Citation Nr: 1314248	
Decision Date: 04/30/13    Archive Date: 05/15/13

DOCKET NO.  04-16 706A	)	DATE
	)
	)

On appeal from the
Department of Veterans Affairs (VA) Regional Office (RO) 
in Muskogee, Oklahoma


THE ISSUE

Whether the overpayment of Department of Veterans Affairs (VA) educational assistance benefits in the calculated amount of $8,673.23 was validly created.


REPRESENTATION

Veteran represented by:	Donald C. Hill, Attorney at Law


ATTORNEY FOR THE BOARD

Matthew Blackwelder, Counsel





INTRODUCTION

The Veteran had active military service from May 1988 to November 1997.

This appeal initially came to the Board of Veterans' Appeals (Board) from an August 2003 rating decision.  

As will be discussed in greater detail below, the RO's finding that the Veteran owed a debt is the result of investigations conducted by the RO in Manila, Philippines, and subsequently the VA Office of Inspector General (OIG) in San Francisco, California, of the enrollment of 60 veterans at Ramon Magsaysay Technological University (RMTU) in the Philippines.  As a result of these investigations, both the Manila RO and the OIG in San Francisco determined that all 60 of these veterans were not regularly attending classes, but were, instead, receiving course credit in return for buying supplies and other "gifts" for the school and for individual instructors.  

The RO in Muskogee, Oklahoma, which has jurisdiction over claims involving educational assistance, subsequently advised each of the 60 veterans that overpayments had been created as a result of these findings, including the overpayment of $8,673.23 that is the subject of this decision.

The Board notes that the Veteran has submitted multiple requests for a Board hearing during the course of this appeal.  In his April 2004 VA Form 9, for example, he requested a Board hearing to be held in Washington, DC.  However, the Veteran's attorney later indicated in February 2005 correspondence that the Veteran, as well as other veterans represented by the attorney, wanted a Travel Board hearing.  In July 2006, the Veteran's attorney asked that the Board schedule one hearing for all of the veterans he represented to include the Veteran in this appeal rather than hold individual hearings for each Veteran.  The Board sent correspondence to the Veteran's attorney in August 2006 explaining that the Board does not have the authority to allow a representative to appear for a personal hearing to present argument on behalf of all of the veterans he represents nor does it have the authority to allow all of the veterans to appear for a single hearing.  The Board further advised that each veteran represented by the attorney was entitled to appear at a personal hearing and to have their representative present at that hearing.  The Board hearing that had been scheduled for the Veteran approximately one week later in Washington, DC (i.e., in August 2006) was postponed.  In an October 2006 correspondence, the Veteran's attorney again requested that the Veteran, along with the other veterans he represented in similar appeals, be afforded with a single Board hearing to be held in Washington, DC.  

The record reflects that the Veteran was subsequently scheduled for an individual Board hearing to be held in Washington, DC in February 2007.  Although the Veteran's representative appeared for other hearings scheduled that day, he did not report for the hearing scheduled for this particular Veteran.  In June 2007, he requested that a hearing be rescheduled and argued that the Board's policy of not allowing representatives to present oral argument is erroneous.  In September 2007 correspondence, the representative was informed that his motion for yet another hearing was denied, and this motion was considered by the Veterans Law Judge designated to conduct the hearings in February 2007.  Accordingly, the Veteran's Board hearing request is considered withdrawn.  Furthermore, pursuant to 38 C.F.R. § 20.700(b), the purpose of a Board hearing is to receive relevant testimony and argument from a claimant and any witnesses, but a hearing will not normally be scheduled solely for the purpose of receiving argument by a representative.  The Board is bound to follow this regulation enacted by the Secretary, as it is not patently inconsistent with the statutes enacted by Congress nor does it violate any due process rules due the Veteran in the course of this administrative proceeding.  

It is also noted that while the Board's prior decision, including this same finding regarding the hearing, was appealed to the Court of Appeals for Veterans Claims (Court) and ultimately vacated, the Veteran's representative did not actually challenge the Board's determination that the Veteran's hearing request had been withdrawn. 

While the Board recognizes that the Veteran's attorney has asserted at various times during the course of this appeal that the Veteran is entitled to waiver of his debt, the issue of entitlement to waiver of recovery of an overpayment of VA compensation benefits has not been procedurally prepared or certified for appellate review and is outside the scope of this appeal.  Godfrey v. Brown, 7 Vet. App. 398, 410 (1995).  A debtor may dispute the amount or existence of a debt, which is a right that may be exercised separately from a request for waiver or at the same time.  See 38 C.F.R. § 1.911(c)(1).  In this case, the Veteran did not exercise his rights to request waiver within a timely manner.  This issue also was not challenged in the appeal of the Board decision.

In September 2007, the Board denied the Veteran's claim, finding that the creation of the Veteran's debt was valid.  The Veteran appealed that decision to the Court.  In November 2010, the Court issued a memorandum decision ordering that the Board's decision be vacated and remanded for further appellate review.  

Specifically, the memorandum decision ordered the Board to provide further statement of the reasons and bases for its determination that this Veteran participated in a fraudulent scheme while enrolled at Ramon Magsaysay Technological University (RMTU) by not regularly attending classes and, instead, receiving course credit in return for buying supplies and other "gifts" for the school and for individual instructors resulting in overpayment of education benefits.  The Court found that the only evidence discussed by the Board that specifically mentioned the Veteran did not necessarily implicate him in any alleged fraudulent scheme.  The Court also found that the Board did not meaningfully weigh evidence suggesting that the Veteran was not part of an alleged scheme.     

In March 2012, the Board concluded that additional development was necessary to comply with the directives of the memorandum decision.  Specifically, the Board found that the record contained multiple redacted copies of various documents pertinent to the current appeal, to include the Education Compliance Survey Report summarizing the findings of surveys conducted in October 2002, February 2003, and May 2003, and numerous depositions taken from students and faculty at RMTU.  While the redacted documents contained references to the Veteran and discussion of his classroom attendance and/or participation, the full context of such references were not always found to be clear due to the redaction of the documents.  See e.g., VA Form 1934E noted as page 8 of 5 and attached to the Education Compliance Survey Report (discussing the reasons given by RMTU for discrepancies found in records in the course of the compliance survey).  

Additionally, the Board determined that it was not clear whether the current record contained all of the documents that are specific to this Veteran and were considered in the determination that he, along with 59 other veterans, participated in a scheme to defraud the government by enrolling at RMTU as full time students solely to collect VA benefits and never really attended classes.  

