ployees, and financial aid officers. We attempted to locate the financial aid officer and other employees. That search was fruitless. It was not in the phone book. We have no idea if these people even exist. As a matter of fact, we know that a couple of people listed in the catalog as officers of the school do not exist, because the attorney said, we have never heard of these people; do not know who they are. The chairman of the board, when we finally said, OK, we are going to have to depose the chairman of the board to get to the bottom of this, his counsel indicated that he would take the Fifth to any and all questions the Subcommittee might have.

So those are just a couple of other examples 1 and I already detailed the problems we had with Sara Schenirer Teachers Semi

nary.

Chairman NUNN. Let me move to another subject. In July of this year, I wrote a letter to the Secretary of Education, Richard Riley and asked him to provide the Subcommittee with a number of students who had received Pell Grants for more than 5 consecutive years for the period 1982 to 1992. Did you receive a reply? Did we receive a reply to that letter, and if so, would you describe it? 2

Mr. BUCKLEY. Senator, the Secretary responded on October 13 of 1993 and answered your questions to the best of their abilities. Some areas they were not able to answer because they do not have the data or could not manipulate the database to come up with the answers. But you had asked for the number of students who had received Pell Grants for more than 5 consecutive years during the period 1982 to 1992, and they found that there were 162,576 recipients who had received grants for between 6 and 10 consecutive years. Now if somebody did not go 1 year and came right back in and went another 5 years that person would not be included. We are only dealing with consecutive year figures here. The amount of expense for these students was in excess of $1.5 billion.

You also had asked for recipients of Pell Grants for more than 10 years.

Chairman NUNN. Ten years, right.

Mr. BUCKLEY. There were 4,095 total recipients who had received $57,133,000 million for those consecutive years. Of them there were 2,594 who had received grants for 11 consecutive years.

Chairman NUNN. This does not count people that might have been in the program for 1 year and skipped a year and then come back a year and so forth? Do they have data on that?

Mr. BUCKLEY. The Pell Grant files are massive. What did we say 55 million people have received Pell Grants. We are talking a huge database that they had to go through and that is what really took a lot of time.

Chairman NUNN. Have they gotten that computerized?

Mr. BUCKLEY. It is all computerized.

Chairman NUNN. They have got it all on computers now?

Mr. BUCKLEY. Yes, sir. They do not have the student loan data system in effect yet. This is just Pell Grants.

Chairman NUNN. Pell Grant is computerized?

1 Exhibits No. 85 and 86 retained in Committee files.

2 See Exhibit No. 84 on page 343.

Mr. BUCKLEY. That is right. So they cannot compare loans to grants. They just have the grants computerized.

Chairman NUNN. There is no correlation? They do not have any way of comparing loans to grants, except

Mr. BUCKLEY. Not right now. I am sure they hope to do that some day, but they certainly cannot now.

Chairman NUNN. I understand one person, I believe Senator Cohen mentioned this morning, has received Pell Grants in excess of 17 consecutive years. Did you look into that particular case?

Mr. BUCKLEY. Yes, we did, sir. At your request, we obtained the name of that individual. I spoke to the colleges. She attended three separate colleges. A couple were junior colleges, and one was a 4year school. She has received Pell Grants for at least 17, possibly 18 consecutive years in excess of $19,000 in Pell Grants. În addition, I spoke with her as well. She said that she had-it is a rather sad case. She is a single parent of three who has raised her kids, worked in bakeries in blue collar jobs, and attended classes largely at night. She has had a terrible time fulfilling the requirements of the courses. The majority of them, she has gotten withdrawals or failures or D's in; has not had satisfactory academic progress which is a requirement of the statute.

In addition to Pell Grants, she has received State tuition assistance and is amassed over $22,000 in federally guaranteed student loans. I would say based on the work we have done, I think we might as well just write that off. The Federal Government gave $19,000. We have guaranteed $22,000. She is now raising her five grandchildren and is unemployed, while her three children go to college, using aid as well. So I do not know if there is any hope that we will get back the $22,000 guaranteed student loans.

Chairman NUNN. Is there any kind of system in the Department of Education that would show when some student-maybe in this instance, I am not sure, was trying hard, but had been in the program a long, long time and that some counseling might be in order or someone might try to help them get into the right slot, so that they could achieve some skilled training or education? Is there any kind of system like that?

Mr. BUCKLEY. We leave that up to the schools. The Federal Government requires that you have satisfactory academic progress, as Senator Pell testified this morning. They just cannot take classes because they want to take classes. There has to be a goal in sight and part of a program.

Chairman NUNN. Is that not supposed to be satisfactory educational progress?

Mr. BUCKLEY. Right. Now we leave that up to the schools to monitor.

Chairman NUNN. That is up to the schools?

Mr. BUCKLEY. Yes.

Chairman NUNN. Do they certify that, if there has been satisfactory educational progress? Is that part of what a school has to do to be able

Mr. BUCKLEY. Yes, sir, that is part of the requirements. Regarding certification, it is my understanding, it is implicit in the fact that the school applies to the Department or certifies and draws

down that money. I mean that is one of their duties to oversee this satisfactory academic progress.

Chairman NUNN. Was the Department of Education aware of this kind of data, for instance, the data of 6 to 10 years of over 162,000, the 4,000 over a 10-year period?

Mr. BUCKLEY. They were not. Senior mid-level management had no idea this data was even available. But the people in the Pell Grant computer division knew they had it and they did produce it. They had never, as far as we know, ever manipulated the data to investigate something like this.

