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Canton couple Indicted for Defrauding Department of Education out of $2.3 million

FOR IMMEDIATE RELEASE
Dec. 12, 2013

A Canton couple and one of their employees were indicted for engaging in a conspiracy to defraud the United State Department of Education of more than $2.3 million by obtaining fake high school diplomas for prospective students, fraudulently applying for financial aid on their behalf by representing that the students had the necessary educational credentials, and then enrolling them in the college that the couple operated, law enforcement officials said.

Named in the seven-count indictment are:  John “Richard” Ceroni, 64, and Adale “Marie” Cernoni, 62, both of Canton, and Tammy Pyle, 43, of Waynesburg, Ohio.

All three are charged with conspiracy to commit mail fraud and wire fraud.  The Ceronis are also charged with one count of conspiracy to launder money and four counts of engaging in monetary transactions in property derived from unlawful activity.  Richard Ceroni also faces one count of making a false statement.

“These defendants stole millions of dollars that were intended to help students pay for college and insteadblew it on jewelry, lingerie, cruises, and a Vegas vacation,” said Steven M. Dettelbach, United States Attorney for the Northern District of Ohio. “We will continue to root out waste, fraud and abuse of federal programs wherever we find it.”

“These defendants ripped off taxpayers to the tune of more than $2 million,” said Stephen D. Anthony, Special Agent in Charge of the Federal Bureau of Investigation’s Cleveland office. “They are now being brought to justice thanks to a collaborative effort.”

“Federal student aid exists so that individuals can pursue and make their dream of a higher education a reality.  It is not to be used as a personal slush fund, which today's indictment alleges this couple did,” said Thomas D. Utz Jr. Special Agent in Charge of the U.S. Department of Education Office of Inspector General's North Central Regional Office. “As the law enforcement arm of the U.S. Department of Education, our mission is to ensure that those who steal student aid or game the system for their own selfish purposes are stopped and held accountable for their criminal actions.”

"Richard Ceroni and his co-defendants built a house of cards laced with a web of financial lies," said Kathy Enstrom, Special Agent in Charge, IRS Criminal Investigation, Cincinnati Field Office. "The underlying structure fell apart and exposed these individuals for who they really are.. Operating a not-for-profit college does not give you a license to steal."

The Ceronis were co-founders Carnegie Career College. From at least 2003, Carnegie College held itself out to the public as a private not-for-profit college that offered a select number of associate degrees, as well as various “certificate” programs in areas such as blood drawing.

Around 2002, Richard Ceroni applied with the Department of Education to participate in the federal student financial aid (SFA) program. That application was approved in December 2003, according to the indictment.

Richard Ceroni was dean and director of education at Carnegie College, while Marie Ceroni was the director of Carnegie and was responsible for financial matters at the school.  They and Pyle purported to work as volunteers at Carnegie.

Richard Ceroni was also founder of Historical Chapel Ministries (HCM), which was registered as a tax-exempt charitable organization.  It had offices in the same building as Carnegie College in Suffield, Ohio.  Both Ceronis held themselves out as ministers of HCM, but it did not have regular services or congregants, according to the indictment.

In February 2007, Carnegie College opened a branch “campus” that operated in a single-family home in Canton.  In 2010, Carnegie moved its branch campus to a commercial building in North Canton, which also hosted a variety of other Ceroni ventures, including a driving school and a massage service, according to the indictment.

From June 2007 through May 2012, the Ceronis and Pyle fraudulently obtained approximately $2.3 million from the Department of Education by submitting applications for SFA funds that stated students at Carnegie College had obtained valid high school diplomas; they also falsely told prospective students they would earn a valid high school diploma at the same time they attended Carnegie College and that such a diploma would be paid for by a “scholarship from a church” in order to increase enrollment and access to SFA funds, according to the indictment.

The Ceronis recruited students who had not earned high school diplomas or G.E.D. certificates, and thus were not eligible for SFA funds, and submitted fraudulent financial aid documents to the Department of Education. They used online high schools, including Australia-based Adison High School, to purchase fake high school diplomas and coursework transcripts for students who were not required to attend any classes or complete any coursework, according to the indictment.

Pyle took a “high school diploma test” for students, while at other times provided test answers to the students.  Marie Ceroni paid Adison High School, which provided diplomas using the graduation date on which the student would have graduated from high school had they completed high school in the normal course.  According to the indictment, sometimes those dates predated general public access to the Internet.

The Ceronis comingled fraudulently obtained money in several accounts and used that money to fund personal expenditures and expand Carnegie College.  Between February 2011 and February 2012, for example, Marie Ceroni made more than $475,000 in large cash withdrawals from two accounts that operated under the Historical Chapel Ministries name.  Money from those accounts was used to make under-the-table cash payments to the defendants and other Carnegie College employees who the Ceronis claimed were unpaid volunteers, according to the indictment.

There were also payments using comingled funds from a several accounts, including: on July 8, 2010, Marie Ceroni wrote a check for $100,038 to pay off a personal line of credit; on Dec. 17, 2010, Marie Ceroni wrote a check for $119,230 to pay off a personal line of credit that was used, among other things, to purchase two Jeep vehicles; in 2012, the Ceronis wrote check to pay credit card balances that included charges for fake Adison High School diplomas and transcripts; in 2010, Marie Ceroni made and caused to be made electronic fund transfers to pay for credit cards that included charges of more than $4,300 from Royal Caribbean Cruises and more than $800 from Airtran; in 2011, similar electronic transfers were made to pay off credit card charges from stores including Victoria’s Secret, Wine & Spirits, Simply Tans and the University of Akron bookstore; on July 11, 2011, Marie Ceroni wrote a check for $15,650 to Jared Jewelers; on Nov. 22, 2011, she wrote a check for $24,808 to Zale’s to pay for wedding bands for the couple’s daughter; on Jan. 12, 2012, she wrote a check for $3,806 to Jared Jewelers and nine days later wrote another check to Jared Jewelers for $9,782, according to the indictment.

This case is being prosecuted by Assistant U.S. Attorneys Rebecca Lutzko and Robert Patton following an investigation by the United States Department of Education – Office of Inspector General, the Federal Bureau of Investigation and the Internal Revenue Service – Criminal Investigation Division.

An indictment is only a charge. The defendants are innocent until proven guilty beyond a reasonable doubt.

 

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