The Issue The issues in this case are (a) whether Respondent committed fraud in seeking to obtain funds from the McKay Scholarship Program, thereby warranting Petitioner's summary suspension of payments to Respondent; and (b) whether Petitioner should revoke Respondent's participation in the McKay Scholarship program for failing to comply with applicable laws.
Findings Of Fact Respondent Muskateer's Academy, Inc. ("MAI") is a Florida corporation that, at all times relevant to this case, operated a private school known as Muskateer's Academy ("Muskateer's"). MAI was closely held by Erick and Jacqueline Cermeno, a married couple. Together, they ran the school, holding (and sometimes swapping) various titles of importance, such as "principal" and "superintendent," which signified their supervisory roles. Located in Hialeah, Florida, Muskateer's served mainly at-risk students who, for one reason or another, were unable or unlikely to succeed in the public school system. On paper, the school's tuition was quite steep. The undersigned infers, however, that few parents, if any, actually paid the "sticker price" for tuition and other expenses that Respondent reported to the Florida Department of Education ("Department") in its student fee schedules, which charges totaled $24,000 per year, per child. Rather, the undersigned infers that, for most students at least, Respondent agreed to accept as payment in full whatever amount was available annually for a particular student under the John M. McKay Scholarships for Students With Disabilities Program ("McKay Scholarship Program"). Respondent operated two separate high schools at Muskateer's. One was a "regular," four-year high school that followed the traditional model, where instructors taught various academic subjects to classes of students, who attended classes for the purpose of learning academic subjects from their teachers. In this high school, tests were given periodically, as a means of measuring the students' mastery of the material. The other program was an "accelerated" high school where each student worked individually, at his own pace. Teachers played a relatively small part in this program, doing little but overseeing the "testing room" in which the students took tests——their primary scholastic activity. Students received course credit for passing tests.1 At the relevant times, there were three or four teachers at Muskateer's. To be a teacher there, a person did not need a bachelor's degree. Instead, MAI was willing to hire individuals having some type of educational background, preferably including at least 40 college credits, more or less. One of the teachers at Muskateer's was Amneris Mesa, whose brother, O. F., attended the school for some period of time. As will be seen, O. F. is one of the key figures in the instant dispute. In August 2006, the Department's Office of Independent Education and Parental Choice ("Choice Office") received a complaint about Muskateer's, the gravamen of which was that MAI was continuing to receive funds under the McKay Scholarship Program for former students who had stopped attending the school. The Choice Office, which administers the McKay Scholarship Program, referred the complaint to the Department's Office of Inspector General ("OIG") for investigation. The OIG's investigation led to the discovery of evidence sufficient to persuade the Commissioner of Education ("Commissioner") that MAI had engaged in fraudulent activity with regard to the McKay Scholarship Program. Consequently, on November 1, 2006, the Commissioner issued an Administrative Complaint against MAI, which charged MAI with fraud and other violations of the laws governing the McKay Scholarship Program. At the same time, the Commissioner immediately suspended all payments to MAI under the McKay Scholarship Program. Being thus cut off from its primary source of revenue, MAI closed Muskateer's on November 18, 2006. As of the final hearing, the school had not reopened. The Commissioner's present case against MAI hinges on allegations that, to induce the payment of funds under the McKay Scholarship Program, the company falsely represented to the Department that three students——O. F., N. P., and C. M.——had "reenrolled" at Muskateer's for the 2006-07 school year, when in fact two of them (O. F. and N. P.) previously had graduated, and the third (C. M.) had dropped out midway through the preceding school year. MAI disputes these allegations, and hence the focus of the hearing largely was on whether the three individuals in question had attended Muskateer's during the 2006-07 school year. Before addressing the contested factual issues, however, a brief examination of the McKay Scholarship Program is in order, to provide context for the findings of fact that will follow. The McKay Scholarship Program affords a disabled student the option of attending a different public school from the one to which he is assigned, or, if he is eligible, the opportunity to receive a scholarship to defray the cost of attending a private school of choice. Once awarded, a McKay scholarship remains in force until the student returns to a public school, graduates, or turns 22, whichever first occurs; provided, however, that he does not drop out, which would render the student ineligible for the scholarship, at least during the period of non-enrollment. To participate in the McKay Scholarship Program, a private school must meet certain conditions as well. Inasmuch as the Commissioner has alleged that MAI failed to comply with some conditions of continued eligibility, the relevant ones will be discussed in greater detail below. For the moment, however, it is sufficient to note that McKay scholarship funding is potentially available to most private schools operating lawfully in the state, for the program is designed to be inclusive in this regard. A private school that wants to participate in the McKay Scholarship Program must notify the Department of its interest and submit information demonstrating compliance with the eligibility requirements. This information——and other data necessary to secure the disbursement of scholarship funds——must be transmitted to the Department electronically, through forms available online to registered users, at a secure website maintained by the Department. To access this site, a private school must first obtain a unique code and establish a confidential password, both of which must be entered correctly in order to logon to the Department's secure web page. If the parent of an eligible student chooses the private school option and secures a place for his child at the private school of choice, then the parent must notify the Department of his decision before the child begins attending the private school. After receiving such notice, the Department verifies the student's enrollment in the private school, obtains from the private school a schedule of the tuition and fees, and receives from the student's school district a "matrix of services" reflecting the student's special educational needs. The maximum amount of the McKay scholarship for a particular student is the lesser of (a) the "calculated amount" (which is roughly equal to the estimated cost of educating the student in the public school to which he is assigned) or (b) the actual amount of the private school's tuition and fees.2 The amount of the student's scholarship is deducted from his public school district's total funding entitlement.3 McKay scholarship payments are made in four equal amounts during the school year to which the scholarship applies. The payment dates are September 1, November 1, February 1, and April 1. Payments are made by warrant payable to the student's parent. The Department mails each warrant to the private school of the parent's choice. The parent is required restrictively to endorse the warrant, authorizing the funds to be deposited only in the private school's account.4 To remain eligible for the McKay scholarship, the student must have regular and direct contact with his teacher(s) at the private school's physical location. Thus, ahead of each payment (after the initial payment), the private school must verify, through the Department's secure, password-protected website, that the student continues to be enrolled in, and to attend, the private school. It is in connection with this ongoing duty to verify continued enrollment and attendance at the private school that MAI is alleged to have engaged in fraudulent activity, namely, reporting to the Department that O. F., N. P., and C. M. were still enrolled in, and attending, Muskateer's when, in fact, they were not. The undersigned will now turn to these allegations, which lie at the heart of this matter. But first: It must be acknowledged that the evidence is in conflict concerning the historical facts relevant to the allegations of fraudulent activity. Given the evidential conflicts, the undersigned supposes that reasonable people might disagree about what happened here. Ultimately, however, it falls to the undersigned, rather than a group of hypothetical "reasonable people," to resolve the evidential conflicts and settle the disputed issues of material fact. Thus, to the extent that any finding below (or herein) is inconsistent with the testimony of one witness or another, or with some documentary evidence, the finding reflects a rejection of all such inconsistent testimony and evidence (none of which was overlooked, disregarded, or ignored) in