Michigan School Official Sentenced in Fraud Scheme

By Tim Holland

The Anti-Trust Div. of the Department of Justice (DOJ) announced on March 26, the sentencing of a former Michigan school official to serve 48 months in jail and pay $1.34 million in restitution with regard to a fraudulent scheme regarding a Michigan school district and falsifying loan documentation with regard to a credit line obtained from a Minnesota bank.

Douglas Benit, a former assistant superintendent at Ecorse Public Schools (EPS), was sentenced in the U. S. District Court in Detroit on one count each of mail fraud and bank fraud.

Benit was responsible for the management of the construction of multiple new facilities in the Michigan school district. While hiding his affiliation with Coral Technology Inc. (Coral), an Ohio corporation under his control, Benit recommended to the school board the awarding of contracts to Coral, effectively steering those contracts to his own company. Funding for these contracts came from EPS general funds, EPS construction bond funds and the federal E-Rate program.

The federal E-Rate program subsidizes the provision of internet access and telecommunications services, as well as internal computer and communications networks, to economically disadvantaged schools and libraries. The program was created by Congress in the Telecommunications Act of 1996 and is administered by Universal Service Administrative Company, a non-profit corporation, under the auspices of the Federal Communications Commission.

Additionally, Doug Benit and his wife Mary Ann Elam Benit obtained a $200,000 line of credit from Minnesota-based TCF National Bank through the submission of a loan application and supporting documentation which vastly overstated and misrepresented their personal and corporate assets and income. Mary Ann Benit is expected to be sentenced today. TCF Financial Corporation is a financial services holding company with 448 branches in seven states including Michigan.

“The children of the Ecorse Public School District, as well as countless others around the Nation, rely on the federal E-Rate program to provide funding for internet access, telecommunication services, and computer and communication networks,” said Scott D. Hammond, Acting Assistant Attorney General in charge of DOJ’s Antitrust Division. “Douglas Benit exploited his position as a trusted school official and lined his own pockets with money that should have gone to these deserving children.”

As a result of the Antitrust Division’s investigation into fraud and anticompetitive conduct in the E-Rate program, a total of seven companies and 18 individuals have pleaded guilty or have been convicted and found guilty or entered civil settlements. Those companies and individuals have paid, agreed to pay, or been sentenced to pay criminal fines and restitution totaling more than $40 million. Including yesterday’s sentence, 12 individuals have been sentenced to serve jail time.