The Board accordingly remanded the Veteran's claim in March 2012 for additional development.  This requested development included: 1) obtaining unredacted copies of any and all documents pertaining to the OIG's February 2003 finding of fraud that might be pertinent to the present appeal, to include those documents that specifically pertained to, or otherwise referenced, this Veteran; and 2) obtaining a written statement from the Resident Agent In Charge at OIG, M.S., who authored the February 2003 Memorandum that addressed the specific discrepancies, behaviors, and/or other factors considered in making the determination that this Veteran was involved in a scheme to defraud the government, to include discussion of those which were not present for the other veteran mentioned in the February 2003 memorandum who was determined to have not been involved in the scheme.  

The directed development has been completed to the fullest extent possible, and because the Board's order was fully complied with, there is no prejudice for the Board to proceed.  See Stegall v. West, 11 Vet. App. 268 (1998). 

The Board must note that in reviewing this case the Board has not only reviewed the Veteran's physical claims file, but also his file on the "Virtual VA" system to insure a total review of the evidence. 

In a November 2010 statement contained in Volume 6 of his claims file, the Veteran filed a claim seeking higher disability ratings and service connection for a number of disabilities, this claim is referred to the AOJ for appropriate action.  
 
FINDINGS OF FACT

1.  The Veteran was enrolled in a program of education at Ramon Magsaysay Technological University (RMTU) to achieve a Diploma in Agricultural Technology.

2.  For the period of April 16, 2001 to April 4, 2003, the Veteran received educational assistance benefits administered in the amount of $8,673.23 based on his enrollment at RMTU.

3.  A fraud investigation conducted by the Manila RO determined that a fraud scheme was perpetuated by all 60 of the veterans enrolled at RMTU, including the Veteran that is the subject of this decision.

4.  The investigation concluded that veteran students were listed as enrolled at RMTU, as full time students, solely to collect VA benefits, but never really attended classes. 

5.  An investigation conducted by the VA Office of Inspector General in San Francisco also determined that a fraud scheme was perpetuated by all 60 veterans enrolled at RMTU, and that the fraud resulted in these students collecting VA educational assistance benefits even though they were not really attending classes.

6.  The Veteran was paid for courses that he did not regularly attend.

7.  The charged indebtedness in the amount of $8,673.23 was validly created.


CONCLUSION OF LAW

The debt created by overpayment of educational assistance benefits in the amount of $8,673.23 is valid.  38 U.S.C.A. §§ 3002, 3011 (West 2002); 38 C.F.R. §§ 21.7020, 21.7070, 21.7144, 21.7153 (2012).

REASONS AND BASES FOR FINDINGS AND CONCLUSION

I.  The Veterans Claims Assistance Act of 2000 (VCAA)

The Veterans Claims Assistance Act of 2000 (VCAA) describes VA's duty to notify and assist claimants in substantiating a claim for VA benefits.  38 U.S.C.A. §§ 5100, 5102, 5103, 5103A, 5107, 5126; 38 C.F.R. §§ 3.102, 3.156(a), 3.159 and 3.326(a).  

A VCAA notice, as required by 38 U.S.C. § 5103(a), must be provided to a claimant before the initial unfavorable agency of original jurisdiction (AOJ) decision on a claim for VA benefits.  Pelegrini v. Principi, 18 Vet. App. 112, 120 (2004).  However, in Barger v. Principi, 16 Vet. App. 132 (2002), the Court held that the VCAA, with its expanded duties, is not applicable to cases involving the waiver of recovery of overpayment claims, noting that the statute at issue in such cases is found in Chapter 53, Title 38, United States Code, and that the provisions of the VCAA are relevant to a different Chapter (i.e. Chapter 51).  Therefore, the VCAA (and, it follows, its implementing regulations) is not for application in this matter.

Nevertheless, the RO explained to the Veteran the basis for the finding that the debt was valid in an August 2003 letter and in a March 2004 Statement of the Case (SOC).  The RO also afforded him the opportunity to present information and evidence in support of his claim.  Moreover, while the September 2007 Board decision was vacated, there was no indication that the Veteran was in any way unaware of the process for adjudicating his claim.

The Board additionally observes that the Veteran's attorney is also representing at least 29 other veterans who were found to have overpayments as a result of the investigation described below, and the attorney has asked on several occasions to have all 30 claims consolidated in a manner similar to class action lawsuits.  However, the Board has no authority to consolidate appeals in this manner and the Veteran's attorney has been so advised.  38 U.S.C.A. § 7107.  Accordingly, this decision will address only the appeal of the Veteran listed on the title page.  The appeals of other veterans represented by the Veteran's attorney are the subject of separate Board decisions and will be based on the facts of each particular case in light of the applicable law and regulations.  Pursuant to 38 C.F.R. § 20.1303, decisions of the Board are considered nonprecedential in nature.

The Board further notes that, on numerous occasions, the Veteran's attorney has made single submissions of evidence and argument on behalf of all 30 veterans that he represents, which included protected information specific to individual veterans, such as VA claims numbers and social security numbers.  In response to VA correspondence requesting that the Veteran's representative submit evidence for individual veterans, the Veteran through his representative has expressly authorized VA to associate his submissions with the claims files of each of the veterans that his representative represents, even if those submissions include the VA claims numbers and social security numbers of the other veterans.  See statement dated August 22, 2006.  Thus, the Board finds that the concerns of the Privacy Act, 5 U.S.C.A. § 552a, and similar VA regulations have been adequately and appropriately addressed in this instance.  

Moreover, the Board has considered requests from the Veteran's representative for unredacted documents and other information pertaining to the individuals interviewed at RMTU and relied upon by VA for its finding of fraud.  However, as explained in April 2005 and September 2005 letters from the Muskogee RO, the names of the veterans were withheld under exemptions set forth under 5 U.S.C.A. § 552(b)(3) and 38 U.S.C.A. § 5701(a), (f), which bars disclosure of their names and addresses.  The RO also indicated that the names and job titles of witnesses involved in the investigation were withheld under exemptions set forth in 5 U.S.C.A. § 552(b)(7), and that VA does not generally disclose the names of witnesses involved in an investigation.  The Board observes that the RO advised the Veteran's attorney that he could appeal the matter to the VA Office of the General Counsel if he disagreed with the decision to provide only redacted copies of these documents and provided him with appropriate contact information for that office.