favor of proof that the undersigned deemed, in the exercise of his prerogatives as the fact-finder, to be more believable and hence entitled to greater weight. O. F. In January 2006, halfway through the 2005-06 school year, O. F. was enrolled as a student of Muskateer's. He began attending the accelerated high school on January 26, 2006. At the same time, his sister, Ms. Mesa, started working for MAI as a teacher in the regular high school. About five months later, O. F. graduated from Muskateer's. O. F. participated in a graduation ceremony on June 3, 2006, and, according to the transcript maintained in his student file, O. F. was awarded a diploma or certificate on that date. The transcript notwithstanding, it is undisputed that O. F. did not actually receive his diploma until several months after his graduation date. MAI contends that it withheld O. F.'s diploma because he had not finished all the tests necessary for graduation. The undersigned finds, however, that the evidence is insufficient to support a finding that O. F. had not finished his degree requirements as of June 3, 2006; indeed, the greater weight of the persuasive evidence is to the contrary. Accordingly, MAI's assertion that O. F. did not graduate from high school at the end of the 2005-06 school year is rejected. On May 26, 2006, MAI reported to the Department, through the Department's secure, password-protected website, that O. F. had reenrolled in Muskateer's for the 2006-07 school year, and that he would resume attending the school on July 1, 2006. On the same date and in the same manner, MAI reported that O. F.'s tuition and fees for the upcoming school year would total $24,000. These representations were made for the purpose of obtaining funds from the McKay Scholarship Program. The foregoing representations regarding O. F.'s reenrollment in Muskateer's for the 2006-07 school year were false. Moreover, the greater weight of the evidence persuades the undersigned that, more likely than not, the individuals responsible for making these representations——namely Mr. And Mrs. Cermeno——actually knew that the representations were false, or they recklessly disregarded the truth or falsity of the matters asserted.5 Despite having graduated, O. F. returned to Muskateer's on three or four occasions in September and October 2006, at which times he took a few tests that he had previously taken and passed. This happened because the Cermenos refused to give O. F. his diploma unless he retook these tests——a condition that was repeated both to O. F.'s mother and his sister (the teacher).6 The undersigned infers that, more likely than not, the Cermenos used the threat of withholding O. F.'s diploma as a means of coercing his "attendance" at Muskateer's during the 2006-07 school year, to create plausible deniability in the event the charge were brought (as it was) that MAI had fraudulently sought to obtain McKay scholarship funds for O. F. At any rate, post-graduation "attendance" such as O. F.'s——to retake exams for no apparent legitimate reason——is not the kind of regular attendance that would support the reasonable inference that the student had enrolled for the 2006-07 school year.7 N. P. N. P. enrolled in Muskateer's on May 3, 2004, and began attending classes in the accelerated high school on August 16, 2004. He graduated (at least in the ceremonial sense) at the end of the 2004-05 school year but never received a diploma. N. P. testified that he never returned to Muskateer's as a student after he (ceremonially) graduated. In other words, N. P. claims that he was not a student of Muskateer's during either the 2005-06 school year or the 2006-07 school year. N. P.'s testimony in this regard is corroborated by the testimony of his aunt (and legal guardian), Altagracia Moreta. Additionally, N. P.'s testimony is corroborated by the absence of well-kept, reliable documentation——such as enrollment registers and attendance records——attesting to his ongoing attendance at Muskateer's after the 2004-05 school year. The undersigned considers the lack of such documentation to be a telling fact. Consequently, although there is conflicting evidence, the undersigned finds that, more likely than not, N. P. did not attend Muskateer's during the 2005-06 and 2006-07 school years, as he testified. On May 4, 2005, MAI reported to the Department, through the Department's secure, password-protected website, that N. P. had reenrolled in Muskateer's for the 2005-06 school year, and that he would resume attending the school on August 8, 2005. On the same date and in the same manner, MAI reported that N. P.'s tuition and fees for the 2005-06 school year would total $24,000. These representations were made for the purpose of obtaining funds from the McKay Scholarship Program. On May 26, 2006, MAI reported to the Department, through the Department's secure, password-protected website, that N. P. had reenrolled in Muskateer's for the 2006-07 school year, and that he would resume attending the school on July 1, 2006. On the same date and in the same manner, MAI reported that N. P.'s tuition and fees for the 2006-07 school year would total $24,000. These representations were made for the purpose of obtaining funds from the McKay Scholarship Program. The foregoing representations regarding N. P.'s reenrollment in Muskateer's for the 2005-06 and 2006-07 school year were false. Moreover, the greater weight of the evidence persuades the undersigned that, more likely than not, the individuals responsible for making these representations——namely Mr. And Mrs. Cermeno——actually knew that these representations were false, or they recklessly disregarded the truth or falsity of the matters asserted. C. M. In July 2004, C. M. registered to attend Muskateer's. He began attending the accelerated high school on August 16, 2004. C. M. testified at hearing (via deposition) that he continued to attend Muskateer's while this proceeding was pending, having been in class there as recently as "yesterday" (January 17, 2007). C. M. did not know what courses he was currently taking or how many other students currently were attending Muskateer's. (Recall that Muskateer's closed its doors on November 18, 2006, and, as of the final hearing, had not reopened).8 Whatever credibility C. M. still possessed after giving testimony such as that just described was shredded when Petitioner impeached him with a prior inconsistent (actually, contradictory) statement. On August 22, 2006, C. M. told the OIG's investigator that he had stopped attending Muskateer's in December 2005 and never returned. The investigator made an audio recording of C. M.'s statement, which was received in evidence, but C. M. was not under oath at the time he gave the statement. The undersigned finds that C. M. is not a believable witness, and his testimony, being unreliable and unpersuasive, is given no weight.9 The documents in C. M.'s disorderly (and seemingly incomplete) student file are likewise insufficient to establish, to the required degree of persuasiveness (namely, that the fact is more likely true than not), the dates on which C. M. attended Muskateer's as an enrolled student. The bottom line is that the evidence is insufficient to permit the undersigned to make a finding as to when (or whether) C. M. stopped attending Muskateer's (prior to its closure on November 18, 2006).10 Lacking sufficient proof regarding the dates during which C. M. attended Muskateer's as a duly enrolled student, it is impossible to determine whether MAI engaged in any fraudulent activity with regard to C. M. Determinations of Ultimate Fact The greater weight of the evidence establishes that, to induce the state to disburse McKay scholarship funds for the benefit of O. F., MAI engaged in fraudulent activity, to wit: MAI intentionally reported to the Department that O. F. had reenrolled in Muskateer's for the 2006-07 school year, while either (a) knowing that this representation of material fact was false or (b) recklessly disregarding the truth or falsity of this material representation, which was, in fact, false. The greater weight of the evidence establishes that, to induce the state to disburse McKay scholarship funds for the benefit of N. P., MAI engaged in fraudulent activity, to wit: MAI intentionally reported to the Department, on separate occasions, that N. P. had reenrolled in Muskateer's for the 2005-06 and 2006-07 school years, while either (a) knowing that these representations of material fact were false or (b) recklessly disregarding the truth or falsity of these material representations, which were, in fact, false. The greater weight of the evidence is insufficient to establish that MAI engaged in fraudulent activity in connection with its efforts to obtain McKay scholarship funds for the benefit of C. M. The greater weight of the evidence establishes that, by failing to keep and maintain complete and orderly records of enrollment and attendance, MAI failed to meet its obligation under Section 1002.39(8)(a), Florida Statutes, to comply with all of the requirements set forth in Section 1002.421, which mandates that private schools participating in the McKay Scholarship Program must, among other things, conform to all the requirements outlined in Section 1002.42, Florida Statutes, including Section 1002.42(4), which directs that private schools must prepare and keep attendance records in accordance with the provisions of Section 1003.23(2), Florida Statutes.
