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Paine trustee's memo claims federal money meant for students used to pay bills, payroll

Federal money paid bills, trustee writes

Saturday, May 12, 2012 9:40 PM
Last updated Sunday, May 13, 2012 2:30 AM
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A Paine College trustee said federal money intended for students was used instead to pay the school’s payroll and past-due bills in December and January, according to documents obtained by The Augusta Chronicle.

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Paine College  JACKIE RICCIARDI/STAFF
JACKIE RICCIARDI/STAFF
Paine College

The school received an $800,000 payment from the U.S. Department of Educa­tion in December, a portion of which was to be refunded to students, but the funds “were used entirely to pay payroll,” according to a memo written to the Board of Trustees on April 20 by Wayne Kendall.

By the end of 2011, the memo states, Paine owed students about $1.2 million in refunds from student aid money that had not been given out.

The school received another federal drawdown of $1 million in January, but instead of making refunds to students, as required by federal regulations, officials used most of it to pay bills that were 60 days past due, according to the memo.

Kendall wrote that his memo is based on interviews with some recently terminated school employees, and he details an “extremely poor” financial audit, spending issues and terminations in the business office that caused the fiscal management of the college to be “thrown into disarray.”

Representatives from the U.S. Department of Educa­tion would not comment on issues raised in the memo or respond to questions about what the federal money was intended for. However, department press secretary Jus­tin Hamilton said allegations of mismanagement of federal funds can trigger a federal investigation.

“In general we take allegations of misuse of federal funds very seriously,” Hamilton said. “When we find them or are made aware of them, we investigate them and take appropriate action.”

A financial audit dated March 22 found that Paine lost eligibility to one federal loan program and is at risk of losing more for inaccurately reporting student enrollment and financial data to the government. The school also had a $3.6 million revenue shortfall as of March.

Repeated requests by The Chron­icle over the past month to interview Paine Presi­dent George Bradley have been denied.

Vice President of Institutional Advancement Brandon Brown said Thursday that the college has no comment on the use of federal money for payroll and bills.

KENDALL’S MEMO attributed much of the school’s financial issues to instability in the business office, which also delayed completion of the financial audit for fiscal years 2010 and 2011 by Augusta certified public accounting firm Cherry, Bekaert and Holland.

The audit was due to the Board of Trustees in October, but the draft version was not delivered until December, and the final audit was not completed until late March.

Turnover in the business office peaked in February when Controller Kelly Kindell, Vice President for Administrative and Fiscal Affairs Leroy Summers and Student Financial Services Manager Nancy Summers were fired. Assistant Controller Melissa Evans-Hall resigned three weeks later, according to the memo.

“In the span of three weeks time the entire mid- to upper-level management in the business office at the college was gone,” Kendall wrote. “Chaos ensued in the aftermath of these terminations and resignations.”

After these changes, about 30 students protested on campus March 21 over financial aid checks they said bounced or were not delivered at all.

As of April, Kendall said, students were still claiming they hadn’t received financial aid checks.

TWELVE DAYS BEFORE the audit was completed March 22, CPA Bonnie Cox told Kendall in an
e-mail that she still had “huge concerns” before she could issue the final audit. Cox described the financial situation as a “mess” and implored Kendall to hire an internal CPA to reconcile accounts and “get things straight.”

Messages left by The Chronicle seeking comment from Kendall and Cox were not returned.

According to the e-mail, Cox said she could not complete the audit earlier because the college had not provided her with bank reconciliations or responses to the findings of the December draft audit. She was also alarmed at Bradley’s indication that he “found bills left unpaid of over $1 million” and feared that Paine had not reported all expenses and liabilities to auditors.

Cox warned that if the college did not submit the final audit by the end of March it would default on federal funding, and she stressed the significance of the college’s inability to complete the audit within nine months of June 30, the end of the fiscal year, as required.

The final audit found that Paine officials did not return leftover financial aid money to the government after students withdrew in 2010-11, did not change students’ enrollment statuses after they withdrew and recorded some loans as disbursed when they never actually gave students the money, among other violations.

In his April memo, Kendall said he feared that the severity of the audit findings “puts the college in jeopardy of receiving crippling future sanctions or suspensions of funding from the Department of Education.”

