Pell grant program under investigation



WASHINGTON (AP)—The government’s main aid program for students after high school is being robbed of millions of dollars by schools that provide little job training or obtain grants fraudulently from lax managers, congressional investigators testified Wednesday.

The so-called Pell grant program provides 4.1 million students $6.3 billion in grants this year to attend universities, colleges and vocational schools.

In several cases, the Senate Permanent Subcommittee on Investigations found orthodox Jewish schools in New York City had become ‘‘Pell grant mills,’‘ existing primarily to reap federal tuition aid dollars.

Sen. Sam Nunn, D-Ga., said the hearings produced ‘‘a good deal of information that needs to be sent to the Department of Justice’‘ for criminal investigation.

One school, Bais Fruma in Brooklyn, ‘‘is enrolling entire families and entire neighborhoods into its program,’‘ said subcommittee counsel Alan Edelman. Since becoming eligible for Pell grants in 1983, the school has collected $22.4 million.

Of 2,000 students at the school in 1991-92, 97 percent got Pell grants, the investigators said. Most got the maximum, $2,400. Some 530 families had at least two members getting grants. One family had nine members at the school on Pell grants.

Edelman cited records showing that one student, Sara Hoffman, got Pell grants to attend Bais Fruma and three other New York-area schools. When investigators questioned her, she said she had never enrolled at Bais Fruma or one of the other schools.

Bais Fruma’s file on the woman included various forms bearing her apparently forged signatures—including one that spelled her first name wrong, Edelman said.

He said the school schemed to get federal dollars to subsidize religious study that religious members of the community would normally participate in anyway.

The school also used at least one broker to generate Pell grant applications, he said. Files of 33 Bais Fruma students were found when authorities raided the office of broker Jacob Ginzburg. All, including Ginzburg and his wife, got Pell grants. Ginzburg has since fled the country, Edelman testified.

Bank and school records showed large payments to other orthodox Jewish institutes and congregations, some of which appear to be mortgage payments on Brooklyn buildings, he said. He said it appears Pell grants have been used by the Munkacser Hasidic movement, the school’s sponsor, ‘‘to funnel federal funds to various religious institutions which otherwise would be ineligible to receive federal aid.’‘

George Meissner, an attorney for the school who was in the audience at the hearing, called the hearing ‘‘a one-sided presentation, with interpretations by people who are jumping to conclusions based on raw material.’‘

He said the school provided records to the subcommittee, but investigators never presented Wednesday’s allegations so the school could respond. ‘‘This is definitely not the whole story,’‘ he said.

Edelman said the subcommittee, which has investigated organized crime in the past, has never encountered such resistance to its questions and subpoenas as it had in the Pell grant probe.

Rabbis and other officials of schools invoked their Fifth Amendment rights against self-incrimination, Edelman said, and religious leaders admonished students not to cooperate.

In another case, Sara Schenirer Teachers Seminary in Brooklyn collected nearly $11 million in Pell grants over the past decade, using waivers from the state of New York and the U.S. Education Department to become eligible.

Profits generated from Pell grants were used last year to pay off a mortgage, transfer $800,000 to an affiliate and help build more than $1.2 million in mutual fund investments, said subcommittee chief investigator David Buckley.

Many students interviewed said they attend classes only because they receive $200-a-semester stipends, apparent kickbacks from the Pell grants the school receives for them, Buckley said. Many are poor, aged Russian immigrants.

The operator of a Brooklyn community center, Don Bluestone, gave the subcommittee an affidavit complaining about ‘‘exploitation of the Russian immigrants and the federal student aid program.’‘

Despite the problems, when the Education Department reviewed the school’s performance in December 1992, ‘‘They didn’t find anything,’‘ Buckley said.

‘‘There is, in fact, a great deal of fraud and abuse going on within this program,’‘ Nunn said in the first of two days of hearings. ‘‘I’m afraid this problem’s a lot bigger than we’ve seen so far.’‘

That is due in part to a ‘‘woefully inadequate’‘ ability of the Department of Education to detect fraud and enforce laws, Nunn said.