Recommendation Based on the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that the Commissioner enter a final order (a) suspending payment of McKay Scholarship funds to MAI in connection with the 2006-07 school year (b) revoking MAI's participation in the McKay Scholarship Program. DONE AND ENTERED this 2nd day of April, 2007, in Tallahassee, Leon County, Florida. S JOHN G. VAN LANINGHAM Administrative Law Judge Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32399-3060 (850) 488-9675 SUNCOM 278-9675 Fax Filing (850) 921-6847 www.doah.state.fl.us Filed with the Clerk of the Division of Administrative Hearings this 2nd day of April, 2007.
The Issue The issue for resolution in this proceeding is whether Respondent's lottery prize should be withheld to be applied against an unpaid student loan.
Findings Of Fact In an application and promissory note dated June 30, 1987, Respondent, Ms. White, applied for an auxiliary student loan in the amount of $2,000 to attend school at Orlando College in Orlando, Florida, for the loan period June 1987 through June 1988. The loan was issued by Florida Federal Savings and Loan Association (lender) in one disbursement on or about September 2, 1987. Interest accrues on the loan at a variable rate which is currently 10.27 percent per year. This loan is Loan Number AL00010400 (loan 10400) which was guaranteed by the federal government through the DOE. In an application and promissory note dated December 9, 1987, Respondent applied for a second auxiliary student loan in the amount of $2,000 to attend the school for the same loan period. That loan was made by the lender in one disbursement on or about March 8, 1988. Interest accrues on that loan at a variable interest rate which is currently 10.27 percent per year. That loan is Loan Number AL00014434 (loan 14434) which was guaranteed by the federal government through DOE. As auxiliary loans, each of Respondent's loans accrued interest from the date of disbursement. For auxiliary loans, the borrower is required to make loan payments even while attending school. However, a borrower may request a deferment or forbearance from payment for several reasons, including attending school on a minimum part-time basis. While an auxiliary loan is in deferment/forbearance status, interest still accrues on the loan. In an application dated January 4, 1988, Respondent requested a deferment of repayment because she was attending school on a full-time basis. That application was approved for any payments due between June 22, 1987, through June 20, 1988. Following the deferment period, Harper-Smith and Associates, Inc., the lender's loan servicer (herein referred to as HSA) sent Respondent a repayment disclosure letter dated August 31, 1988. The letter outlined the terms and conditions of the repayment schedule assigned to both of Respondent's loans. As of the date of the disclosure letter, Respondent owed $4,082.40 in outstanding principal and capitalized interest for both loans. Additionally, Respondent owed a total of $36.23 in accrued unpaid interest. The disclosure letter indicated that Respondent's first payment of $56.06 was due September 20, 1988. Respondent failed to make any payments on the loans and Respondent was declared in default by HSA. HSA filed a lender application for claim payment with DOE dated May 11, 1989. On November 23, 1989, DOE, as guarantor of the loans, paid HSA for both of Respondent's defaulted auxiliary student loans. When DOE acquired loan 10400 and loan 14434, the outstanding interest was capitalized, resulting in a balance of $4,680.86 ($4,082.40 in claim principal and $598.46 in claim interest). This sum is subject to a variable interest rate which is currently 10.27 per cent per year. Since DOE acquired Respondent's loans, payments received from the Respondent's federal income tax returns (herein referred to as IRS offsets) have been applied to Respondent's outstanding balance as follows: 4/09/91 $1,082 3/30/92 $1,628 10/04/93 $1,140 5/08/95 $ 614 5/08/95 $ 727 After applying each IRS offset payment according to federal regulations (outstanding interest first, then principal), Respondent's account had a net balance of $1,445.43 in principal due on May 8, 1995, and all interest was paid through that date. DOE's earlier certification of amount owed was based on DOE's records which did not include the 1993 and 1995 IRS offsets. Ms. White provided the evidence of those and DOE verified that those should be applied against her debt. On June 30, 1995, Respondent filed for Chapter 7 bankruptcy protection. The filing occurred less than seven years after Respondent's loans went into repayment on September 20, 1988. On October 17, 1995, the United States Bankruptcy Court for the Middle District of Florida, Orlando Division, issued a "Discharge of Debtor" order in Respondent's case, number 95-03350-687. That order provides in pertinent part, "The above-named debtor is released from all dischargeable debts . . . . . . [including] debts dischargeable under 11 U. S. C. [Section] 523." On April 28, 1996, the Department subrogated (sold) loan 10400 to the United States Department of Education (USDOE). DOE still owns loan 14434. On May 8, 1995, the day the last IRS offset payment was applied, Respondent owed $722.72 in principal on loan 14434 which currently accrues interest at the rate of 10.27 percent per year. No other payment was received between May 8, 1995, and the time the DOE received Respondent's lottery winnings which are the subject of this action. Ms. White produced evidence that an additional $941.69 was withheld in an IRS offset, but that was after her lottery winnings were withheld. By letter of February 12, 1999, the DOE notified the Department of the Lottery (Lottery) that Respondent owed DOE $2,811.88, in principal and interest, as a consequence of her outstanding defaulted student loan. That amount has been amended as explained in paragraph 8, above. Pursuant to Section 24.115(4), Florida Statutes, the Lottery transmitted Respondent's $800 lottery prize to the DOE. By letter of February 25, 1999, DOE notified Respondent that it was in receipt of her $800 lottery prize in accordance with Section 24.115(4), Florida Statutes. DOE applied Respondent's lottery winnings to her outstanding balance on the remaining loan, number 14434, held by DOE in accordance with federal requirements.2 DOE's letter also advised Respondent of her right to request a formal hearing pursuant to Section 120.57, Florida Statutes, to contest the action. This proceeding arose when Respondent made her request for formal hearing. DOE has demonstrated that even when the five IRS offsets noted above were properly applied to both loans, there remained a balance due on loan 14434 of $722.72 in principal as of May 8, 1995, plus interest accruing since that date, plus $585.11 in collection costs. DOE also demonstrated that loan 14434 was not discharged in bankruptcy, because it was not in repayment for more than 7 years when the bankruptcy petition was filed, the minimum time required in order for a student loan to be eligible for discharge.
