School owners accused of bilking $13 million in financial aid

By PATRICK WALTERSAssociated Press WriterJune 30, 2005, 4:04 PM EDT
PHILADELPHIA -- A husband and wife who owned a vocational school with a location in New Jersey bilked the federal government out of $13 million in financial aid grants by falsifying school records, prosecutors alleged in an indictment released Thursday. Alexander Lebed, 36, and Larisa Lebed, 33, of Richboro, face more than 120 counts of fraud and money laundering in connection with Pell Grants obtained for CSC Institute from January 1999 through December. The couple allegedly received $4.3 million for themselves personally and put the rest toward promoting the scheme.

"They tricked and manipulated a system that was put in place to help people improve their lives through education and, in a sense, took the taxpayers to school," U.S. Attorney Patrick L. Meehan said in a statement. Pell Grants are awarded to students who have not earned a bachelor's or professional degree, and they do not have to be repaid. The Department of Education uses a formula to determine if a student is financially eligible for the award, which had a maximum of $4,000 in 2002-2003. The federal government authorized the Pell funds to be disbursed directly to the school to pay the students' tuition and other costs for eligible courses. CSC Institute had locations in Philadelphia, Southampton and Cherry Hill, N.J., and offered training for adult students in business, medical and computer fields and English as a second language. It closed in February after the Education Department determined it was no longer eligible to receive financial aid. The Lebeds had employees falsify answers on students' financial aid applications, create fraudulent supporting documents and create fake records for ineligible students in the name of eligible friends or relatives who didn't attend the school, authorities said. Schools are allowed to keep entire Pell awards for some recipients who don't finish their classes. The defendants allegedly deceived the Department of Education so the school could keep whole Pell disbursements for students who had not attended classes, had withdrawn early or had graduated from ineligible short courses. In addition, the couple is accused of paying employees a bonus or commission of $25 to $150 for each student they enrolled _ a violation of department rules _ and ordering them not to tell anyone. The Lebeds have an unlisted telephone number and could not immediately be reached Thursday. A U.S. Department of Education spokeswoman did not immediately comment on the indictment.