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A preliminary investigation detailing a recent financial scandal at Howard University was released on Monday and reveals that the malfeasance was more widespread than previously thought. Depending on one’s perspective, the report shows an egregious con job in which hundreds of thousands of dollars were stolen from deserving students for years, or a responsive Howard administration that caught the SEAL Team 6 of finessing before things got out of hand.

Although initial reports, including our reporting at The Root, showed that the money stolen from Howard University’s financial aid department may have totaled $1 million, Monday’s report, released by Howard President Wayne A.I. Frederick, alleges that the financial misconduct was far less than previously reported.

But the details of the theft and how it was discovered read like the script from a heist movie starring Morgan Freeman as the savvy HBCU administrator who uncovers a plot by a team of con men to bilk the school out of thousands.

According to the report, as part of its “ongoing efforts to improve the University’s internal controls,” in 2016 the office of the comptroller began reviewing Banner, the software that processes Howard’s financial aid. It was during this investigation that the comptroller (played by Viola Davis) noticed that something wasn’t right.

So Viola the comptroller called in the forensic accounting firm RSM to analyze the situation. RSM and the comptroller began a walk-through of the financial aid process, essentially simulating typical financial aid transactions. During the walk-through, in November 2016, the team noticed that a glitch in the system made it possible for university employees to receive tuition remission (free or reduced tuition benefits that often result in a zero balance) and university-provided financial aid. In many cases, this combination of the two resulted in overages that were disbursed to the employees who were enrolled as students.

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When Viola noticed this, she asked RSM to look into it. After conducting interviews with the staff, examining records and reviewing transactions, RSM discovered that the financial aid office and the bursar’s office “may have been” responsible for inappropriate practices because, as the report details:

Financial Aid Office managers had been granted authority to implement financial aids awards without adequate external controls and consequently were able to make inappropriate aid awards without proper documentation and oversight.

RSM found that 131 employees received free or reduced tuition and grants from the university between 2011 and 2016 and received disbursements. Although not all 131 employees were in on the scam, records show that the top 50 recipients accounted for 90 percent of the refunds. Even more concerning, the top five individuals received $689,375 in total refunds over six years, including, but not limited to:

  • $90,000 in tuition remission
  • $279,000 in university grants
  • $303,000 in refunds
  • $18,000 in loan forgiveness

Upon discovering this, Howard called in the office of the general counsel (the lawyers) to take over the investigation into which employees were responsible for the conduct. The school began changing its policies and implemented a new system with multiple layers of approval for the financial aid process.

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The school also fired employees and hired a financial aid consulting firm to review compliance, operation and training in its office of financial aid. In addition, on Wednesday, April 4, Howard University administrators met with U.S. Department of Education officials to review the university’s financial aid department.

The investigation determined that six individuals were engaged in the misuse of university funds, which is different from federal student aid. The report cautions that the investigation is ongoing and has not determined whether federal student aid was involved.

President Frederick, who can be credited with discovering and ending the misappropriation, said in a December 2017 letter to Howard’s board of trustees that a third-party investigation “found no misappropriation of federal funds related to this issue.” Yet it is important to note that, while federal student financial aid may not have been affected by the misappropriation of funds, it does not mean that federal funds were not involved.

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Because Howard is one of only two colleges in existence chartered by the federal government (Gallaudet University is the other), the university receives hundreds of millions in federal funding through the Department of Education. Congress appropriated more than $220 million to Howard in 2017 (pdf), but Howard’s tuition costs continue to rise and students are sometimes left without housing.

Howard has recently seen mass student protests over this issue and others, including its handling of sexual assault, housing issues and rising tuition.