Recommendation Based on the foregoing Findings of fact and conclusions of Law, it is RECOMMENDED that DOE enter a final order which authorizes Respondent's lottery prize of $800 be applied toward her outstanding debt for a defaulted student loan. DONE AND ENTERED this 2nd day of August, 1999, in Tallahassee, Leon County, Florida. MARY CLARK Administrative Law Judge Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32399-3060 (850) 488-9675 SUNCOM 278-9675 Fax Filing (850) 921-6847 www.doah.state.fl.us Filed with the Clerk of the Division of Administrative Hearings this 2nd day of August, 1999.
The Issue The issue for determination is whether Respondent’s lottery prize is subject to an outstanding debt owed to the Department of Education.
Findings Of Fact Respondent is Wilbert Dudley. His address is 1962 Willow Bends, Apt 2-D, Sneads, Florida 32460. Petitioner is the Florida Department of Education. In an application dated September 25, 1981, Respondent applied for a federally guaranteed student loan for the 1981-82 academic year. The loan, in the amount of $2,500, was issued by the Ellis Bank of Blountstown (the lender) in two equal disbursements: One on or after November 9, 1981, and one on or about January 29, 1982. The loan accrues interest at the rate of 7 percent per year unless Respondent is in deferment status, such as attending school on a minimum part-time basis. Respondent’s loan, number 114103, was guaranteed by Petitioner. Respondent and the lender agreed to a repayment schedule for the loan with the first payment beginning November 15, 1984. The lender received no payment from Respondent after March 25, 1985. Subsequently, the lender declared Respondent in default and filed a claim with Petitioner. On August 8, 1986, Petitioner, as guarantor of the loan, paid the lender $2,612.67 in principal and interest for Respondent’s loan. After Petitioner acquired Respondent’s loan, the following payments were applied to Respondent’s loan: May 10, 1989 $25.00 June 13, 1990 $25.00 December 6, 1991 $50.00 March 9, 1992 $391.66 (1991 Federal Income Tax Return) May 5, 1992 $50.00 In a letter dated May 1, 1998, Petitioner notified Respondent that his salary was subject to administrative wage garnishment for the defaulted student loan in accordance with provisions of Section 112.175, Florida Statutes. Petitioner advised Respondent that the total principal and interest due on the loan at that time was $5,335.15 not counting legal fees or collection costs. Thereafter Respondent agreed to voluntary administrative wage garnishment in the amount of $25 biweekly through payroll deduction. The agreement was confirmed by Petitioner’s letter dated June 16, 1998. Based on this agreement, regular payments of $25 biweekly have been received since July 17, 1998, and credited to Respondent’s account by Petitioner. By letter dated October 14, 1998, Respondent was informed by Petitioner that a claim again Respondent’s lottery winnings of $2,500 had been made in accordance with provisions of Section 24.115(4), Florida Statutes. At that time, Respondent owed Petitioner $5,268.09 in outstanding principal and interest. Respondent’s lottery winnings were transferred to Petitioner on November 25, 1998, and applied to Respondent’s outstanding balance in accordance with federal requirements. Respondent was informed of his right to review of this action per Chapter 120, Florida Statutes. Respondent timely sought such review.
Recommendation Based upon the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that Petitioner enter a final order certifying that the Department of Lottery should pay Respondent's $2,500 lottery prize to Petitioner for application to Respondent’s outstanding defaulted student loan balance. DONE AND ENTERED this 31st day of March, 1999, in Tallahassee, Leon County, Florida. DON W. DAVIS Administrative Law Judge Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32399-3060 (850) 488-9675 SUNCOM 278-9675 Fax Filing (850) 921-6847 www.doah.state.fl.us Filed with the Clerk of the Division of Administrative Hearings this 31st day of March, 1999. COPIES FURNISHED: Ronald G. Stowers, Esquire Department of Education The Capitol, Suite 1701 400 South Monroe Street Tallahassee, Florida 32399-0400 Wilbert Dudley 1962 Willow Bends, Apt 2-D Sneads, Florida 32460 Michael H. Olenick, General Counsel Department of Education The Capitol, Suite 1701 Tallahassee, Florida 32399-0400 Tom Gallagher Commissioner of Education Department of Education The Capitol, Plaza Level 08 Tallahassee, Florida 32399-0400
The Issue Whether grounds exist to deny the application of Respondent, Academy of Education School (6979), to participate in the Florida state scholarship programs under chapter 1002, Florida Statutes.
