Update Feb. 4, 2003 (2002 Year in Review)|
Venezia acquitted but must pay debt
In October, former graduate student David M. Venezia SM '89 agreed to settle a civil lawsuit filed by the government alleging that he faked his own death, among other schemes, to escape paying back student loans incurred while attending MIT and other Boston-area universities.
In the settlement, Venezia agreed to repay the government $55,000 and to resign his job as an administrator for the National Park Service, and to accept an eight-year ban on working for the government.
Venezia had been acquitted in June of separate criminal charges related to one of the alleged schemes.
MIT Grad Allegedly Faked Death to Avoid DebtsBy Keith Winstein
A former MIT graduate student faked his own death in 1990 to avoid paying his bursar’s bill and student loans, federal prosecutors charged in a civil complaint on Jan. 11. The former student, David M. Venezia SM ’89, had been arrested two days earlier and was also held on separate criminal charges that he defrauded an Army scholarship program while attending Boston University in 1997.
Venezia received a Master of Science degree from MIT’s Department of Civil and Environmental Engineering in 1989, but he failed to pay off his $4,000 bursar’s bill after graduation, according to MIT documents that were part of the government’s filing.
Additionally, prosecutors say Venezia filed five times between September 1989 and November 1990 to defer repayment of $23,000 in student loans used to attend Brandeis, Northeastern, and MIT, each time claiming that he was unemployed.
The government asserts that during that period, he was a full time civil engineer at the U.S. Army Soldier Systems Center in Natick, Mass.
Venezia’s attorney in the criminal case, James I. Sultan, confirmed that Venezia “worked at Natick Labs at some point” but said he is now an administrator for the United States Park Service.
Venezia allegedly faked death
Prosecutors accuse Venezia of eventually resorting to more extreme means to escape his debts. A log of attempts to collect Venezia’s $4,000 bill, part of the government’s exhibit of bursar’s office documents, includes the notation: “7/09/90 Call received from Michael Venezia, says his cousin David died from an auto accident.” Michael is David Venezia’s middle name.
MIT mailed a letter of condolence, along with a form to submit with a death certificate or newspaper obituary clipping to discharge the debt. Only the form was returned. It appears in the bursar’s file exhibit filled out by “Mike Venezia”, who identified himself this time as David Venezia’s brother. The date of death was listed as July 1, 1989.
Next to Mike Venezia’s signature is a note, “we are very proud of David’s accomplishments and we would like to have a continued [unreadable] with MIT. Thank you! Sincerely!”
‘It appears student has not died’
Prosecutors allege the phone call and form were fakes. MIT administrators were suspicious at the time, due to the omission of a death certificate or obituary clipping. After further requests for a death certificate went unanswered, the bursar’s office log indicates that MIT used the TRW (now Equifax) credit-reporting service to investigate Venezia in January 1991.
The credit check found a similar delinquent account at Brandeis University, with Venezia’s debt being paid off from “payroll deductions.”
After reporting this discovery, the log then says, “It appears student has not died.”
MIT sent the account to a collection agency, and two years later received a $3562.50 personal check on a Quincy Savings Bank account in the name of “David M. Venezia”, including a florid signature.
Carlene Chisom-Freeman, Associate Director of Student Financial Services, categorized her office’s actions as following standard procedure. In the event that the bursar’s office were unable to secure a death certificate for a reportedly deceased debtor, “We would do what we did, which is to keep collecting,” she said.
Members of the bursar’s office declined to comment on the specifics of Venezia’s case or whether they had encountered other questionable student deaths, citing privacy laws.
It was not immediately clear how the bursar’s office file, which includes Venezia’s social security number, became part of a public court filing by the federal prosecutors. Assistant U.S. Attorney Suzanne E. Durrell, the signed author of the civil complaint, said her office only learned of the MIT-Venezia correspondence in December 2001, when the case was referred along with the documents by the U.S. Department of Education Office of the Inspector General. The Inspector General’s representative Roger Murphy and Chisom-Freeman of the MIT bursar’s office both declined to comment on the existence or timing of any communication or cooperation between their offices.
While he apparently took pains to appear dead to the bursar’s office, Venezia seems to have kept up connections to MIT in other ways. He is listed as a new member of the MIT Club of Boston in that group’s February 1996 newsletter. His online Alumni Network Services information was last updated on November 9, 2001.
