A r c h i v e d  I n f o r m a t i o n

     FOR RELEASE                                           Contact: Rodger Murphey   November 21, 1996                                              (202) 401-1576

Trade School Operators Plead Guilty to Fraud and Conspiracy

Irwin Mautner, of Greenwich, Conn., was charged with mail fraud, conspiracy to defraud the U.S. Department of Education, and making a false statement in connection with a matter within the jurisdiction of the department. Each violation carries a maximum penalty of five years imprisonment and/or a $250,000 fine.

Mautner was the head of Programming and Systems, Inc. (PSI), headquartered in New York. PSI operated vocational schools in Baltimore; Charlotte, N.C.; Cleveland; Columbus, Ohio; Flint, Mich.; Indianapolis; Miami; New York; Philadelphia; Southfield, Mich.; and Washington, D.C. The schools closed in 1992 and 1993.

From July 1988 through September 1993 -- the period covered by the indictment -- PSI schools received federally insured student loans totaling more than $100 million and Federal Pell Grant funds totaling more than $41 million. The indictment charged that Mautner participated in a scheme to defraud the Education Department by concealing the high rate of student withdrawals at PSI schools in order to prevent the schools from losing their accreditation, and consequently, the schools' eligibility to receive federally insured loans and grants.

PSI was a publicly traded corporation, which at one time had more than 3.6 million shares of stock outstanding and annual revenues in excess of $31 million.

Mautner had previously consented in December 1994 to civil penalties imposed by the Securities and Exchange Commission in connection with false financial statements submitted to the commission..

Mautner, PSI National Financial Aid Director Ronald Sundick, and the corporation were indicted in Cleveland on August 13, 1996, by a federal grand jury for the Northern District of Ohio. In a plea agreement with the government, Sundick pleaded guilty on November 14, 1996, to a one count information that charged him with violation of Title 18, United States Code 1516, Obstruction of a Federal Audit.

Mautner and Sundick are scheduled to be sentenced early next year.

Assistant United States Attorney James C. Lynch presented the plea before Federal District Court Judge Sam Bell.

In reaction to the pleas, Education Department Inspector General Thomas Bloom said, "We are pleased with the progress of the PSI investigation. The Office of Inspector General is committed to a continuation of aggressive investigations of individuals who commit fraud in education programs. Neither taxpayers not students can afford fraudulent activities in programs designed to help those who are ultimately victimized by those same activities."

The case was investigated by the Cleveland office of the Federal Bureau of Investigation and the U.S. Department of Education Office of Inspector General in Pittsburgh.