The Board believes that the Veteran is not prejudiced by VA's decision to provide only redacted copies, as he and his attorney are well aware that the individuals interviewed during the course of the investigation included staff members, faculty, and students of RMTU.  There was nothing to prevent the Veteran's representative from obtaining lay statements from individuals at RMTU on his own initiative, and to submit those statements in support of the Veteran's claim.  There was also nothing preventing the Veteran's representative from obtaining and submitting statements from the individual veterans he represents, and he has submitted several such statements.  As to those veterans involved in the investigation who are not represented by the Veteran's representative, VA is precluded under the Privacy Act from revealing their identities or other personal information.

The Veteran's attorney has also specifically requested that VA subpoena all individuals involved in the investigation, including both witnesses and VA employees, so that he may question them, and he has also objected to VA's reliance on the interviews conducted at RMTU, asserting that they amount to "hearsay evidence."

However, as noted in Flynn v. Brown, 6 Vet. App. 500, 503 (1994), the VA benefits claims system does not include such adversarial concepts as cross examination, best evidence rule, or hearsay evidence exclusion.  See also Manio v. Derwinski, 1 Vet. App. 140 (1991).  Certainly, the Board has a responsibility to weigh the credibility and probative value of testimony provided by the students and faculty at RMTU, just as it does any evidence provided by the veteran that is the subject of this decision.  However, the Board will not reject such testimony solely on the basis that it is hearsay evidence.

The Board recognizes that, under 38 U.S.C.A. § 5711(a), VA has the authority to "(1) issue subpoenas for and compel the attendance of witnesses within a radius of 100 miles from the place of hearing . . .[and] (4) aid claimants in the preparation and presentation of claims."  However, in 38 C.F.R. § 20.711, the Secretary has defined the scope of this subpoena power to include compelling the attendance of witnesses within a radius of 100 miles from the place of hearing, and to aid in the production of "tangible evidence."

The regulation does not contemplate issuing subpoenas to allow witnesses to be questioned outside of the context of a personal hearing, and even then, the individual must reside within a 100 mile radius of the hearing.  Furthermore, the regulation specifically provides that a subpoena will not be issued to compel the attendance of VA adjudicatory personnel.  38 C.F.R. § 20.711(a).   In this instance, the Veteran's representative has clearly requested subpoenas far outside the scope of the situations contemplated by the applicable regulation.

The Veteran's representative has also argued that the Education Compliance Survey that was completed by the Manila RO was not conducted "in accordance with applicable statutory and regulatory law" such that it constitutes a clear error of law.   It is noted that the representative did not actually cite any statutory or regulatory law regarding the requirements to support his contention.  In review, the survey appears to be thorough and provided after assembling relevant evidence and interviewing numerous material witnesses.  As such, the Board has found this report to be fully relevant, considers it to be fully competent evidence.

The Veteran's attorney has argued that he did not receive a copy of the Veteran's claims file at the time the overpayment decision was made as he had requested.  It is unclear from the record whether this is the case.  However, he has not explained how the Veteran has in any way been prejudiced by such a fact.  The Veteran's claim has been reviewed by both the RO and the Board.  The representative clearly has the claims file now, and since he made this argument, the Veteran's claim was remanded by the Board and readjudicated by the RO.  As such, the Board does not find that any prejudice currently exists with regard to this issue.  Based on the foregoing, the Board finds that the Veteran has not been prejudiced by any failure of VA in its duties to notify and assist him, and that any such violations could be no more than harmless error.  See Conway v. Principi, 353 F.3d 1369 (Fed. Cir. 2004).   

It is finally noted that in his brief to the Court, the Veteran's representative raised numerous allegations of due process and VCAA violations.  However, the memorandum decision did not find cite to any flaw in VA's development of this case, holding only that the Board needed to better explain the Veteran's specific involvement. 

In consideration of the foregoing, the Board finds that this case is ready for appellate review.

II.	Legal Criteria

The law provides that VA will approve and will authorize payment of educational assistance for an individual's enrollment in any course or subject which a State approving agency has approved and which forms a part of a program of education as defined by 38 C.F.R. § 21.7020(b)(23).  38 U.S.C.A. § 3002(3); 38 C.F.R. § 21.7120.  A program of education, in pertinent part, is any unit course or subject or combination of courses or subjects, which is pursued at an educational institution. 38 C.F.R. § 21.7020(b)(23).

The Veteran had been previously determined to be eligible for Chapter 30 education benefits.  Therefore, he was entitled to a monthly benefit for the period of time he was enrolled in, and satisfactorily pursuing an approved program of education.  38 U.S.C.A. § 3014; 38 C.F.R. § 21.7070.  The term attendance means the presence of a veteran (i) in the class where the approved course is being taught in which he is enrolled, or (ii) at a training establishment, or (iii) any other place of instruction, training or study designated by the educational institution or training establishment where the veteran is enrolled and is pursuing a program of education.  38 C.F.R. § 20.7020(b)(2).

In order to receive educational assistance for pursuit of program of education, an individual must demonstrate satisfactory pursuit of a program, satisfactory conduct, and satisfactory attendance.  38 C.F.R. § 21.7153(c).  VA will discontinue educational assistance if the individual does not maintain such progress and conduct.  Id.  Attendance is unsatisfactory it the individual does not attend according to the regularly prescribed standards of the educational institution in which he is enrolled.  Id.  The amount of overpayment of educational assistance paid to a veteran constitutes a liability of that veteran.  38 C.F.R. § 21.7144(b).


III.	Analysis 

The Veteran has been charged with indebtedness to VA in the amount of $8,673.23. This amount represents payments he received for Chapter 30 Education Benefits for the period of April 16, 2001, through April 4, 2003.  In August 2003, the RO notified the Veteran that a review of records at RMTU showed that he did not attend classes, which were certified and paid for by VA.  The RO based its August 2003 overpayment determination on the results of a VA compliance survey conducted in the Philippines.  

The Board notes that a February 2003 memorandum details the results of the fraud investigation involving education benefits at RMTU.  It was noted in the memorandum that its findings were based on an extensive review of interviews conducted by the Manila RO, correspondences sent in by veterans, a review of files at Muskogee, and interviews of various VA officials and other individuals.  The fraud was determined to be perpetuated by all of the 60 Veterans enrolled at RMTU.

