U.S. v. Ross
| Decision Date | 02 February 1996 |
| Docket Number | Nos. 92-1449,s. 92-1449 |
| Parties | 107 Ed. Law Rep. 484 UNITED STATES of America, Plaintiff-Appellee, v. Thomas S. ROSS and John Collori, Defendants-Appellants. & 92-1685. |
| Court | U.S. Court of Appeals — Seventh Circuit |
Appeal from the United States District Court for the Northern District of Illinois, Eastern Division, No. 90 CR 579; Charles R. Norgle, Sr., Judge.
Deborah A. Devaney (argued), Office of the United States Attorney, Criminal Division, Chicago, IL, Barry Rand Elden, Chief of Appeals, Office of the United States Attorney, Criminal Appellate Division, Chicago, IL, for United States.
Thomas S. Ross (argued), Highland Park, IL, pro se.
Standish E. Willis (argued), Chicago, IL, for John Collori.
Before FLAUM, KANNE, and ROVNER, Circuit Judges.
Thomas Ross and his brother, John Collori, profited by defrauding financially needy students in search of an education and the federal government aid programs that attempted to give them one. As officers of the Illinois School of Commerce, which Ross owned and Collori worked for, the defendants engaged in a complicated scheme to receive undeserved federal financial aid funds and student loan monies, use these funds for their own personal benefit, refuse to refund these monies to the government and the students that were entitled to them, and repeatedly falsify records and financial documents to conceal their wrongdoing. To further their scheme, the defendants made false statements to auditing accountants, Department of Education investigators, and financial institutions. And in the end, after the school had gone bankrupt, Ross violated his fiduciary duty to the school's creditors (including the victims of their scheme) by improperly transferring school assets to himself and one of his friends. After a jury trial, Ross and Collori were convicted of several crimes, including mail and wire fraud, false statements, misapplication and embezzlement, and bankruptcy fraud. On appeal, the defendants raise a flood of arguments. Between them, they challenge the timeliness of the indictment, the jury instructions, the sufficiency of the evidence upon which they were convicted, and the calculation of their sentences. We affirm their convictions and sentences in all respects.
In 1977, defendant Thomas Ross founded the Illinois School of Commerce ("ISC"), a for-profit business school located in downtown Chicago. For the next eleven years until the school's closing, Ross acted as ISC's president and sole shareholder. Ross's brother, defendant John Collori, joined ISC in December 1981 and served as the school's vice president of business services until he left for a brief period in May 1984. Collori returned to ISC in October 1985 and acted as the school's chief financial officer until it closed in May 1988.
In April 1982, ISC entered into a Program Participation Agreement with the Department of Education ("DOE"), allowing ISC to participate in Title IV student financial aid programs. The school was authorized to act as a "disbursing agent" for the federally funded Pell Grant program and to receive student loan checks as part of the federally insured and subsidized Guaranteed Student Loan ("GSL") program. Continued participation in these programs was contingent upon ISC's compliance with applicable DOE regulations and upon accreditation by an approved accrediting association, ISC was accredited by the Association of Independent Colleges and Schools ("AICS").
A short note on program mechanics. The Pell Grant program provided educational grants of approximately $2,000 per year to needy ISC students. ISC was required to submit cash request forms to the DOE for monies needed to fund student enrollments for the thirty days following submission of the form. Based on these requests, the DOE would transfer funds from the United States Treasury to ISC's cash control account, where the school was to hold the funds in trust for the federal government. When qualifying students enrolled and completed their financial aid applications, the school was authorized to transfer corresponding cash control account monies into the school's operating account to pay the students' tuition debts. ISC utilized a system wherein the school officers filled out vouchers to document the number of eligible students with completed financial aid applications, so as to prevent excess transfers out of the cash control account. When a student would withdraw from school, ISC was required to refund the unused portion of grant monies to the cash control account. ISC was to offset any extra monies in the cash control account--either excess cash requests or refunds for withdrawn students--against future cash requests. To monitor the use of Pell Grant monies, the DOE required schools like ISC to file quarterly cash transaction reports. These reports were intended to reflect the quarterly amount of Pell Grant monies transferred to the operating account for student tuition debts, as well as the balance in the cash control account at the end of the quarter.
Unlike Pell Grants, loans under the GSL program were not made out of federal government funds. Instead, the loans were offered by banks and other financial institutions. The federal government's role was to administer the program, to guarantee that the loans were paid (thus assuring an exceptionally low interest rate), and in many cases to subsidize the loans by making interest payments during the time when the student debtors were still enrolled in school. After a qualifying student completed his application, the lending institution would send a loan check directly to ISC. The check would be made payable jointly to ISC and the recipient student, and both signatures were necessary to cash the check. Once cashed, the check would be deposited directly into the operating account and used to cover the student's tuition debt. When a student withdrew from school or had a credit balance, DOE regulations instructed that the school was to refund the money to the student within standards set by the school's accrediting agency. In order to maintain accreditation, AICS required GSL refunds to be paid within thirty days. These refunds were particularly important because even if ISC failed to properly refund loan monies, the student debtor would nonetheless remain fully liable for the total amount of the loan.