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raul
5714
Points
raul 05/12/12 - 09:24 pm
8
0
Federal Investigation Needed

We have allegations of misappropriation of federal funds. As a taxpayer, these allegations should be investigated by the feds. Sounds like a real mess. Incompetence or something more sinister afoot?

whatmistake
100
Points
whatmistake 05/12/12 - 09:49 pm
3
0
You have to wonder whether

You have to wonder whether the geniuses in charge at Paine are getting pointers from their counterparts at South Carolina State University on how to run a school into the ground.

Iwannakno
1533
Points
Iwannakno 05/12/12 - 10:12 pm
1
0
With all the problems being
Unpublished

With all the problems being reported there in the last 2 years I'm not shocked by this.

dr.sandracannonscott.yah
5
Points
dr.sandracannonscott.yah 05/13/12 - 03:20 am
3
0
Integrity in Reporting

Thank you, Tracey McManus, for maintaining integrity in reporting the truth to readers about this matter. Paine College has meant so much to so many for so long. In God's timing, the entire truth will be revealed, and all will be set free. Again, your efforts are deeply appreciated.

mrducks
59
Points
mrducks 05/13/12 - 05:05 am
1
0
Just shut it down. It's a
Unpublished

Just shut it down. It's a terrible school anyway.

avidreader
3558
Points
avidreader 05/13/12 - 06:41 am
3
0
Tracey McManus

I have to agree with dr.scscott; Ms. McManus continues to stoke the fire and let the public know what's happening. All of this mess reeks of a cover-up, and hopefully the truth will surface. I wonder how many students at Paine actually pay tuition from their parents' college savings accounts. What about HOPE money? Will this scholarship have any affect on the investigation?

Stay with it, Tracey!

nothin2show4it
120
Points
nothin2show4it 05/13/12 - 06:59 am
0
0
Decided to delete my own
Unpublished

Decided to delete my own comment.

mrducks
59
Points
mrducks 05/13/12 - 09:37 am
0
0
AC=NO INTEGRITY
Unpublished

Since the AC deletes posts that are not against the rules, just against the AC's political wants, I assume that the AC writes its own fake comments too. I wish we had a real newspaper in Augusta.

Jane18
12332
Points
Jane18 05/13/12 - 11:05 am
2
0
Liars and Thieves, oh yeah!

Yes, Raul. Incompetence AND something more sinister! That's what happens when organizations and people get "free money"! Free to them, but taken from us!!

Bizkit
35397
Points
Bizkit 05/13/12 - 11:42 am
2
0
The same thing happened at

The same thing happened at Morris Brown College from Wikipedia:"Eighty percent of the school's 2,500 students received financial aid from the federal government, which gave Morris Brown $8 million a year. A federal criminal case against the former president, Dolores Cross, and financial aid director, Mr. Parvesh Singh, proved the pair had embezzled a great deal of that federal aid and diverted it to ineligible college costs, such as personal staff, instead of subsidizing the students whose names were used to obtain the funds.

In 2002, the Southern Association of Colleges and Schools revoked the college's accreditation because of its financial problems.

Cross and Singh were charged in December 2004 in a 34-count indictment that accused them of defrauding the school, the U.S. Department of Education, and hundreds of students. The pair, who had first worked together at a college in Chicago, Illinois, were convicted of using the names of hundreds of students, ex-students, and people who were never enrolled to obtain financial aid for the school." So this is a really big deal and likely a criminal investigation will ensue and the school may lose its SACS accreditation. .

Sweet son
11488
Points
Sweet son 05/13/12 - 01:52 pm
1
0
dr scott's comment

"In God's timing, the entire truth will be revealed, and all will be set free. "

If all will be set free means students then that is true but the administrators who misappropriated the funds might face a different ending.

Discussionstarter
497
Points
Discussionstarter 05/13/12 - 07:35 pm
1
0
Paine Administrators Need to be Held Accountable

It's very simple. FBI should investigate. If investigation proves misuse of federal funds.... prosecute to the fullest extent of the law.

Bizkit
35397
Points
Bizkit 05/13/12 - 09:45 pm
1
0
FBI????? You mean Department

FBI????? You mean Department of Justice. If Holder doesn't investigate this then he should be ousted.

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