Initially, a routine educational compliance survey was conducted by one of the Manila RO Educational Compliance Survey Specialists (ECSS) in October 2002. The audit revealed that for at least seven veteran students there were no certificates of registration for the previous semesters in any of the file, only the registration for the current first semester of 2002-2003.  It was felt that the school failed to maintain accurate or complete records of enrollment for VA beneficiary students.  The primary contact at RMTU for this survey was the Registrar Clerk.  She made available the records of the randomly selected students, which consisted of individual envelopes for each student containing personal interview forms, immigration papers, Certificates of Honorable Discharge, and records from previous or secondary schools.  No other documents such as school curriculum, enrollment forms, or adding/dropping of subject forms were found inside.  

Significant discrepancies were found in the records that were reviewed.  For example, some students had no addresses listed other than P.O. Box addresses, and others had addresses at locations of such distance that it raised questions as to regular attendance at any of the campuses of RMTU.  Although no overpayments were found based on the available school records presented, it was noted that it might be necessary to conduct a more extensive compliance survey at a later date, including class checks to monitor actual class attendance of the students.  It was also explained to the Clerk that the students were expected to attend regular class hours in accordance with the standards and practices.

Based on the results of the initial survey, a 100 percent compliance audit was then initiated in February 2003.  This audit examined records associated with all 60 veteran students.  

The survey began at the San Marcelino Campus by interviewing the Chancellor of RMTU, who reported that the veterans had established their own school club on campus called the U.S. Veteran Students Organization.  He indicated that they were allowed to have their own "Vet-Park" inside the campus where they often meet, and that they had donated several garbage bins located throughout the campus.  The compliance survey continued at the Registrar's office of the Porac Botolan Campus of RMTU, where additional student records were reviewed.  

In reviewing the records, discrepancies were found in all 60 records.  These included: the absence of final grades for certain courses or for entire semesters; different signatures or penmanship appearing on certificates of registration (the staff of the university reported that sometimes students' wives or classmates filled out the forms on their behalf); and indications that some students received credits consistent with only part-time enrollment even though they were receiving VA benefits for full-time enrollment. 

As a result of these findings, the Manila RO subsequently conducted a field investigation, which involved eleven Manila employees, including eight field investigators, the head of the Field Section, and two Educational Compliance Survey Specialists (ECSS's).  From May 10, 2003, to May 15, 2003, they interviewed approximately 39 individuals, including RMTU administration officials, professors, Veteran students, and non-veteran students.  

In a memorandum, it was noted that almost all the teachers, the college dean, registrars and chancellor, several non-VA students, and one Chapter 31 beneficiary gave depositions.  Four veterans evaded contact, eighteen were not found in their addresses of record, two refused to give sworn statements, three were interviewed only, seventeen gave a group statement, and one refused to be interviewed.  Fifteen "beneficiaries" gave depositions which leaned toward confirming the statements of the non-VA deponents.

The investigators determined that veteran students were listed as enrolled at RMTU, as full time students, solely to collect VA benefits, but never really attended classes.  The veterans would meet once a week at a location on campus and circulate attendance sheets for the various classes they were enrolled in and signed them.  The elected leader of the group would then turn the signed sheets in to the relevant professors.  Mid-term and final examinations were done collectively by a group of veterans.  All the veterans received passing grades.

In depositions, some instructors revealed that they did not personally verify the presence of the veteran students in their classes, but, instead, relied on attendance sheets regularly submitted by a representative of the veteran students.  Some of the instructors indicated that they either did not know whether the veteran students actually attended, and some admitted that they were aware of the fact that the veteran students did not attend many classes.  Instructors also gave various reasons for the different treatment accorded veteran students over non-veteran students, such as language barriers, "humanitarian reasons," or the veteran students already having advanced knowledge.  Some faculty members acknowledged that veteran students were only expected to act as financiers by providing monetary assistance to complete projects while the non-veteran students were expected to do the labor.  Several faculty members and non-veteran students reported that the non-veteran students were stringently held to the requirement of reporting to class five days a week, but that veteran students were not.  Some faculty members also admitted having been given cash incentives by the administration, and being told it came from donations by the veteran students.

The scheme was found to have been happening for decades with one teacher disclosing that veteran students had been enjoying the arrangement since that teacher had started in 1989.  Most teachers, staff, and non-veteran students admitted that the veteran students had not been attending classes, which was contrary to the insistent claims of the veteran students that they had.  

The school also benefited because the veterans would pay for various expenses the school could not afford, to include new curtains, sports equipments, water dispensers, renovations, holiday party expenses, etc.  The veterans also provided cash payments directly to professors and school administration officials.  All the veterans were enrolled in the Diploma in Agriculture or the Bachelors in Agriculture program under the College of Agriculture.

Thereafter, in February 2004, an agent of the Criminal Investigation Division of the VA Office of Inspector General (OIG) in San Francisco, California, completed a report regarding his review of the situation at RMTU.  The agent explained that his analysis was based on an extensive review of the documentation detailing interviews conducted by the Manila RO, correspondence sent by the veterans, a review of files at the Muskogee RO, and interviews of various VA officials and other individuals.  The agent further explained that his review was also based on 14 years of experience as a Special Agent with the OIG, some of which had been as a Resident Agent in Charge.  The agent noted that he had extensive training in conducting fraud investigations, and had also worked extensively in the Philippines on VA-related investigations.  

Based on his review, the agent concluded that fraud was committed by all 60 of the veterans who had attended RMTU, and it was his recommendation that all administrative action be taken to recover monetary damages suffered by VA and to forfeit the benefits of the involved veterans.  However, based on the complexities and expense of prosecuting individuals in the Philippines, the OIG decided not to proceed with a criminal investigation of the matter.

Regarding the findings of the OIG, the agent explained that the essence of the "scheme" at RMTU was that veteran students were listed as enrolled at RMTU, as full time students, solely to collect VA benefits.  They never really attended classes, and would meet once a week at a location on campus to circulate attendance sheets for various classes they were enrolled in.  They would sign these sheets, and a representative would take them to the relevant professors.  The students were given mid-term and final exams, but these exams were given to a representative, and taken to the veteran's park, where they would be answered collectively based on the "honor system."  All of the veterans would subsequently receive passing grades, and the school would benefit from this system because the veterans would pay for various expenses, usually collectively, through money collected by their "treasurer."  It was noted that items paid for by the students included new curtains, sports equipment, water dispensers, renovations, holiday party expenses, and the materials costs associated with class projects.

