Fraud Prevention 101: 3 School-Related Scams to Look Out For

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GUEST BLOGGER

Hallie Ayres
Contributing Author

As we start a new academic year, we’re highlighting three recent scams that took place in schools so that parents, teachers, administrators, and students can remain vigilant and prevent succumbing to these dubious schemes.

Rogue PTA president proves to be big spender

In July 2021, Tiffany Bell, former PTA president at AZ Kelley Elementary School in Nashville, Tennessee, was indicted on fraud and theft charges after stealing nearly $5,600 from the school’s PTA fund during the summer of 2017. Bell used the PTA’s debit card to make cash withdrawals at ATMs, and to make a series of personal purchases at Walmart, Family Dollar and Kmart.

After parents noticed the charges in the PTA account in the fall of 2017 and questioned Bell about them, Bell resigned as president. PTA officials, together with Metropolitan Nashville Public Schools, then reported their inquiry to the Tennessee Comptroller’s Office, which began the formal investigation that led to Bell’s indictment. Though a court date has not yet been set for Bell, the consequences of her actions have had rippling effects at AZ Kelley, and their PTA was ultimately dissolved by the Tennessee Secretary of State.

Comptroller Jason Mumpower made use of the opportunity to remind administrators and parents of lessons that can be gleaned from this incident. “School support organizations must ensure they provide adequate oversight over all collections and maintain supporting documentation, such as invoices and receipts, for all expenditures,” he wrote in a press release.

Mother-son duo turned private education into a family fraud frenzy

Also in July 2021, a federal grand jury amended their indictment of Nancy and Zachary New, the mother and son duo who have been accused of defrauding the Mississippi Department of Education. Just a few months prior, in March 2021, the News received a federal indictment claiming that their fraud had amounted to $2 million, but the new indictment increased that amount to $4 million.

While both have pleaded not guilty to the initial charges, they face trial on September 15 for 21 felony charges. Their convictions could include decades of prison time and millions in restitution each.

The News owned the for-profit company New Learning Resource Inc., which operated a number of private schools within Mississippi. From 2017 to 2020, the Mississippi Adequate Education Program, a state-run and need-based program that funds public and private schools, paid out thousands of dollars to New Learning Resource Inc., all based on falsified documents submitted to the Department of Education. These documents listed full-time salaries of teachers who no longer worked at the school, had never worked at the school or didn’t work full-time, all in an effort to aggrandize the schools’ demonstrated financial needs as reported to the Department.

Ghost students haunt Baltimore

Augusta Fells Savage Institute of Visual Arts in Baltimore, Maryland, is under fire for listing 21 students on their 2019-2020 enrollment documents, despite the fact that these students were not attending classes. The Maryland Department of Education funds schools based on the number of students attending each institution. Each year, Baltimore schools receive around $16,000 per student, which would amount to $331,653 of taxpayer money that August Fells received for its “ghost students.”

Baltimore City Public Schools has been mired in similar scandals: in both 2014 and 2016, the district was forced to return money to taxpayers after overreporting enrollment by 978 students and 1,900 students, respectively. These repayment amounts totaled $3 million in 2014 and $25 million in 2016. In all these cases, administrators continue to deflect blame; the mayor, the School Board of Commissioners and individual school principals all refuse to be held accountable.

SOURCE: ACFE Insights – A Publication of the Association of Certified Fraud Examiners