania 17108-1754
(717) 221-4482
FAX (717) 221-4582

Former New Jersey Resident Sentenced to 51 Months in Prison

HARRISBURG, PA.  A former New Jersey resident, now residing in Colorado, was sentenced last week to 51 months in prison to be followed by two years of supervised releasefollowing his conviction on federal student financial aid fraud,obstruction of justice, and money laundering charges. He was also ordered to pay restitution in the amount of $846,000 to theU.S, Department of Education.

United States Attorney David M. Barasch together with U.S.Department of Education, Acting Assistant Inspector General forInvestigations Gary Mathison and U.S. Postal inspector-In-ChargeBruce Chambers of the Philadelphia Division, announced that FRANKCEFARATTI, age 43, of Steamboat Springs, Colorado was sentencedfor his participation in a scheme to defraud the U.S. Departmentof Education of approximately $846,000 in student financialassistance, in the form of federally insured loans and Pellgrants. CEFARATTI pled guilty on October 30, 1998, to one count of mail fraud, one count of student financial assistance fraud, one count of money laundering and one count of obstruction of justice.

CEFARATTI was an owner and President of Franklin School of Cosmetology and Hair Design (Franklin), located in Elizabeth, New Jersey. From 1994 through 1996, CEFARATTI engaged in a scheme that involved fabricating and forging Federal Family Education Loan program deferments, forbearances and critical eligibility documentation. As a result of the submission of fraudulent deferment and forbearance forms to financial institutions in Pennsylvania, Franklin improperly lowered its cohort default rate and thereby remained eligible to participate in the U.S. Department of Education's federal student assistance programs, the source of more then 90% of the School's income.

Additionally, the purpose of the scheme was to obtain and retain student financial assistance for students who, according to the U.S. Department of Education's regulations, were ineligible to receive student financial assistance. Fraudulent documents were created and placed in the student files in order to make ineligible students appear to be eligible.

CEFARATTI was also sentenced for removing evidence seized pursuant to a federal search warrant from a government conference room, thereby obstructing justice.

Three other individuals previously pled guilty for their involvement in this scheme:

In November of 1998, pursuant to plea agreements, former financial aid director Modesta Perez, and former director of admissions Gloria Malavet pled guilty to one-count informations charging them with federal student financial assistance fraud. Perez and Malavet were each sentenced to six months home confinement, three years supervised release, and ordered to pay restitution in the amount of $1,000.

Additionally, on May 18, 1999, Carole Cefaratti Diaz, the former co-owner of Pranklin pled guilty to mail fraud, student financial assistance fraud, money laundering, and loan application fraud. Carole Cefaratti Diaz is currently awaiting sentencing.

Assistant United States Attorney Sally Lied was in charge of this investigation and prosecution. The case was jointly investigated by Special Agents of the United States Department of Education, Office of Inspector General (New York), and the United States Postal Inspection Service (Harrisburg).


 
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Last Modified: 03/03/2005