ISC catered primarily to low-income students who qualified for federal financial aid funds. In fact, an estimated 99 percent of ISC's tuition payments were received through the Pell Grant and GSL programs, and only one in every two hundred ISC students was able to attend without financial aid. The nature of this student population allowed an extraordinary amount of federal financial aid funds to enter into ISC's accounts, and by 1987, when the school filed for bankruptcy, Ross and Collori had misappropriated over $1.4 million owed to students and the DOE.
Soon after ISC became eligible to participate in the federal financial aid programs, Ross and Collori commenced a pattern of abusing the Pell Grant program in order to improperly funnel excess government funds into the school and to conceal the fact that they were doing so. In order to bring in extra funds, both Ross and Collori filed numerous monthly cash request forms with the DOE that grossly overestimated ISC's projected Pell Grant needs by understating cash on hand levels. Although junior ISC employees informed the defendants of the cash control account's growing excess balance, the defendants ignored these figures and filed the request forms with inflated cash requirements they had derived out of whole cloth.
The excess money did not merely remain in the cash control account, however. Ross repeatedly directed that monies be transferred out of the cash control account without supporting student enrollment vouchers, many times for his own personal expenses. By June 1984, ISC had appropriated $594,000 more in Pell Grant money than was justified by student enrollment. Yet despite this excess, Ross submitted cash request forms to draw down another $555,000 from the Treasury in October and November of 1984.
In order to conceal the excess transfers out of the cash control account from both periodic auditors and the DOE, Ross directed ISC personnel to backdate several student enrollment vouchers, making it appear that the withdrawals had been justified. Ross and Collori also caused the quarterly cash transaction reports filed with the DOE to be falsified. Unlike the cash request forms, the transaction reports would overstate the balance in the cash control account, masking the improper withdrawals from the cash control account.
In October 1985, DOE Special Agent Rex Livengood conducted an inspection of ISC's participation in the Pell Grant program and was given a spreadsheet purporting to track the activity in the cash control account for the year ending June 1985. In reality, Ross had directed that the spreadsheet be altered to conceal improper withdrawals and an excess balance. In 1986, when ISC Financial Aid Director Michael Shields once approached Collori about the incorrect cash control account figures listed on a transaction report, Collori told him: When the school closed in 1987, it was $552,000 overdrawn on Pell Grant money.
The defendants similarly abused the GSL program. ISC consistently failed to pay refunds, except to those students who complained the loudest. In 1984, AICS became concerned about ISC's failure to pay refunds and ordered an outside audit. Ross retained the accounting firm of Miller, Cooper to perform the audit, but he made several false representations concerning refund and tax debts during the audit. On the basis of the false information, Miller, Cooper issued...
To continue reading
Request your trial
-
U.S. v. Perez
...it amounted to a "waiver" of the right to appeal on that point. This is the analysis we should follow. Likewise, United States v. Ross, 77 F.3d 1525, 1542 (7th Cir.1996), interprets Olano to mean that if defendant requests a particular instruction which is given, "he has voluntarily waived ......
-
U.S. v. Ballistrea, 56
...meaning the law existing at the time of the appeal. United States v. Viola, 35 F.3d 37, 42 (2d Cir.1994); accord United States v. Ross, 77 F.3d 1525, 1539 (7th Cir.1996). The third requirement is also satisfied. As this Court held in Viola, where the error at issue was unclear at the time o......
-
U.S. v. Chen
...of judicial proceedings than permitting [Appellants'] conviction[s] to stand." Cedelle, 89 F.3d at 186 (citing United States v. Ross, 77 F.3d 1525, 1540-41 (7th Cir.1996)). Accordingly, even if the instructional error here affected Appellants' substantial rights (which it does not), I would......
-
Dobek v. United States
...the passage of time and to minimize the danger of official punishment because of acts in the far-distant past.’ " United States v. Ross, 77 F.3d 1525, 1537 (7th Cir. 1996) (quoting Toussie, 397 U.S. at 114-15, 90 S.Ct. 858 ).However, once an indictment has been timely filed, the defendant i......
-
False statements and false claims.
...because they "were of a type that would naturally tend to influence a reasonable decisionmaker [sic]"). (60.) See United States v. Ross, 77 F.3d 1525, 1546 (7th Cir. 1996) (holding the fact that a statement was not required does not make that statement any less (61.) See United States v. Ca......
-
False statements and false claims.
...Cir. 1995) (explaining false statement may be material even if agent who hears it suspects it is false). (60.) See United States v. Ross, 77 F.3d 1525, 1546 (7th Cir. 1996) (holding the fact that a statement was not required does not make that statement any less (61.) See United States v. C......
-
False statements and false claims.
...Cir. 1995) (explaining false statement may be material even if agent who hears it suspects it is false). (60.) See United States v. Ross, 77 F.3d 1525, 1546 (7th Cir. 1996) (holding the fact that a statement was not required does not make that statement any less (61.) See United States v. C......
-
False statements and false claims.
...because they "were of a type that would naturally tend to influence a reasonable decisionmaker [sic]."). (61.) See United States v. Ross, 77 F.3d 1525, 1546 (7th Cir. 1996) (holding the fact that a statement was not required does not make that statement any less (62.) See United States v. C......