Four College of Lake County financial aid office employees elected to resign or were transferred to other jobs after it was discovered they improperly awarded scholarships to students, school officials have confirmed.
At least 11 ineligible students received the scholarships for the fall 2011 or spring 2012 semesters, said Richard Anderson, chairman of the board at Grayslake-based CLC.
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Nearly $11,400 in scholarship money was involved, CLC President Jerry Weber said. The individual scholarship amounts ranged from $250 to more than $1,700.
It's believed some of scholarship recipients knew the CLC workers who approved their applications, officials said.
"It's extremely serious," Anderson said. "People (employees) were kind of in cahoots with those students."
Two workers resigned because of their involvement with the scholarships, and two others were disciplined and transferred to other CLC jobs. The financial aid boss at the time has left the school for family reasons, officials said.
Weber said one of the wrongly awarded scholarships went to a school employee, who was told to repay about $630.
School officials detailed the case after the Daily Herald, through a Freedom of Information Act request, recently obtained letters sent to students stating they were "erroneously awarded" the scholarships.
"In some cases," Weber said, "the funds had not been given out and the financial aid was canceled. In cases where the award was given out, the college is requiring repayment.
"Our investigation certainly raised the question of personal relationships and collusion affecting a number of the 11 awards," he said.
Weber and Anderson said the case started to unfold early this year when a controller's office employee discovered the scholarship awards in question as a matter of a standard financial control process.
Eleven employees were interviewed as part of CLC's internal investigation, Weber said, and it became apparent four workers were involved in approving the scholarships for the ineligible students.
Weber said the information was presented to George Carpenter, who was CLC's interim police chief at the time. He said Carpenter decided what occurred was a school policy violation -- not a criminal matter -- and that the board should handle it.
CLC Trustee William Griffin said he was disappointed in the employees' actions, particularly because he believed some had bright futures at the school. He said having a high level of scrutiny in financial matters is important at CLC, which he likened to a big business.
"As a $100 million operation, we have to make sure we have controls in place to prevent this type of thing from happening again," Griffin said.
Evelyn Schiele, CLC's executive vice president of marketing and public relations, said another layer of approval is now in place for any scholarships awarded to college employees. In addition, she said, the college now double checks applications "confirming that everything is on the up and up on these scholarships."
Records show there were improper awards of the Patricia Hedstrom Scholarship for students arriving at CLC with a maximum 3.0 grade-point average. In February 2008, the estate of Hedstrom -- a former assistant to late state Sen. Adeline Geo-Karis -- announced a $200,000 donation for the scholarship during a CLC board meeting.
Others were given the Returning to Education Scholarship, designed for students 24 years of age and older who have renewed their commitment to school after a one-year period of not attending classes.
In all, Weber said, there were 10 CLC scholarships and a federal Pell Grant involved.
Weber said the U.S. Department of Education was contacted after CLC discovered the Pell Grant should not have been given to one of the student. He said federal officials directed the school to seek repayment.
The seven letters the Daily Herald obtained from CLC show the students were told they never met the scholarships' criteria and were ineligible for the financial assistance. CLC blacked out the students' names in the letters in accordance with the state's open records law.
Each letter had the heading: "RE: Notification of Negative Reassessment of Scholarship Eligibility." The letters to the students were similarly worded and offered payment arrangements for outstanding balances that resulted for them because they were ineligible for the scholarships.
Anderson said what happened triggered a review of scholarships awarded to CLC students over the past five years in the event deeper problems existed.
"We were clean," he said.
CLC distributes about $20 million annually in financial aid, including 500 scholarships, Weber said. Financial aid comes from sources such as the federal government, state, individuals, organizations and private foundations.
Meanwhile, College of DuPage officials announced last week 44 students and two organizers of a financial aid fraud ring used money meant for education purposes for their personal use after dropping out of online classes this year. College of DuPage officials estimated the loss at $354,000.
In April, the American Association of Community Colleges published a report titled "Preventing Abuse in Federal Student Aid: Community College Practices." Weber said he received the document at the College of Lake County.
The report touches on spotting red flags, creating campus awareness and cooperation, getting students to play a role in preserving the integrity of programs and giving appropriate training to financial aid officers to curb potential abuse.