Friday, August 03, 2007
Follow the Money
Two of the mechanisms commonly used for tax evasion and money-laundering by transnational corporations and other criminal enterprises, are offshore accounts and shell corporations. It's still possible to track down the criminals, but it takes a lot more work.
Reading the WASC Special Investigation Team report last night, we were reminded of these tools of the trade by several remarks about secrecy, missing records, evasive responses, and curious delays in student loan disbursements. Which got us thinking along RICO lines of inquiry, like who had access to moving funds around. And we made a list.
But before we name names, it's important to shed the notion of bumbling idiots promoted by New College president Martin Hamilton, and begin thinking of criminal enterprise in a corrupt organization. It takes cooperation from several key individuals to launder money, and it takes planning, coordination, and -- when things start going south -- a cover-up. We believe we're at the latter phase.
One more thing before we get to the cast of characters. There's more than one scam going on in our alma mater, although they are likely related, but focusing solely on the PHLUTE program masterminded by Dr. Myers would be a mistake. She only arrived two years ago, and funny stuff was going on long before that. PHLUTE may be the latest and most flagrant example of a shell program, but we don't think it's the first. But even that misses the larger picture of systematic, prolonged practice of felony fraud--something we've repeatedly referred to.
One obvious place to start an investigation of this would be, as they say, to follow the money. Since the school runs 95% on student loans, it should be easy to track. Money in--money out, right? Well, not quite. In the Special Investigation Team report, they mention complaints about delays in federal student loan disbursements, sometimes up to a month or two after the funds arrive from the U.S. Department of Education. I personally remember a week or two being the norm.
With an annual cash flow of $16 million from the U.S. Treasury, that means something like $1.3 million a month was flowing through the school's bank account. If someone was able to reroute that money -- even for a short period of time -- the interest skimmed could amount to a fairly tidy sum. $100,000 a year would be a very conservative estimate.
But we -- unlike the New College administration -- are not funded by the US government. We're volunteer concerned alumni. We don't have lawyers, private investigators, and auditors. But someone we know does.
Update: New College board of trustees have accepted Hamilton's resignation.
Reading the WASC Special Investigation Team report last night, we were reminded of these tools of the trade by several remarks about secrecy, missing records, evasive responses, and curious delays in student loan disbursements. Which got us thinking along RICO lines of inquiry, like who had access to moving funds around. And we made a list.
But before we name names, it's important to shed the notion of bumbling idiots promoted by New College president Martin Hamilton, and begin thinking of criminal enterprise in a corrupt organization. It takes cooperation from several key individuals to launder money, and it takes planning, coordination, and -- when things start going south -- a cover-up. We believe we're at the latter phase.
One more thing before we get to the cast of characters. There's more than one scam going on in our alma mater, although they are likely related, but focusing solely on the PHLUTE program masterminded by Dr. Myers would be a mistake. She only arrived two years ago, and funny stuff was going on long before that. PHLUTE may be the latest and most flagrant example of a shell program, but we don't think it's the first. But even that misses the larger picture of systematic, prolonged practice of felony fraud--something we've repeatedly referred to.
One obvious place to start an investigation of this would be, as they say, to follow the money. Since the school runs 95% on student loans, it should be easy to track. Money in--money out, right? Well, not quite. In the Special Investigation Team report, they mention complaints about delays in federal student loan disbursements, sometimes up to a month or two after the funds arrive from the U.S. Department of Education. I personally remember a week or two being the norm.
With an annual cash flow of $16 million from the U.S. Treasury, that means something like $1.3 million a month was flowing through the school's bank account. If someone was able to reroute that money -- even for a short period of time -- the interest skimmed could amount to a fairly tidy sum. $100,000 a year would be a very conservative estimate.
But we -- unlike the New College administration -- are not funded by the US government. We're volunteer concerned alumni. We don't have lawyers, private investigators, and auditors. But someone we know does.
Update: New College board of trustees have accepted Hamilton's resignation.