The agent explained that the evidence of all 60 veterans' guilt included the following: the testimony of 13 professors/instructors, plus the Dean of Agricultural Technology, who indicated that the veterans never attended classes; the testimony of seven non-veteran students and one veteran student that was not involved in the scheme.  The testimony established that the veterans did not attend classes prior to the survey, and they began attending classes regularly only after the onset of the investigation by the Manila RO.  The agent also pointed out that the joint statement signed by 17 of the veteran students in which they asserted that they met the minimum requirement of 1 hour of classroom instruction per week and/or 3 hours of laboratory time for each subject was clearly contrary to the testimony provided by instructors and fellow students, but is indicative of their knowledge that classroom attendance was required.

The agent also noted that a similar scheme had been in place at Laney College in Oakland, California, which had resulted in a loss of $6 million to VA.  The agent indicated that it was his belief that the scheme at Laney College was exported from the school in the Philippines, as there were many similarities beyond just the mechanics of the scheme, similar terminology, and the fact that the RMTU scheme had reportedly been going on since the 1980s.  Furthermore, several RMTU professors noted that, when the naval center was still active, they had many more veterans enrolled.  The agent noted that the students at Laney College had been sued in Federal Court under the Civil False Claims Act, and most of them paid double damages plus fines.

In August 2003, the Veteran that is the subject of this decision, received a letter from the Muskogee RO advising him that he had been certified and paid educational assistance benefits for attending RMTU from April 16, 2001, through April 4, 2003, but that the evidence of record suggested that he did not attend classes during that period to the degree that would be required to receive the education benefits.  His payments were stopped, and an overpayment in the amount of $8,673.23 was created on account of his failure to comply with the requirements for receiving VA education benefits.  He was advised of his right to request a waiver of this overpayment.

In his August 2003 notice of disagreement, the Veteran asserted that he attended all of the classes for which was enrolled from April 16, 2001 to April 4, 2003.  He submitted a copy of his official transcript of record from RMTU, a Certificate of Attendance signed by the Campus Registrar at RMTU, a Certification of Attendance signed by his former professor and the Vice-Chancellor & Campus Director for Instruction at RMTU, and Enrollment Certification forms for RMTU for the periods of November 4, 2002 to April 4, 2003; April 16, 2001 to May 25, 2001; and April 15, 2002 to May 24, 2002.  Neither the Veteran, in his notice of disagreement, nor his attorney in subsequent communications, expressed a request for waiver of this debt, as noted in the Introduction above.  Instead, the Veteran's attorney has exclusively argued that the creation of the debt was not valid.     

Having once again reviewed the evidence of record, the Board is thoroughly persuaded beyond a shadow of a doubt that there was an arrangement in place at RMTU which had the effect of exchanging course credit/eligibility to collect VA educational benefits for contributions to the school and relaxed/nonexistent attendance requirements.  The effect of this arrangement undisputedly created a double standard between the educational requirements for veteran and non-veteran students, and it resulted in the abuse of VA educational benefits.  The Board's conclusions are based on the testimony of veteran students, non-veteran students, and faculty, as well as the findings by investigators at the RO and by the resident in charge of the VA Office of the Inspector General.  It is also noted that VA argued in its brief to the Court that there was considerable evidence of a "widespread fraud scheme at the University" and the Court did not dispute such a conclusion.

Rather, the memorandum decision remanded the case to the Board for a more thorough explanation of how the evidence of record specifically implicated this Veteran in the fraudulent scheme.  

In response to the memorandum decision, the Board remanded the Veteran's claim in March 2012 in an effort to obtain additional information; since that time, the Board has again reviewed the evidence, but ultimately is not persuaded that the overpayment was improperly created.  The evidence of record makes it quite clear that there was a large scale scheme to defraud VA at work at RMTU, and this scheme involved most, and likely all of the veterans who were receiving VA educational benefits based on their "attendance" at the school.  As noted, the difficulty in this case is in establishing that each specific veteran was an active participant in the scheme.  This process is made difficult as the veteran students have banded together to essentially obfuscate the investigation.  For example, according to one veteran when asked why regular classmates could not see him in the classroom stated that he "could not speak more.  The thing is, we, VA students had a meeting and we agreed upon to have a common stand to tell in this investigation that we are actually attending regular classes and nothing more."  As such, the united front presented by the veteran students has prevented differing accounts from being obtained which might add clarity to the extent of involvement of different students.

It is also noted that difficulty is created in this case by the fact that much of the testimony received in this case is potentially against the interest of the parties involved.  For example, if a veteran student testifies that he did not attend classes as required to receive educational benefits, he/she loses those benefits and may have to deal with an overpayment.  Similarly, if an administrator, faculty member or even non-veteran student testified that the veteran students were held to a different standard, they potentially jeopardize the contributions/payments which the record clearly establishes that the veteran students were making to the school.  In fact, in the wake of this scheme being uncovered, the VA certification of the institution was revoked, a decision which likely represented a significant loss of revenue to the institution.

Nevertheless, having reviewed the evidence once again, the Board is quite convinced that the Veteran in this appeal did participate in the scheme and did not "attend" school as required for the receipt of VA educational benefits.   The Board will endeavor to better explain its rationale for such a conclusion.

On remand, the Board was provided with a less-redacted copy of the VA Compliance Survey report from February 2003.  The report clearly establishes that the Veteran was a Chapter 30 beneficiary.  The report also made clear that there was rampant abuse of the VA educational benefits system at RMTU.  There was some concern voiced that one student was not implicated in the fraud.  However, upon closer inspection of the evidence, the non-implicated student does not appear to be the Veteran, as the Veteran in his own deposition admitted to participating in the scheme that was in place to effectively skip class.

The Board also contacted the Resident Agent in Charge who supplied a memorandum from December 2003 evaluating the merits of VA pursuing an Education fraud case in the Philippines.  This memorandum made clear that there were discrepancies in the files of all 60 veterans, a group which would necessarily include the Veteran.

