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Two American Commercial College Execs Plead Guilty to Charges

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Two more executives from American Commercial College have pleaded guilty to federal charges.

James Michael Otto and Bruce Allan Reed each pleaded guilty to one count of misprision of a felony, admitting they knew about criminal activity but failed to report it.

On Thursday, May 22nd, ACC President Doyle Brent Sheets of Lubbock pleaded guilty to stealing government funds by converting Federal Student Aid program funds.

The theft caused a loss to the government of more than $972,700.

According to the U.S. Attorney’s Office, Sheets said that he knew about the thefts but did not report it, and agreed that he would be personally, individually, and jointly liable for the total loss amount.

ACC is a proprietary institution with their corporate office in Lubbock.

The 61-year-old Otto was the chief operating officer and campus director for ACC’s Lubbock campus. Reed, a 64-year-old resident of San Angelo, was the campus director for ACC’s San Angelo Campus.

Otto, Reed, and Sheets face a maximum sentence of three years in federal prison and a $250,000 fine.

ACC admitted that it knowing converted FSA program funds from its students, solely for its benefit, to represent falsely to the U.S. Department of Education that it complied with the requirement that a proprietary institution may not derive more than 90 percent of its revenue from the FSA program to remain eligible to participate.

The remaining 10 percent of revenue must come from other sources, and this regulation is known as the 90/10 rule. If an institution fails to satisfy the 90/10 rule, it becomes ineligible to participate in the FSA programs.

The College failed to meet the rule’s requirements from 2007 through 2009, but had developed the scheme to falsely represent that they were meeting the requirements as early as 2003.

From 2007 through 2009, ACC had students obtain private loans from a private bank in San Angelo, with whom ACC had made arrangements, of more than $953,000.

The College recorded the loan funds from the private bank as “good cash,” falsely representing to the Department of Education that ACC complied with the 90/10 rule.

ACC repaid and intended to repay those loans with the FSA program funds, to give the appearance of compliance.

The case was investigated by the United States Department of Education, Office of Inspector General.

American Commercial College formerly operated six campuses.

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