[Congressional Record (Bound Edition), Volume 146 (2000), Part 13]
[House]
[Pages 18560-18561]
[From the U.S. Government Publishing Office, www.gpo.gov]



                            IMPACT AID THEFT

  The SPEAKER pro tempore. Under a previous order of the House, the 
gentleman from Colorado (Mr. Schaffer) is recognized for 5 minutes.
  Mr. SCHAFFER. Madam Speaker, something pretty positive happened in 
Hyattsville, Maryland that I want to discuss; it happened particularly 
at a Chevrolet dealership, at the Lustine Chevrolet dealership. It was 
there that a sales agent happened upon a scandal that affects the 
United States Department of Education, a theft of about $2 million that 
this sales agent stumbled upon and called the FBI, and it resulted in a 
hearing that was conducted earlier today in the Committee on Education 
and the Workforce; specifically, the Subcommittee on Oversight and 
Investigations.
  The Justice Department, back in July of 2000, filed a claim in 
Federal court that Impact Aid funds, these are the funds that are sent 
to assist districts responsible for educating children connected with 
Federal facilities; military installations usually, sometimes Indian 
reservations, that these Impact Aid funds intended for two school 
districts in South Dakota were stolen on March 31 of this year. These 
alleged facts were presented in the Justice Department's complaint for 
forfeiture, which it filed in order to recover the stolen money and 
property

[[Page 18561]]

and try to get these dollars back to the children in South Dakota.
  Here is how it worked. There was a falsified, direct deposit sign-up 
form for the Bennett County, South Dakota school district that was 
submitted to the Department of Education on March 20 of this year, and 
on the form, the deposit bank account was changed from the correct bank 
account number, which was used by the school district, to a number 
under the name of Dany Enterprises. The Department of Education 
employee entered these forms and this false information into the 
agency's electronic accounting system. Consequently, the Impact Aid 
forms were wired on March 31 to the Dany Enterprises bank account, to 
the thief's bank account.
  Now, this fraud was discovered thereafter on April 4 when a 
salesperson at the Chevrolet dealership in Hyattsville, Maryland, when 
he contacted the FBI to report this suspicious transaction involving 
two men trying to buy a Chevy vehicle with a $48,000 cashier's check, 
drawing on the stolen funds from the U.S. Department of Education that 
were deposited in the thief's account, Dany Enterprises account. The 
salesman was alerted by what appeared to be false credit information.
  Now, although this Chevrolet salesman refused to sell the two men the 
car, they were each successful in purchasing a car from other dealers 
in the Washington, D.C. area. Now, one of them purchased a 2000 
Cadillac Escalade from a Cadillac dealer using a $46,900 cashier's 
check, and the other person purchased a Lincoln Navigator from a 
Lincoln-Mercury dealer, using a $50,000 cashier's check. These checks 
were used to buy both of these cars and they drew on the stolen funds 
from the Department of Education which were intended to go to the 
school in South Dakota.
  Madam Speaker, I mention all of this because the Subcommittee on 
Oversight and Investigation has been working very hard to try to divert 
dollars away from the waste, fraud and abuse that is rampant over in 
the Department and move these dollars back to our classrooms where they 
benefit children.
  The story did not end there, because following these revelations, the 
FBI found another example of where another cash transaction, this time 
almost $1 million which was intended for another South Dakota school 
district was again stolen out of these Impact Aid funds and wired to an 
account called Children's Cottage, Incorporated, due to another 
fraudulently submitted direct deposit form. This was used to buy a 
house as it turns out somewhere here in the Maryland area.
  Now, this committee hearing that we had today was one of an ongoing 
series of committee hearings that we have initiated to uncover and 
explore the theft, fraud and abuse and waste in the Department of 
Education. We have also been learning about a computer theft ring where 
Department of Education employees have come up with this elaborate 
system where they have stolen television sets, electronic equipment, 
and so on and so forth.
  Madam Speaker, we are spending as a Congress about $40 million a year 
for various investigators, financial auditors, other investigators that 
are working over in the Department of Education to try to help us stop 
this waste, fraud and abuse within the Department of Education and to 
help us get these dollars to our children and classrooms where these 
dollars matter most. But in this case, we are thankful for the car 
agent who did what the high-priced auditors were unable to do, and in 
this case, it has a very positive ending. He has reunited these almost 
$2 million with the children of South Dakota who need them. I wanted to 
bring that to the attention of my colleagues.

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