In VA's brief to the Court, it was conceded that the previous Board decision had not explained what discrepancies were present in the Veteran's educational record, if any, or if such discrepancies, assuming they were present, constituted sufficient evidence that the Veteran participated in a scheme to defraud the United States Government.  The brief allowed that the Board had set forth that the Veteran was required to maintain satisfactory conduct and attendance according to the prescribed standards of the educational institution in which he was enrolled, but it was felt that the Board had not addressed how the Veteran had deviated from such a standard.  However, the brief did note that the record does show that there was a widespread fraud scheme at RMTU.  To this end, it is somewhat unclear to the Board that if there was a widespread fraud scheme at RMTU, which was based on lesser standards of attendance and participation for veteran students vis a vis non-veteran students, and if the Veteran in this case took advantage of such a scheme, and did not attend classes as non-veteran students had to or participate as non-veteran students had to how he did not deviate from an educational standard.  In fact, that logic alone implicates the Veteran.

Here, the Veteran provided a sworn statement that he was aware of the attendance policy of the school and that he was told to come to the school every day.  However, he specifically acknowledged that a separate attendance sheet was provided for veterans, and he stated that it was his job to get other veterans to sign it.  He stated that he learned that most of the people enrolled were not actually going to school.  To sign in, the Veteran explained that you did not actually have to attend class, but rather had only to be physically present on the school's campus.  He explained that they did the attendance check by physical presence not by classroom attendance.  He stated that his grade was determined by examination, but he stated "We usually stayed at the kiosk we built and donated to the school."  The emphasis was added, but we in this context would necessarily include the Veteran as he did not limit the group in the kiosk to other veterans or "they".  He stated that he and several others came to the campus to signing in every day, but the rest of the veterans only came twice or three times a week.  The Veteran also stated that when he enrolled in the school "there was already system going on, and I know I have to go to school as scheduled to attend classes as required by VA.  However, other veterans ahead of me, we doing the activities as required, but not through normal means like just physically signing in an attendance sheet then provided a copy to the school registrar and that's it.  I also did it, like others, since the school authorities tolerated it..." (emphasis added).  While the Veteran did not believe that he committed any wrongdoing, his own statement states that he did it like the others in reference to signing in and not having to attend classes.  It would appear that the Veteran may have been present more than some of the other veteran students, but he admits in his testimony that he also participated because the authorities tolerated it.  Hence, his testimony alone concedes his participation.

Even taken in its best possible light, the Veteran's own statements establish that he was complicit in a system to defraud the government of education benefits, as the Veteran freely admitted to collecting attendance signatures for those who were not regularly attending classes.

A professor who taught the Veteran provided a statement in May 2003 indicating that he did not require the veteran students to attend his class because they already had advanced knowledge of Agricultural Mechanics.  He stated that while non-veteran students would have to submit drawings of farm tools and equipment, the veterans would have to submit an actual farm tool which would then be donated to the school.  The professor was asked why the veterans were not simply exempted from the subject given their "advanced knowledge" to which he replied that they needed the class for the major.  He stated that the Veteran had been in his class the previous semester and while the veteran students attended his class, they did "not normally finish the required number of hours.  Usually, they leave earlier than regular students."  As such, this is clear evidence that the Veteran himself was held to a lower attendance standard than if he had been a non-veteran.

The Veteran's representative argued to the Court that the evidence did not contain any proof citing to specific dates that the Veteran did not attend class.  The representative pointed to attendance sheets showing attendance and final grades being given.  The irony in the representative's argument is that the attendance sheets which were obtained, ultimately have no evidentiary value in that considerable testimony (including from the Veteran himself) is of record explaining that the attendance sheets were simply circulated at the kiosk for the veterans to sign whether or not they actually went to class.  As such, the Board does not dispute the fact that the attendance sheets show that each veteran regularly "attended" class, but the evidence of record undisputedly establishes that a veteran student did not have to actually be present in a class to "attend" it, as all they were required to do was to come to campus and sign an attendance sheet (and even then there is evidence that this was as little as once a week for some veteran students).  

While acknowledgement of this fact does not entirely address the representative's argument, the Board finds that the circumstantial evidence provides a compelling case that the Veteran's attendance fell short of what was required to receive VA educational benefits.  Here, the Veteran himself admitted to signing an attendance sheet and providing it to the registrar, because the school tolerated it, which is clearly negative to his claim, in light of the fact that the fraudulent education scheme is well documented in the record.

Likewise, while the Veteran did receive passing grades for all of the courses he took, the fact remains that according to the RO investigation, all the veteran students passed all their classes, and in fact the investigation report made note that it would be extremely rare at a public university in the Philippines to have such a pass rate.  Moreover, a review of the record seriously undermines the value of such an accomplishment for RTMU in that to pass a course, a veteran student often had to simply buy supplies.  For example, a physical education teacher stated in May 2003 that VA students' class attendance was not being checked like regular students and that in lieu of attendance the veterans had to submit sports equipment for the regular students to use, and the submission of that equipment was enough to pass his class.  

At this juncture, the Board notes that as finder of fact, it must determine, both the weight and credibility of all the evidence of record.  To this end, equal weight is not accorded to each piece of evidence contained in a record; and every item is not considered to have the same probative value.  Rather, the Board must account for the evidence which it finds to be persuasive or unpersuasive, analyze the credibility and probative value of all material evidence submitted by and on behalf of a claimant, and provide the reasons for its rejection of any such evidence.  See Struck v. Brown, 9 Vet. App. 145, 152 (1996); Caluza v. Brown, 7 Vet. App. 498, 506 (1995); Gabrielson v. Brown, 7 Vet. App. 36, 40 (1994); Abernathy v. Principi, 3 Vet. App. 461, 465 (1992); Simon v. Derwinski, 2 Vet. App. 621, 622 (1992); Hatlestad v. Derwinski, 1 Vet. App. 164, 169 (1991).

In weighing credibility of evidence, the Board may consider interest, bias, inconsistent statements, bad character, internal inconsistency, facial plausibility, self interest, consistency with other evidence of record, malingering, desire for monetary gain, and demeanor of the witness.  Caluza v. Brown, 7 Vet. App. 498 (1995); Macarubbo v. Gober, 10 Vet. App. 388 (1997); Coburn v. Nicholson, 19 Vet. App. 427, 432 (2006) (Board may reject such statements of the veteran if rebutted by the overall weight of the evidence).

As noted, there has been some evidence which was submitted on the Veteran's behalf.  For example, in 2007, the Veteran's attorney submitted several statements signed and dated in March 2005 by instructors at RMTU stating, as a general matter, that they would never misreport a student's attendance and discussing the conduct of the investigation.  However, these assertions mean little in light of the fact that grades for veterans were based on gifts to the class, not on actual classroom work or participation. 