Findings Of Fact The Commissioner is the chief educational officer for the State of Florida. The Commissioner is responsible for assisting the State Board of Education in enforcing compliance with the mission and goals of the K-20 education system. See § 1001.10(1), Fla. Stat. The Academy is a private school formed in Orlando, Florida. The Academy registered as a private school with the Florida Department of Education (the “Department”) in March 2020. On March 25, 2020, the Academy submitted a request to participate in the state educational scholarship programs established under chapter 1002. These programs include the John M. McKay Scholarship for Students with Disabilities Program, the Florida Tax Credits Scholarship Program, the Gardiner Scholarship Program, the Hope Scholarship Program, the Reading 3 The Academy’s motion for extension was filed after the expiration of the ten-day deadline it sought to extend, which is contrary to Florida Administrative Code Rule 28-106.204(4). However, the Commissioner did not oppose the undersigned’s consideration of Academy’s Proposed Recommended Order. Scholarship Program, and the Family Empowerment Scholarship Program (collectively referred to as the “Scholarship Programs”).4 The Scholarship Programs distribute state funds to pay tuition for students who come from low-income families or have disabilities. The scholarships help children attend their (private) school of choice. For a school to be eligible to receive money from one or more of the Scholarship Programs, it must comply with the requirements set forth in section 1002.421. The Commissioner's is the state government entity charged with administering and overseeing the Scholarship Programs. Pertinent to this matter, section 1002.421(3) authorizes the Commissioner to deny a private school’s eligibility to participate in the Scholarship Programs if it is determined that the owner or operator of the school has exhibited a previous pattern of failure to comply with section 1002.421. After reviewing the Academy’s application, on May 21, 2020, the Commissioner issued a letter denying the Academy’s request. The Commissioner explained that its decision was based on the (alleged) inappropriate relationship between the Academy and another private school named Agape Christian Academy (“Agape”). Agape was the subject of prior discipline from the Commissioner regarding its improper activity involving the Scholarship Programs. As background information, Agape was founded as a private school in 2002, and remained operational until 2018. Agape was housed in a building located at 2425 N. Hiawassee Road, Orlando, Florida. From 2015 through 2018, Ingrid Bishop served as president of Agape’s corporate entity. Also during this time, Cassandra Cook was an employee of Agape, and served on Agape’s board of directors. After its formation, Agape requested, and was granted, eligibility to participate in the Scholarship Programs. 4 See §§ 1002.385, 1002.39, 1002.394, 1002.395, 1002.40, and 1002.411, Fla. Stat. In March 2016, however, the Commissioner initiated an action to revoke Agape’s eligibility. The revocation was based on the Commissioner’s findings that Agape was operating from an unapproved location and had filed a fraudulent annual fire inspection report with the Department. Thereafter, in August 2016, Agape and the Commissioner entered into a Settlement Agreement wherein the Commissioner allowed Agape to remain eligible for the Scholarship Programs on a probationary status, if Agape agreed to reimburse the Commissioner for past scholarship funds received while not in compliance with state law. Soon thereafter, however, Agape breached the terms of the Settlement Agreement. Consequently, on May 11, 2018, the Department issued a Final Order terminating Agape’s authority to participate in the Scholarship Programs. The Commissioner further ordered that: Agape’s … officers, directors, principal, or controlling persons [are] ineligible to participate in the Gardiner, McKay or Florida Tax Credit Scholarship Programs for a period of ten years from the date of the Final Order. Regarding the action against the Academy, as articulated in its May 21, 2020, letter, the Commissioner bases its decision to deny the Academy’s application on the following reasons: The Academy’s relationship with Cassandra Cook: Ms. Cook was employed as an officer, director, principal, or controlling person of Agape. Pursuant to the Agape Final Order, Ms. Cook is ineligible to participate in the Scholarship Programs for ten years. The Commissioner asserts that the circumstances surrounding the creation of the Academy indicate that the Academy is “operating as a proxy or surrogate for Agape and/or Cassandra Cook.” Consequently, the Academy’s association with Ms. Cook renders the Academy ineligible to participate in the Scholarship Programs. The Academy’s relationship with Ingrid Bishop: Ingrid Bishop was employed as an officer, director, principal, or controlling person of Agape. Pursuant to the Agape Final Order, Ingrid Bishop is ineligible to participate in the Scholarship Programs for ten years. The Commisioner asserts that the circumstances surrounding the creation of the Academy indicate that the Academy is “operating as a proxy or surrogate for Agape and/or … Ingrid Bishop.” Consequently, the Academy’s association with Ingrid Bishop renders the Academy ineligible to participate in the Scholarship Programs. The relationship between Academy officers or employees and Ingrid Bishop: The Academy intends to employ Blaire Bishop, Braelyn Bishop, and Brooke Bishop in some capacity. All three women are related to Ingrid Bishop (her daughters). The Commissioner's position is that the relationship between these Academy personnel and Ingrid Bishop renders the Academy ineligible to participate in the Scholarship Programs. The Academy’s relationship with Northwestern Learning Center, Inc. (“Northwestern”): In addition to Agape, the Commissioner previously denied Northwestern’s eligibility to participate in the state scholarship programs. Northwestern’s denial was based on its relationship with Ms. Cook. The Academy intends to set up its school on property owned by Northwestern. The business relationship between the Academy and Northwestern (and Ms. Cook) renders the Academy ineligible to participate in the Scholarship Programs. In short, the Commissioner believes that the same parties who owned and operated Agape (Ingrid Bishop and Ms. Cook) are behind the formation of the Academy. This time, however, Ingrid Bishop’s children (Blaire, Braelyn, and Brooke Bishop) are the named officers, directors, principals, or controlling persons. The Commissioner alleges that Blaire Bishop is not the legitimate owner/operator of the Academy, and the Academy’s “true” founders (Ingrid Bishop and Ms. Cook) are fraudulently conducting a shell game in “an effort to circumvent the Department’s Final Order.” To support its position, the Commissioner first called Phylea Daugherty to testify regarding the Commissioner’s investigation into the connection between Agape and the Academy. As a “site visit specialist” for the Department’s Office of Independent Education and Parental Choice (“IEPC”), Ms. Daugherty is tasked with visiting private schools that apply to participate in the Scholarship Programs. She explained that a school must pass her inspection prior to becoming eligible to receive scholarship funds for its students. Ms. Daugherty expressed that the Academy’s application raised concerns when her office noticed that the Academy’s facilities were located close by a school (Agape) whose eligibility to receive scholarship funds had been revoked. Her office also noted that the last name of the person who signed the Academy’s application (“Bishop”) matched the name of an individual who the Commissioner had deemed ineligible to participate in the Scholarship Programs. That being said, Ms. Daugherty divulged that, aside from the possible issues regarding the relationship between the Academy and Agape (the schools’ locations and biologically related officers or employees), the Academy’s application was complete. Therefore, nothing else on the face of the application explicitly indicated that the Commissioner should deny it. Whitney Blake, a Compliance Specialist for IEPC, also testified regarding the Commissioner’s decision to deny the Academy’s application. As part of her responsibilities, Ms. Blake reviews applications from Florida private schools that request to take part in the Scholarship Programs. Echoing Ms. Daugherty’s testimony, Ms. Blake expressed that the Academy’s application raised two concerns: 1) the Academy’s intended location suggested a close association with a sanctioned entity (Agape), and 2) the fact that the Academy’s officers and employees might be related to the officers or employees of another school (Agape) whose authority to participate in the Scholarship Programs was revoked. Ms. Blake