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Feds Bust USA Beauty School in Chinatown

MANHATTAN (CN) - In yet another case of corruption in profit-seeking colleges, federal prosecutors arrested seven officers and employees of USA Beauty School International and charged them with conspiring to fraudulently obtain federal Pell Grant money.

The school received more than $2 million in Pell Grant money, according to the indictment.

Lead defendant Siu Ping Yuen aka Pamela Yuen owns the cosmetology school in Manhattan's Chinatown, and Dominick Yuen Bonomolo is its financial aid director.

The U.S. attorney said the defendants used "a systematic pattern of deception and fraud," including "false records and phony diplomas to fraudulently obtain Pell Grant funds."

Profit-seeking colleges, particularly chain colleges with an Internet presence, have been under fire since a scorching Government Accountability Office report accused them of widespread fraud and misrepresentations to students, whom they recruit, allegedly for the primary purpose of snaring the money from their tuition student loans.

Hundreds of students have filed class actions against the chain colleges, many of them trade schools, and shareholders followed up with more class actions when the publicly traded schools' share prices sank after the release of the GAO report.

If convicted, Yuen faces up to 10 years in prison and a fine of $270,000 or twice the gross gain from her offenses.

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