Chairman NUNN. Is there any rule at all or regulation or provision of law that regulates the length of time you stay in school or is satisfactory, educational progress the only criterion?

Mr. BUCKLEY. There is no ceiling right now on the number of years you can get a Pell Grant. It is wide open. So as long as you never receive your bachelor's degree and as long as you maintain satisfactory academic progress, you are attending an eligible institution, and enrolled at least on a half-time basis, you can get a Pell Grant.

Chairman NUNN. How about student loans, how long can you go before you pay back the student loan? What triggers the payback? Mr. BUCKLEY. This person may not be as innocent as she sounds. As long as you stayed enrolled in a school, you do not have to start paying back your loan. The Federal Government guarantees that loan and pays the interest subsidy to the guarantee agencies and secondary market. But as long as you are enrolled, you do not have to start paying back those loans.

Chairman NUNN. So theoretically and maybe even practically, a student can stay in school, receive Pell Grants for an unlimited number of years, also receive student loans, and never have the student loan paid back until they graduate, and they do not have to graduate to continue to receive Pell Grants?

Mr. BUCKLEY. That is right.

Chairman NUNN. You have outlined some of the payment which you were able to track from the bank records and the Bais Fruma case and financial statements, including questionable payments for mortgage rent, research and training. You went through that, went on the charts and so forth. Did you find any other questionable transactions relating to the money flow here?

Mr. EDELMAN. Yes, sir, Mr. Chairman. The Staff has conducted a preliminary review of currency transaction reports and currency and monetary instrument reports filed under the Bank Secrecy Act. CRTs are required to be filed whenever a transaction of cash or negotiable instruments in excess of $10,000 occurs. It is the responsibility of the financial institution conducting the transaction to fill out the appropriate forms for filing. And among the information included on this form is the party on whose behalf the transaction is being conducted. The currency and monetary instrument reports are required to be filed whenever cash or monetary instruments in excess of $10,000 are carried into or out of the United States. And it is the responsibility of the individual carrying the instruments to prepare the reports for filing with U.S. Customs Service.

Our preliminary review of these reports revealed that two individuals associated with Bais Fruma, Yitzchak Klein and George

Goldberger were responsible for filing over 700 such reports during the period 1987 to 1993. The amount of money involved in the transactions reported in these reports is over $7 million. Mr. Klein is Bais Fruma's treasurer and Mr. Goldberger is Bais Fruma's financial aid director. And the mere fact of conducting these transactions or filing these reports is not, in and of itself, an indication of any illegal activity.

However, our review of some of the information contained in these reports raised a number of questions which I would just like to outline for you here. For example, both Goldberger and Klein engaged in financial transactions on behalf of an entity known as American Theological Institute. Now on some reports filed the address of American Theological Institute was listed as P.O. Box 176. On other reports, the institute was listed at 1286 52nd Street. And on still other reports, the American Theological Institute was listed at 4601 14th Avenue. And this last address 4601 14th Avenue is the same address as Bais Fruma. And indeed, a check of the ready real estate property at the display database shows that the owner of 4601 14th Avenue is the American Theological Institute.

And even more intriguing is the fact that a number of other institutions on whose behalf either Klein or Goldberger performed transactions, were also listed on these CTRS and CMIRS as being located at 4601 14th Avenue. Among these institutions were the Rabbinical Seminary of Israel, the Shalom Torah Institute, Yeshiva Migdal Hatorah, and Bais Fruma itself. Still other reports, however, list these same institutions at different addresses.

For example, at least one report lists the Rabbinical Seminary of Israel as being at 1272 52nd Street. Now if you will recall, 1272 52nd Street is the address of the high school which we showed in one of the photographs earlier today that Bais Fruma was paying rent for. The sign on the outside of that building referred to it as Tifereth Bunim and said nothing about the Rabbinical Seminary of Israel.

A number of the CTRs also list different addresses for Bais Fruma itself, including a P.O. box address, an address at 4709 14th Avenue, and an address at 4712 14th Avenue. Now the Staff is not clear why Klein and Goldberger are listing multiple addresses for these same institutions. Nor do we know why individuals associated with Bais Fruma would be performing transactions on behalf of other organizations.

Perhaps the most intriguing information gleaned from our review of these reports though, shows that Yitzchak Klein has conducted a number of transactions on behalf of Boro Park Torah Institute. As you will recall Boro Park Torah Institute is the entity to which Bais Fruma is paying that $2 million mortgage for the empty shell of the building. In a number of these transactions, Mr. Klein actually negotiated instruments for cash, and, indeed, in at least one transaction, Mr. Klein took $50,000 out of the bank in $100 bills. on behalf of Boro Park Torah Institute.

Now we cannot explain these transactions at this time, however, we do feel that they are very unusual transactions for employees of a nonprofit, tax-exempt religious organization to be engaging in. We have attempted to question both Mr. Klein and Mr. Goldberger and served each of them with a subpoena for deposition. However,

in response to our subpoenas, both Mr. Klein and Mr. Goldberger asserted their privilege against self-incrimination under the Fifth Amendment. In light of the questions raised, at least in the Staff's mind by the information on these reports, we feel that this is a matter that is deserving of further investigation and would recommend the information be referred to the Departments of Treasury and the Department of Justice for such investigation.

Chairman NUNN. Based on what I have heard this morning, I think there is a good bit of material that needs to be sent to the Department of Justice. We will begin our hearings tomorrow morning at 9:00 a.m. in the same room. Thank you.

[Whereupon, at 1:04 p.m., the Subcommittee adjourned, to reconvene at 9:00 a.m., October 28, 1993.]