David Jesse

Detroit Free Press

A private Jewish Michigan college committed fraud over the past decade, leading to millions of federal dollars being sent to the West Bloomfield school to pay for the education of students who weren’t enrolled there, according to the federal Department of Education.

The school remains open. It’s unclear whether criminal charges will be pursued.

Pell Grants are awarded to low-income students to help cover the costs of attending college. They do not need to be paid back. For 2015-16, the maximum Pell Grant is $5,775.

In a 17-page letter to the Michigan Jewish Institute, the department outlines more than 2,000 cases where Pell Grant funds were sent to the school to pay for students who were in Israel studying and never took one class at MJI. A total dollar amount of fraudulent Pell Grants to the school is not known.

The institute is tied to the local chapter of the Chabad-Lubavitch, an Orthodox Jewish group with a growing campus in West Bloomfield. Rabbi Kasriel Shemtov is president of the institute and spiritual director of the Shul. The Shul is part of the Campus of Living Judaism. The school was founded in 1994.

"The evidence the department has reviewed shows that many, if not most, of MJI students had no interest in obtaining, or intention of receiving, a degree or certificate offered by MJI," says a Feb. 29 letter to the school from the department. It was obtained by the Free Press.

"Rather," the letter continues, "they were 'enrolled' in MJI, and by MJI, for the sole purpose of getting MJI Pell Grants while these students 'studied abroad.' Such abuse of the Pell Grant program is unacceptable."

The letter told MJI the department was pulling the school's eligibility for all federal funds, including student aid.

"At this time, MJI believes it would not be appropriate for it to discuss DoE’s assertions in the press or in public forums, as that could be taken as politicizing the matter," MJI spokesman Steven Ellis said in an e-mail to the Free Press, referring to the Department of Education. "Perhaps, this is something others might do to gain some advantage, but not something MJI chooses to do while counsel & DoE are engaged." ​

School officials told students that if they were relying on Pell Grants or other federal student aid to pay tuition bills for the rest of the year, that they would have to come up with other sources of money to cover the bills.

The alleged fraud was uncovered during a routine review of MJI's application to renew its eligibility to receive federal student aid. The department looked at the years of 2006 to 2012, and then expanded to look at more recent years. In addition to a site visit, federal agents raided the school in summer 2015.

The school says once it established an online curriculum in 2006, interest from Orthodox Jews across the world increased, and enrollment in online courses boomed.

"A majority of MJI’s student body studies in Israel," the school said in a document sent to the Free Press. "All are U.S. citizens. A substantial number is studying 100 percent online with MJI. The remainder study at host schools and reside in Israel. In order to become a host school for MJI, an institution must apply, be approved, and comply fully with all MJI requirements and published technical guidelines. In order to be recognized by MJI and qualify for Pell funds, courses taken by students at host schools must conform or be equivalent to courses in our MJI catalog. Further, MJI students are limited to taking no more than 49 percent of their program credit requirements at host schools. As a matter of law, American citizens studying online abroad or under a written arrangement with a host institution may apply for and, if they qualify, receive Pell grants with which to defray costs incurred in their education."

That's not what happened, the feds say.

"The evidence shows that almost 2000 U.S. citizens, who were full-time Israeli residents, received Pell Grants for ostensibly 'studying abroad' in Israel at Israeli institutions between 2006 and 2012," the letter from the education department says. "Not a single one of them ever physically attended classes at MJI, and none of them graduated from MJI.

"More than a quarter of these individuals were enrolled at universities or colleges in Israel offering degree programs or were enrolled in teachers colleges in Israel offering teacher certificates. This evidence demonstrates that these students did not study briefly at an Israeli institution to enhance their educational experience after enrolling in MJI for purposes of obtaining a degree from MJI. Rather, these full-time Israeli residents were 'enrolled' in MJI so MJI could obtain and use Pell Grants, partly to subsidize the education of full-time Israeli residents enrolled at Israeli educational institutions, and partly to fund its own activities."

The department went through the LinkedIn accounts of MJI students receiving Pell Grants and found no mention of MJI in them.

"For example, Student #1's LinkedIn page states that she obtained a Bachelor's of Science degree from Machon Lev, and that she attended from 2006 to 2009, when she graduated. MJI is not mentioned on her LinkedIn page. MJI represents on the student's transcript that she was enrolled in a bachelor's degree program in General Judaic Studies at MJI in 2008 and 2009, and during that entire time, she was enrolled in a study-abroad program at Machon Lev, after which she dropped out. Student #1 is an Israeli resident for whom MJI received a Pell Grant in 2008-09 for $4,381."

The department also spoke with students.

"Even those students residing in the United States who studied abroad in Israel were not regular students seeking a degree from MJI," the letter said. "Rather, those with whom the department has spoken have consistently admitted that they were connected to MJI on paper only for the purpose of securing religious education overseas."

The Department of Education found 87 cases in which students were in religious education overseas, but MJI had said the students were studying computer-related courses.

"MJI's misconduct will not be tolerated by the department," the letter said. "MJI evidenced its disdain for its fiduciary duties, and failed to maintain the requisite levels of competency and integrity, by, among other things, securing Pell Grants in the name of students who, even though they resided full-time abroad, were ostensibly enrolled in MJI 'study abroad' programs and never intended to secure a degree from MJI, and obtaining Pell Grants on behalf of still other students who were enrolled in foreign institutions with no intention of earning a degree from MJI.

"Such a high number suggests intentional culpability."

Contact David Jesse: 313-222-8851, djesse@freepress.com or on Twitter: @reporterdavidj