American Commercial Colleges, Inc. And Its President Sentenced On Federal Charges
Responsible For Theft Of Nearly $1 Million
LUBBOCK, Texas — The president of American Commercial Colleges, Inc. (ACC), Doyle Brent Sheets, 58, of Lubbock, Texas, who pleaded guilty, personally and on behalf of ACC, to federal charges, was sentenced this morning, announced U.S. Attorney Sarah R. Saldaña of the Northern District of Texas.
U.S. District Judge Sam R. Cummings sentenced Sheets, who pleaded guilty to an Information charging one count of misprision of a felony, to 24 months in federal prison, restitution in the amount of $972,794.70 and a $5,000.00 fine.
Authorized by corporate resolution, Sheets pleaded guilty to one count of theft of government funds and aiding and abetting, on behalf of ACC. Today, Judge Cummings sentenced ACC to 5 years probation, restitution in the amount of $972,794.70 and a $1,200,000.00 fine.
According to Sheets’ plea agreement with the government, ACC stole government funds by converting Federal Student Aid (FSA) program funds, and thus caused a loss to the government of approximately $972,794. Sheets admitted that he knew about the theft but did not report it, and he agreed that he would be personally, individually, jointly and severally liable for the total loss amount.
According to ACC’s plea agreement with the government, ACC is excluded, directly and indirectly from participating in any FSA programs. This voluntary exclusion is also a voluntary debarment, and ACC will not contest any actions taken to execute the debarment. ACC agrees that it will not have any ownership or interest in, or serve as an officer, director or any legal entity acting as a post-secondary educational institution participating in any FSA program.
Two others associated with ACC have also pleaded guilty to federal charges. Michael James Otto, 61, of Lubbock, who served as the Chief Operating Officer and Campus Director for ACC’s Lubbock campus, pleaded guilty in May 2014 to one count of misprision of a felony. He was sentenced last week to 3 years probation, restitution in the amount of $66,606.48 and a $5,000.00 fine. Bruce Alan Reed, 64, of San Angelo, Texas, who served as the Campus Director for ACC’s San Angelo campus, pleaded guilty to the same offense and was also sentenced last week to 3 years probation, restitution in the amount of $66,606.48 and a $5,000.00 fine.
ACC is a proprietary institution with corporate office in Lubbock. At one time, ACC operated five campuses in Texas — Lubbock, Abilene, Odessa, San Angelo and Wichita Falls — and one in Shreveport, Louisiana. ACC admitted that it knowingly converted FSA program funds from its students solely for its benefit to represent falsely to the U.S. Department of Education that it was in compliance with the requirement that a proprietary institution may not derive more than 90% of its revenue from the FSA program to remain eligible to participate in the FSA program. The remaining 10% of revenue must come from other sources. This is known as the 90/10 Rule, and if an institution did not satisfy it, it would lose its eligibility to participate in the FSA programs.
In 2007, 2008 and 2009, ACC failed to meet the requirements of the 90/10 Rule, however, as early as 2003, ACC had devised a scheme to represent falsely to the Department of Education that it had met the requirements. From 2007-2009, ACC had students obtain private loans from a private bank in San Angelo, Texas, with whom ACC had made arrangements, of approximately $953,897. ACC recorded the loan funds received from the private bank as “good cash,” thus falsely representing to the Department of Education that ACC complied with the 90/10 Rule. By obtaining the loans from the private bank and delaying the students’ FSA program funds, ACC lowered their total FSA program funds revenue for the 90/10 Rule. ACC repaid and intended to repay those loans with approximately $972,794 of FSA program funds to give the appearance of complying with the 90/10 Rule. The private short-term loans were obtained entirely to benefit ACC so that it could falsely represent its compliance. To further the scheme, ACC employees advised students that the school would close if they did not satisfy the 90/10 Rule, and this would jeopardize the students’ education at ACC.
The investigation was conducted by the United States Department of Education, Office of Inspector General. Assistant U.S. Attorney Paulina Jacobo prosecuted.