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Archive for Thursday, October 26, 2000

$1 million returned in stolen schools funds

Education secretary says all missing finances eventually to be recovered

October 26, 2000

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— Asked by Congress to explain a pair of theft schemes at his agency, Education Secretary Richard Riley said Wednesday more than half the $3 million taken this year has been recovered.

Riley, who blamed the incidents on "misplaced faith" in a longtime, career employee and "abuse of our trust," said $1.9 million in stolen grants for children who live on Indian reservations and military bases had been returned to two South Dakota school districts.

"We expect to recover every penny by the time the (theft ring) investigation and prosecution is completed."

Education Secretary Richard Riley

The money was diverted in July with forged documents into Maryland bank accounts and used to purchase a Cadillac, real estate and other property.

The government seized the property after winning a civil judgment. No criminal charges have been filed.

Riley could not say how much would be recovered from the March theft of $1 million in equipment and from falsely reported overtime. Six department employees pleaded guilty in the case, which is still pending, the U.S. Attorney's office said.

He offered no details on how employees or outsiders could have avoided department security, but said "we have put stringent new measures in place."

"We expect to recover every penny by the time the (theft ring) investigation and prosecution is completed," Riley said at a hearing of the House Education and Workforce Committee, the panel's third forum this year on the agency's handling of its $32 billion budget.

"We can't say nobody will ever steal in the future or commit forgery."

The department, which has had trouble clearing its audits, was again taken to task for the thefts, the state of its books, distribution of special education funds, and Riley's official department trips to Democratic Congressional districts.

The high-profile theft cases drew the most attention. Riley angered lawmakers by once again being unable to say how much money the department has lost in recent years to fraud, waste and abuse.

"Once we stop denying these problems, we can begin to address them in a meaningful manner," said Rep. Pete Hoekstra, R-Mich., who chairs the House investigations panel.

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