explained that the Commissioner’s Final Order from May 11, 2018, banned Ingrid Bishop and Ms. Cook from participating in the Scholarship Programs for a period of ten years. Consequently, neither Ingrid Bishop nor Ms. Cook may personally serve as officers, directors, principals, or controlling parties at any other private school that is authorized to accept scholarship funds. In June 2018, however, Ms. Cook5 became involved in a new school that registered with the Department called Orlando Christian Academy (“Orlando Christian”). Soon thereafter, Orlando Christian applied to participate in the Scholarship Programs. In November 2019, after discovering its association with Ms. Cook, the Commissioner denied Orlando Christian’s application. Moreover, Ms. Blake testified that Orlando Christian’s listed address, 2425B N. Hiawassee Drive, Orlando, Florida, is situated very near the Academy’s intended address of 2332 N. Hiawassee Drive, Orlando, Florida. This address is also close to Agape’s former location at 2425 N. Hiawassee Road, Orlando, Florida. In addition, based on Orange County, Florida, property records, the current owner of 2332 N. Hiawassee Drive is Northwestern. Ms. Cook served on Northwestern’s board of directors from 2017 through 2019. (Ms. Cook is not listed as an officer or director on Northwestern’s annual corporate report for 2020.) Northwestern acquired the property in 2012 from Agape via a quitclaim deed executed by Ingrid Bishop. Ms. Blake expressed that the facts and circumstances surrounding the Academy’s formation insinuate a similar attempt by Ms. Cook to start another private school to unlawfully take advantage of the state scholarship funds. Ms. Blake testified that based on all the circumstantial evidence connecting the Academy to Agape, Northwestern, Ms. Cook, and Ingrid 5 Ms. Cook has used several names over the past twenty years including Cassandra Cook Wood, C. D. Wood, and Sandra Wood. When Orlando Christian applied for scholarship eligibility in 2019, Ms. Cook identified herself as "Sandra Wood." Bishop, the Commissioner had serious cause for concern that Ms. Cook and/or Ingrid Bishop were also involved in the administration, management, and operation of the Academy. According to Ms. Blake, such “undue participation” by prohibited persons in the Academy’s attempt to obtain scholarship funds is grounds to deny the Academy’s application. Despite these facts, Ms. Blake acknowledged that no former officer, director, principal, or controlling party from Agape is included or referenced in any corporate document related to the Academy’s formation or application. In particular, neither Ingrid Bishop nor Ms. Cook are listed on any Academy corporate records. Further, Ms. Blake repeated Ms. Daugherty’s statement that, other than the Academy’s proposed location and the fact that Ingrid Bishop is related to the Academy’s officers and employees, the Academy’s application does not contain information that would cause the Commissioner to automatically deny it. At the final hearing, the Academy argued that the Commissioner’s decision to deny its application is based on false and unsupported assumptions regarding the relationship between the Academy’s founders and officers (Blaire, Braelyn, and Brooke Bishop) and Agape’s founders and officers (Ingrid Bishop and Ms. Cook). The Academy charges that the Commissioner unfairly ties Ms. Bishop to the sins of her mother, with no proof that Ingrid Bishop is connected to the Academy in any way. Blaire Bishop testified on behalf of the Academy. Ms. Bishop founded the Academy and serves as president of its board of directors. She also intends to fill the role of the Academy’s first principal. Ms. Bishop described herself as a product of her community. She attended Agape from kindergarten through high school. Upon graduation from college at Florida A&M University (“FAMU”) in 2018, she returned to Orlando and is pursuing a master’s degree in educational leadership from the University of Central Florida. Ms. Bishop expressed that she now finds herself in a position to give back to the community in which she grew up. She has dreamed of opening a school for some time. Ms. Bishop voiced that she created the Academy as a way to provide educational opportunities for underprivileged children who live in northwest Orlando. Ms. Bishop explained that, currently, the Academy is still in the development and planning stage. She envisions opening her school with about 100 students. She would like to offer classes from kindergarten through high school. At this time, however, she has not hired any employees. Neither has she enrolled any students. She anticipates, however, that her two sisters, Braelyn and Brooke Bishop, who have agreed to serve as officers of the Academy’s corporate entity, will also have a role with the school. Ms. Bishop conveyed that, from an administrative standpoint, she is ready to open the Academy. However, to effectively operate as a private institution, her school will be dependent upon money from the Scholarship Programs. The vast majority of the low-income children she hopes to attract cannot afford private school tuition. Consequently, scholarship money is essential to help fund their enrollment. Ms. Bishop estimates that each student who qualifies for a scholarship will receive approximately $4,500 - $5,000 a year, which will be forwarded to the Academy if its application is approved. Ms. Bishop disclosed that she cannot feasibly run her school unless the Commissioner allows it to participate in the Scholarship Programs. Ms. Bishop expounded that, with the financial assistance awarded through the Scholarship Programs, the Academy will offer free, private school education to low-income students living nearby. Consequently, the Commissioner’s decision to disallow the Academy from accepting scholarship funds only serves to negatively impact needy children in the Orlando area. Ms. Bishop urges that she independently founded the Academy, and her school has no connection with the now-defunct Agape or any of its previous officers, directors, or employees. Ms. Bishop insists that the Academy is not a strawman or surrogate for Agape. She has not allowed anyone associated with Agape to help her incorporate or organize her school. Specifically, Ms. Bishop testified that neither her mother nor Ms. Cook have played any role in creating the Academy. They have not provided any financial assistance to the Academy. Neither will they receive any benefits or compensation from Academy income or resources. In addition, Ms. Bishop asserted that she was not involved in, nor did she have any connection with, the administration, creation, or management of Agape. Ms. Bishop further testified that she was not personally bound by, named, identified, or referenced in the Settlement Agreement between Agape and the Commissioner. Accordingly, she argues it is fundamentally unfair to deny the Academy the ability to participate in the Scholarship Programs based on the breach of an agreement to which she was not a party. Regarding the Academy’s location, Ms. Bishop explained that she is interested in leasing the building located at 2332 N. Hiawassee Drive, which is currently owned by Northwestern. Ms. Bishop explained that the property would provide a great location for the Academy. It is located within her community and was previously used as a school. Further, while the building the Academy may use is situated across the street from the former Agape site (2425 N. Hiawassee Drive), Ms. Bishop proclaimed that, other than being located in close proximity with each other, there is no connection between the two schools. Further, while setting up in the 2332 N. Hiawassee Drive location will require her to rent property from Northwestern, no one associated with Northwestern helped her create the Academy. Neither does she plan on conferring with or employing anyone who currently works for Northwestern, or who previously worked for Agape. Ms. Bishop’s testimony describing the relationship between the Academy and Agape, Northwestern, Ingrid Bishop, and Ms. Cook was credible and is credited. Ms. Bishop spoke with conviction, and no documents or other witness testimony refute her representation that she was not involved in the administration or management of Agape. Neither does the competent, substantial evidence prove that any individual associated with Agape or Northwestern will be involved in the administration or management of the Academy. Ingrid Bishop testified at the final hearing to support the Academy’s application. Ingrid Bishop is Ms. Bishop’s mother. Ingrid Bishop and her husband, Richard (Ms. Bishop’s father), founded Agape. Ingrid and Richard Bishop also lead the Agape Assembly Baptist Church (“Agape Church”). Agape Church is located at 2425 N. Hiawassee Drive, which was the same location as the Agape school. Ingrid Bishop expressed that Agape served as an outreach ministry for the