Sworn statements, dated in March 2005, were received from a number of instructors and administrators who were at RMTU during the years from 2001-2003.  Each statement contained a pre printed block asserting that they would never misreport a student's attendance or grade; and most importantly, each statement asserted that all American veteran and Filipino students that received a grade as shown on their transcripts attended all required classes.  

While this evidence on its face would appear to constitute exculpatory evidence, the Board finds that it is simply not credible in light of the earlier testimony which was made when investigators first arrived on campus, and not provided after the fact in an effort to preserve the monetary pipeline to the school that was provided by VA educational benefits.  See Cartwright v. Derwinski, 2 Vet. App. 24, 25 (1991) (a pecuniary interest is recognized as a factor which may affect the credibility of a claimant's statements). 

Here, these signatures on pre-printed forms add little to the evidentiary framework of this case.  It is clear that these statements were made solely for the purpose of refuting VA's case against the veterans at RMTU and to continue the flow of education funds to the school.  Moreover, the information which was provided in the earlier statements and which was provided by the non-veteran and even veteran students was to the effect that veteran students were not required to actually attend.  Rather, the school only required a signature on a sign in sheet to constitute "attendance."  This information appears to have been given more freely and candidly, and not after the proverbial wagons were circled.

The Board finds it extremely curious that the evidence of record in this case very clearly outlines the school requirements and showed that most, if not all, veteran students did not sit in the actual classrooms while classes were in session.  This point is so clear, that the Board does not even consider it to be in dispute (as the only issue in these cases appears to be proving the complicity of each individual veteran that was enrolled at the school).  Yet, with this as a background, the affidavits all attested to fact that ALL veterans had perfect attendance.  

It might be plausibly argued that several veteran students were not complicit in the larger scheme; that is, that several students attended class while a many did not.  However, the depositions of most students and faculty suggest that it was the exception for veteran students to actually attend class.  For example, a physical education teacher stated in May 2003 that VA students' class attendance was not being checked like regular students and that in lieu of attendance the veterans had to submit sports equipment for the regular students to use, and the submission of that equipment was enough to pass his class.  

The Board agrees that as in this case, such a determination must be made on an individual, case by case, basis.  However, it is simply not believable that all the veteran students attended class regularly, as numerous statements were obtained from non-veteran students, and veteran students explaining how the veteran students spent most of their time in the kiosk they built and their "class participation" was in paying for supplies for the courses.  As such, while the Board has carefully reviewed and considered the faculty statements, the Board wholly discounts their probative value and will not assign them any weight.

To the extent that the faculty members consider "attending" to mean signing a piece of paper but not actually physically attending a class, this would constitute precisely the type of fraud that VA is asserting was perpetrated.  As such, the only meaning which would support the schools defense is patently implausible on its face.

In the Veteran's notice of disagreement he stated that he attended all the classes that he was enrolled in from April 2001-April 2003.  The school registrar certified that he was enrolled for summer school in 2000-2001, summer 2001-2002 and for the second semester in 2002-3003.  Transcripts show that the Veteran passed every class.  However, this evidence does not prove innocence on the Veteran's part, as all veterans reportedly received passing grades in all classes; and as established, many veterans did not regularly attend classes. 

One professor, Dr. Oliveros, Vice-Chancellor and Campus Director for Instruction, stated that the Veteran regularly attended his class, but he also stated that the Veteran regularly attended the other classes he was enrolled in, and suggesting that hence he passed all of his subjects.  It is unclear how Dr. Oliveros would have known if the Veteran attended subjects that he was not teaching or present in, and such an overreach on his part diminishes the probative value of his statement as a whole, as it appears to be a clear attempt to exonerate the Veteran after the fact.

In addition to Dr. Oliveros' statement, there is also some other evidence that the Veteran attended classes more regularly than some of the other students.  For example, a physical education teacher stated in May 2003 that VA students' class attendance was not being checked like regular students and that in lieu of attendance the veterans had to submit sports equipment for the regular students to use, and the submission of that equipment was enough to pass his class.  He then stated that "Mr. D" did participate in his class because he enjoyed the sporting activities.  The teacher did not specify which Mr. D he was referring to (as there is another veteran with the same last name and first initial as the Veteran in this case), but it would appear that he was referring to the Veteran in that he stated that the class representative was Mr. D, and the Veteran testified in May 2003 that he was a class leader.  Nevertheless, while the Veteran may have attended a physical education class with some regularity, his testimony acknowledges that he participated in the scheme not to attend other classes as the administration tolerated it.

At his May 2003 deposition, the Veteran admitted that the veteran students on his RMTU campus were seldom seen in school after enrollment.  He also explained that he acted as the group leader and was responsible for maintaining the record of attendance for veteran students and giving the list to his instructor.  He additionally reported that the veteran students funded most of the projects in the school.  While the Veteran reported that he went to school every day, he further explained that he and other veteran students at RMTU usually stayed at the kiosk that they built and donated to the school and that their grades were determined by presenting projects in front of the class or taking examinations.  Moreover, the Veteran indicated that he, like other veteran students, engaged in these activities because school authorities tolerated the actions.  

The Board further notes other evidence of record pertaining to the Veteran tends to support the investigative findings as well as the Veteran's description of how class attendance was recorded and grades were distributed at RMTU.  Indeed, one of the Veteran's former professors reported that the Veteran would submit to him or her an attendance sheet for veteran students enrolled in that class every month.  The professor also indicated that he or she knew that veteran students, on the whole, received passing grades but did not attend classes regularly.  Another professor explained in a May 2003 deposition that the Veteran attended his or her class every Tuesday and Wednesday during that semester; however, he did not normally finish the required number of hours and would leave earlier than regular students.  

Although one veteran student revealed in his May 2003 deposition that the Veteran had been his classmate during one semester and attended class regularly during that time, he did not indicate that the Veteran actually fulfilled class requirements like a non-veteran student.  None of the 2005 depositions by RMTU instructors pertained to this individual Veteran.  

As discussed, the Veteran and his attorney have pointed to various documentation from RMTU in support of his appeal, including Enrollment Certifications and a transcript of passing grades.  However, it was implicit in the scheme discovered by the Manila RO, and later confirmed by the OIG, that the veteran students at RMTU received course credit in return for the donations and gifts that they provided the school.  Certainly, it is clear that RMTU routinely confirmed to the RO that these students were enrolled, attending classes, and receiving passing grades.  Documentation to that effect, such as transcripts or enrollment certifications, in no way contradicts the findings of the Manila RO or the OIG, and the Board finds it to be of no probative value.