Agape Church. According to Ingrid Bishop, Agape was founded in 2002 as an independent non-profit corporation. The school’s initial board members included Ingrid Bishop, Richard Bishop, and Cassandra Cook. These three individuals remained Agape’s corporate officers through the school’s dissolution in 2018, and are subject to the Commissioner’s 2018 Final Order. Mirroring her daughter’s intentions for the Academy, Ingrid Bishop explained that Agape’s goal was to provide a private school option for low- income children and children with disabilities from the local community. Ingrid Bishop relayed that 98 percent of the students who matriculated at Agape were from underprivileged families. Based on that population, Agape’s ability to operate relied heavily on the funds its students received through the Scholarship Programs. Ingrid Bishop further stated that Agape elected not to charge tuition to any student. Instead, the school relied on the scholarship funds as its sole source of revenue. At its peak, Agape averaged about 300 students on scholarships during a school year. Ingrid Bishop freely recounted that Agape ran into trouble with the Commissioner in 2016 based on a fire inspection report that one of her employees had allegedly forged. Agape and the Commissioner subsequently entered into the Settlement Agreement. Ingrid Bishop signed the Settlement Agreement on behalf of Agape. Regarding her daughter’s involvement in Agape, Ingrid Bishop credibly testified that Ms. Bishop never served as an employee, administrator, agent, or director of Agape. Ms. Bishop’s only interaction with Agape was when she attended the school as a student from kindergarten through high school. Ingrid Bishop further asserted that her daughter had no involvement in the underlying issues between Agape and the Commissioner. She conveyed that Ms. Bishop graduated from Agape high school in 2014 and was a student at FAMU in Tallahassee when the Commissioner began its investigation into Agape. Neither did Ms. Bishop play any part in Agape’s decision to settle with the Commissioner or negotiating the terms of the Settlement Agreement. Ingrid Bishop acknowledged that Agape has not been an active school since 2018. After the Commissioner revoked Agape’s authority to receive funds from the Scholarship Programs in 2017, Agape could only effectively operate for one more year. Agape’s corporate entity was administratively dissolved in September 2018. Finally, Ingrid Bishop convincingly represented that Ms. Bishop is acting completely independently in creating the Academy, as well as drafting the Academy’s application to participate in the Scholarship Programs. Ingrid Bishop asserted that she has not been included in her daughter’s designs and plans for the Academy. She denied that she will work for the Academy in any capacity. Neither will she have any financial interest in the school. Similarly, Ingrid Bishop commented that the location the Academy selected to use, 2332 N. Hiawassee Road, is not the same location as Agape. It is across the street. Ingrid Bishop disclosed that Agape, at one point, leased this site to use as a separate facility for its high school, but it currently does not own or use this property. As a final declaration, Ingrid Bishop readily recognized that her involvement in the Academy’s affairs would jeopardize her daughter’s efforts to run her own school. Therefore, she has deliberately avoided any participation in the Academy’s formation. Ingrid Bishop expressed that she understands that she must keep Agape’s past dispute with the Commissioner completely separate from her daughter’s application for scholarship funds. Ms. Cook also testified to support Ms. Bishop’s representation that the Academy is not connected to either Agape or herself. Ms. Cook declared that she has no involvement or relationship with the Academy. She was not consulted when Ms. Bishop formed the school. Neither has Ms. Bishop asked Ms. Cook to work there. Regarding her relationship with Ms. Bishop, Ms. Cook relayed that she has known Ms. Bishop since she was a student at Agape. Addressing her time with Agape, Ms. Cook admitted that she worked for the school in a number of roles between 2003 and 2018. Her responsibilities included administrator and dean of students. However, she declared that Ms. Bishop was not involved in the administration or management of Agape. Ms. Cook never saw Ms. Bishop in the Agape administrative offices when she was in school there. Regarding Orlando Christian, Ms. Cook stated that this school was to be located at 2425B N. Hiawassee Road in a building just next to the Agape Church. However, neither Orlando Christian nor the Agape school occupied the same proposed site as the Academy (2332 N. Hiawassee Road). Finally, Ms. Cook confirmed that Northwestern owns the property located at 2332 N. Hiawassee Drive, where the Academy may be located. However, Ms. Cook offered that she no longer serves on Northwestern’s board of directors. She represented that in 2019, she was dismissed from the board due to lack of participation. During the final hearing, Ms. Cook’s testimony came across as self- serving and lacking in details. However, no evidence or testimony directly refutes her representation that she is not involved, and will not be involved, in the Academy’s formation, administration, management, or operation. Accordingly, Ms. Cook’s testimony is credited to the extent that it was corroborated by Ms. Bishop and Ingrid Bishop. Based on the competent substantial evidence presented at the final hearing, the greater weight of the facts do not establish that the Academy is inappropriately associated with Agape, Ingrid Bishop, Ms. Cook, or Northwestern, or that the Academy is “operating as a proxy or surrogate for Agape and/or Cassandra Cook and/or Ingrid Bishop.” Neither do the facts in the record show that the Academy is attempting to perpetrate a fraud on the Commissioner in order to qualify for scholarship eligibility by concealing or misrepresenting its relationship with Agape, Ingrid Bishop, Ms. Cook, or Northwestern. Consequently, the Academy demonstrated that the preponderance of the evidence does not support the Commissioner’s decision to deny the Academy’s application based on the reasons cited in the Commissioner’s letter, dated May 21, 2020. Accordingly, the Commissioner should continue to process the Academy’s application under section 1002.421, and, if appropriate, grant the Academy eligibility to participate in the Scholarship Programs.
Recommendation Based on the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that the Commissioner withdraw its letter, dated May 21, 2020, indicating its intent to deny the Academy’s application and continue to review the Academy’s eligibility to participate in the Scholarship Programs under chapter 1002. DONE AND ENTERED this 8th day of December, 2020, in Tallahassee, Leon County, Florida. S J. BRUCE CULPEPPER Administrative Law Judge Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32399-3060 (850) 488-9675 Fax Filing (850) 921-6847 www.doah.state.fl.us Filed with the Clerk of the Division of Administrative Hearings this 8th day of December, 2020. 6 This Recommended Order should not be interpreted to mean that the Commissioner should automatically approve the Academy’s application. As the Commissioner emphasized in its Proposed Recommended Order, the Academy must still complete several additional steps in order to gain eligibility to participate in the Scholarship Programs under chapter 1002. The focus of this administrative proceeding is restricted to the allegations and issues specifically raised in the Commissioner’s letter, dated May 21, 2020, which notified the Academy of the Commissioner’s intended action to deny the application. COPIES FURNISHED: Robert Leroy Ehrhardt, Esquire Department of Education Suite 1544 325 West Gaines Street Tallahassee, Florida 32399 (eServed) James Sweeting, III, Esquire James Sweeting, III, LLC Post Office Box 215 Churchville, Maryland 21028 (eServed) Jason Douglas Borntreger, Esquire Department of Education Suite 1544 325 West Gaines Street Tallahassee, Florida 32310 (eServed) Chris Emerson, Agency Clerk Department of Education Turlington Building, Suite 1520 325 West Gaines Street Tallahassee, Florida 32399-0400 (eServed) Matthew Mears, General Counsel Department of Education Turlington Building, Suite 1244 325 West Gaines Street Tallahassee, Florida 32399-0400 (eServed) Richard Corcoran Commissioner of Education Department of Education Turlington Building, Suite 1514 325 West Gaines Street Tallahassee, Florida 32399-0400 (eServed)
The Issue The issues to be determined are whether Respondent violated section 456.072(1)(k), Florida Statutes, by failing to repay a student loan issued or guaranteed by the state or the Federal government in accordance with the terms of the loan as alleged in the Administrative Complaint; and, if so, the appropriate penalty.
Findings Of Fact The Department of Health, Bureau of Emergency Medical Oversight, is the state agency charged with the investigation and prosecution of complaints against licensed paramedics pursuant to chapters 456 and 401, Florida Statutes. At all times material to this proceeding, Respondent was a paramedic in the state of Florida, holding certificate number PMD 16223. Respondent’s license is currently active and does not expire until December 1, 2018. Respondent’s current address of record is 763 Tumblebrook Drive, Port Orange, Florida 32127. The Florida Department of Education (DOE) is the state agency responsible for guaranteeing student loans in cooperation with the United States Department of Education under the Federal Family Education Loan Program. As the guarantor of a student loan, DOE is bound to purchase the debt of a borrower who fails to satisfy their loan obligations. On July 7, 1993, Respondent executed an “Application/Promissory Note for a Florida Stafford Loan” with a requested loan amount of $3,500.00. The stated purpose of the loan was “for [Respondent’s] attendance at Daytona Beach Community College [DBCC] for the term(s) that begins on 8/93 and ends on 4/94.” The lender was Chase Manhattan Bank, Lender Code 807807. The loan proceeds were, as is normal for student loans, paid directly to DBCC on Respondent’s behalf for his tuition, fees, and educational expenses. On January 7, 1994, Respondent executed an “Application and Promissory Note for Federal Stafford Loans” for a subsidized Federal Stafford Loan, with a requested loan amount of $1,750.00, with a loan period of January 1994 to May 1994. Pursuant to the Borrower Certification and School Certification, the loan proceeds were for Respondent’s attendance at DBCC. The lender was “Chase,” Lender Code 807807. The loan proceeds were, as is normal for student loans, paid directly to DBCC on Respondent’s behalf for his tuition, fees, and educational expenses. On June 1, 1994, Respondent executed an “Application and Promissory Note for Federal Stafford Loans” for a subsidized Federal Stafford Loan, with a requested loan amount of $3,500.00, with a loan period of August 1994 to May 1995. Pursuant to the Borrower Certification and School Certification, the loan proceeds were for Respondent’s attendance at DBCC. Respondent requested a deferment of repayment for applicable in-school and grace periods. The lender was Chase Manhattan Bank, Lender Code 807807. The loan proceeds were, as is normal for student loans, paid directly to DBCC on Respondent’s behalf for his tuition, fees, and educational expenses. On May 30, 1995, Respondent executed an “Application and Promissory Note for Federal Stafford Loans” for a subsidized Federal Stafford Loan, with a requested loan amount of $3,500.00, with a loan period of August 1995 to “end of deferment.” The loan proceeds were for Respondent’s attendance at DBCC. Respondent requested a deferment of repayment for applicable in- school and grace periods. The lender was Chase Manhattan Bank, Lender Code 807807. The loan proceeds were, as is normal for student loans, paid directly to DBCC on Respondent’s behalf for his tuition, fees, and educational expenses. On August 19, 1996, Respondent executed an “Application and Promissory Note for Federal Stafford Loans” for a subsidized Federal Stafford Loan, with a requested loan amount of $3,500.00, with a loan period of August 1996 to May 1997. The loan proceeds were for Respondent’s attendance at Valencia Community College on Respondent’s behalf for his tuition, fees, and educational expenses. Respondent requested a deferment of repayment for applicable in-school and grace periods. The lender was Chase Manhattan Bank, Lender Code 807807. The loan proceeds were, as is normal for student loans, paid directly to Valencia Community College. On August 22, 1997, Respondent executed an “Application and Promissory Note for Federal Stafford Loans” for a subsidized Federal Stafford Loan, with a requested loan amount of $3,500.00, with a loan period of August 1997 to May 1998. The loan proceeds were for Respondent’s attendance at DBCC. Respondent requested a deferment of repayment for applicable in-school and grace periods. The lender was Chase Manhattan Bank, Lender Code 807807. The loan proceeds were, as is normal for student loans, paid directly to DBCC on Respondent’s behalf for his tuition, fees, and educational expenses. Between August 22, 1997, and June 14, 2005, the evidence demonstrates that Respondent made no payments on any of the above-referenced loans. On June 14, 2005, Respondent filed an on-line Federal Consolidation Loan Application and Promissory Note by which Respondent consolidated his outstanding student loans. By the time the loans were being consolidated, they were held by the Sallie Mae Trust. Respondent’s total loan amount after consolidation was $17,500.00. Pursuant to the Loan Consolidation Disclosure Statement and Repayment Schedule, the first of 180 monthly payments of $128.751/ on the consolidated student loans was scheduled for August 21, 2005. DOE was the guarantor of all of Respondent’s student loans, including the consolidated student loan. The Federal Family Education Loan Program Claim Form demonstrates that Respondent received a deferment of payment for 59 months, followed by forbearance from payment of 63 months -- a total of 10 years and two months. As a result, Respondent’s payment due date was extended to October 21, 2015. In the more than 25 years since Respondent made application for his first student loan, he has yet to repay any of the loan proceeds paid to DBCC and Valencia Community College on his behalf for tuition, fees, and educational expenses. An educational loan default occurs when a borrower fails to make required payments on a loan for 270 days. On November 3, 2016, having received no payments from Respondent on his loan since payments became due on October 21, 2015, the lender submitted a default claim to DOE. On November 10, 2016, DOE determined Respondent defaulted on his student loan obligations and purchased Respondent’s debt from the lender. At the time of the default, Respondent’s full $17,500.00 principal balance remained, as well as $3,794.90 of capitalized interest and $995.71 of unpaid interest. Respondent has made no payments against his student loan obligations since DOE purchased his student loan obligations on November 10, 2016.
Recommendation Based on the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that the Department of Health, Bureau of Emergency Management Oversight, enter a final order: finding that Respondent failed to repay a student loan issued or guaranteed by the state or the Federal government in accordance with the terms of the loan; imposing a suspension of Respondent’s paramedic certification until new loan payment terms are agreed upon, followed by probation for the duration of the student loan; imposing a fine equal to 10 percent of the defaulted loan amount calculated as of the date of the Final Order, to be deposited into the Medical Quality Assurance Trust Fund; and requiring Respondent to pay the costs related to the investigation and prosecution. DONE AND ENTERED this 12th day of September, 2018, in Tallahassee, Leon County, Florida. S E. GARY EARLY Administrative Law Judge Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32399-3060 (850) 488-9675 Fax Filing (850) 921-6847 www.doah.state.fl.us Filed with the Clerk of the Division of Administrative Hearings this 12th day of September, 2018.