In support of the Veteran's claim, his attorney has cited to the provisions of 38 C.F.R. § 21.7153(c), which defines "satisfactory attendance" on the part of a beneficiary as meeting the regularly prescribed standards of the educational institution in which he is enrolled.  He essentially argues that, because the school accepted or "tolerated" the Veteran's attendance as adequate, VA is obligated to do so regardless of the frequency of the Veteran's actual attendance.

However, as discussed in detail above, there is persuasive testimony of record from faculty members and non-veteran students at RMTU that the veteran students were not being held to the same standards of attendance or class participation that the non-veteran students were, and that this was due to the donations made to the school by the veteran students.  Under these circumstances, it cannot be said that the veteran students were meeting the regularly prescribed standards of RMTU as contemplated by 38 C.F.R. § 21.7153(c). 

Furthermore, it is implicit in all of the statutes and regulations dealing with the administration of Chapter 30 benefits that a veteran beneficiary be pursuing a meaningful program of education in exchange for his VA benefits.  As noted, the scheme discovered by the Manila RO involved beneficiaries who received course credit and passing grades without having to attend classes or otherwise participate in class in return for monetary donations and other gifts they made to the university.  It is difficult for the Board to imagine any argument that could justify this scheme as being consistent with the purpose of Chapter 30 benefits.  To the contrary, the participants of the scheme, including this Veteran, either must have known, or should have known, that receiving VA benefits based on their enrollment at RMTU amounted to defrauding the government.  In the Board's opinion, the school's complicity does not in any way mitigate the actions of the Veteran in participating in this scheme.

In consideration of the foregoing, the Board finds that the Veteran either knew or should have known that he was accepting education benefits for purposes other than what was intended as it is clear that veteran students were given preferential treatment at RMTU due to the financial benefits bestowed upon the institution.  The evidence (including the Veteran's own testimony) further reflects that the Veteran was not required to participate in his classes as a regular student to receive passing grades in classes for which he was enrolled at RMTU for the periods relevant to the current appeal.  Thus, the Board concludes that Veteran's debt in the amount of $8,673.23 was validly created.  

In the November 2010 memorandum decision, the Court asserted that the Board had failed to provide adequate reasons and bases for its decision, because the evidence cited by the Board did not specifically implicate the particular Veteran.  In the decision above, the Board has attempted to address the Court's concerns and to meaningfully weigh the evidence suggesting that the Veteran was not part of the alleged scheme.  However, the Board notes that aside from the narrow request addressed above, the memorandum decision did not endorse any of numerous arguments advanced by the Veteran's representative.  The Board therefore stands by its previous findings with regard to the arguments later raised by the Veteran's representative, aside from the fact that greater specificity was needed.  It is noted that additional rationale and explanation was provided in the VA brief to the Court, and those arguments are incorporated herein to the extent that they rebut the arguments by the Veteran and his representative.

The Board has also considered the assertion by the Veteran's attorney that one or more of the employees of the Manila RO insinuated to the veteran students and faculty of RMTU that they were open to bribes, and that it was only the failure to pay such bribes that resulted in the findings of the RO's investigation.  In support of this assertion, he has submitted statements from several of the veteran students who were the subject of the investigation at RMTU.  Certainly, such allegations are troubling.  

However, the only evidence suggesting that RO employees undertook such conduct is apparently the assertions of the attorney's clients.  Their credibility must be weighed against the numerous depositions from faculty members and non-veteran students indicating that the veteran students did not attend classes, and the specific findings of fraud that were made by both the Manila RO and the OIG in San Francisco.  It is difficult to imagine that a failure to accept bribery offers from Manila RO employees could have resulted in the fabrication of the substantial amount of evidence obtained by that RO of the scheme that apparently existed in RMTU.  Furthermore, the depositions and other documents created as a result of their investigation were independently reviewed by the OIG in San Francisco, as well as statements of the veteran students.  The OIG specifically found that fraud had occurred at RMTU.  It seems extremely unlikely that the employees of the Manila RO could have fabricated the testimony of the faculty members and students at RMTU who reported that the veterans were allowed to pass classes without attending in exchange for gifts, and it also seems equally unlikely that the faculty members or students at RMTU would testify to such if the practice was not actually occurring.  There seems to be no motivation for either faculty or non-veteran students to lie about such a scheme if it did not, in fact, exist.

The Board's conclusions in this regard appear consistent with the findings of the Special Agent of Los Angeles OIG, as explained in his December 2004 letter.  That agent explained that the OIG had chosen not to pursue an investigation into the bribery charges against D.B. because the complainants were the same individuals who were the subject of the RMTU investigation, and that they had a strong motivation to discredit the VA investigators who uncovered their scheme.  It was noted that the San Francisco OIG had conducted an extensive review of the situation at RMTU, and had concluded that there was an "overwhelming" amount of evidence indicating that those students had engaged in a fraudulent scheme.  It was further noted that D.B. was not in charge of the field investigators, and had no authority over the outcome of the investigation.  The evidence collected with regard to the scheme was obtained by eleven different field investigators, and D.B. had no authority over any of them.  Moreover, the management of the Manila RO was involved in planning the investigation from the outset, and he would have not have been able to exercise considerable influence over the outcome.  It was noted that bribes were typically solicited by individuals that had authority to affect some type of outcome, which was a scenario that did not exist here.  For these reasons, the Special Agent determined that the allegations lacked credibility and had been put forth in an attempt to obscure the issues and deflect the guilt of the involved Veterans.

It is noted that the memorandum decision found no issue with the conclusion that the bribery allegations were not sufficiently plausible to render the creation of the overpayment improper.

In reaching this conclusion, the Board notes that under the provisions of 38 U.S.C.A. § 5107(b), the benefit of the doubt is to be resolved in the claimant's favor in cases where there is an approximate balance of positive and negative evidence in regard to a material issue.  The preponderance of the evidence, however, is against the veteran's claim and that doctrine is not applicable.  Gilbert v. Derwinski, 1 Vet. App. 49 (1990).


ORDER

The overpayment of Department of Veterans Affairs (VA) educational assistance benefits in the calculated amount of $8,673.23 was validly created.  The appeal is denied.

____________________________________________
MICHELLE L. KANE 
Veterans Law Judge, Board of Veterans' Appeals



Department of Veterans Affairs