Dept. of Education not informed
Despite the fact that by January 1991 MIT and Brandeis both believed him to have faked his death to escape debt, Venezia was subsequently able to discharge his $23,000 in federally guaranteed student loans at the expense of the Department of Education by submitting a falsified death certificate to his bank in June 1991, prosecutors allege.
Under the system known as the Family Federal Education Loan Program, Venezia had reportedly obtained his student loans from a Boston bank, with the American Student Assistance Corp. (ASA) serving as the “guarantor” of the loans.
The U.S. Department of Education, in turn, had promised to cover any losses by ASA. In the event of a debtor’s death, ASA was to compensate the bank that issued the loan, and the Department of Education was to then compensate ASA.
According to the civil complaint, the Boston bank that issued Venezia’s student loans received a Massachusetts death certificate for Venezia in June 1991, causing them to give up on recovering the loans and request reimbursement. As a result, ASA paid the bank $23,000, and the Department of Education subsequently paid ASA the same amount, plus interest, in late 1991 and early 1992.
The death certificate listed the cause as a motorcycle accident and the date of death as May 25, 1991, almost two years after the date given to MIT.
This alleged falsification and erroneous federal reimbursement was apparently not discovered until fall 2001, when the Department of Education Office of the Inspector General compared the Venezia certificate submitted in 1991 with the official Massachusetts death certificate of the same number, which the complaint asserts was actually issued for an Erin O’Neill who died September 23, 1991.
Both certificates were attached as exhibits to the government’s civil complaint, but The Tech was not immediately able to examine either document.
The civil complaint requests with various legal tools, among them separate accusations of false claims, fraud, unjust enrichment, and payment by mistake, that Venezia be required to pay back the money he allegedly cheated out of the federal government. The prosecutors further asked the court to make Venezia pay triple damages, plus a $10,000 penalty for each false statement he is found to have made.
It is not clear that Venezia would have any problem paying back his student loans today, over a decade after the alleged frauds took place. Prosecutors claim he owns a 26-foot boat, a Cadillac, and possibly a Jaguar. In addition to his Park Service job, he reportedly runs three modeling businesses with operations in Boston, Miami, New York, Los Angeles, and Philadelphia.
The civil complaint also describes a mortgage Venezia has on a $100,000 Charleston condominium. The government asserts that an attorney claiming to represent Venezia telephoned ASA three times between 1994 and 1996, each time asking the ASA to “delete any reference to him as being deceased” in the records ASA submitted to the national credit bureaus. ASA reportedly refused each time, but Venezia was able to obtain his mortgage anyway.
As yet, the case has had one hearing before U.S. District Judge Morris E. Lasker. At this “ex parte” proceeding, known as such because Venezia was not present, nor had he yet been informed of the complaint, the Judge denied the government’s request to freeze Venezia’s assets, which had been based on allegations that Venezia attempted to hide evidence when federal investigators first interviewed him in December.
Venezia has not yet filed an answer to the government’s complaint. He did not return repeated calls seeking comment, nor did the attorney representing him in the case.
Civil complaint followed arrest
When prosecutors filed their civil complaint on Jan. 11, Venezia had already spent two days in jail following his arrest on a separate criminal complaint filed Jan. 9. That complaint, which is not yet publicly available, accuses Venezia of criminally defrauding an Army scholarship program in 1997. While the civil complaint seeks repayment of money Venezia allegedly received through this fraud, the criminal case could put Venezia in jail.
According to the criminal complaint, while Venezia was employed by the Army’s Natick Labs in 1996, he applied for a full-tuition scholarship under the Army’s Professional Development Program to obtain a Masters in Business Administration from Boston University.
As part of the scholarship application, Venezia allegedly certified to the Army that he would be needing full-tuition reimbursement because he was not receiving and would not accept any other scholarship “contributions, awards, or payments.” Army Special Agent Vincent A. DeSalvo submitted a sworn affidavit that, in reality, Venezia already knew by this point that he had been awarded two merit scholarships from BU.
Because he did not disclose these to the Army, his tuition bill was overpaid by $17,000, causing BU to issue Venezia a refund of that amount, which DeSalvo alleges Venezia pocketed. The particular crime at issue in the criminal complaint is that of making a false statement to the Army, which carries a penalty of up to five years in prison.
Sultan, Venezia’s criminal attorney, said the issue in the criminal case is not whether Venezia illegally took the $17,000. “If someone sent him that money then maybe he should be required to give it back,” Sultan said, “But to call someone a criminal for that is like trying to slay a flea with a bazooka.”
The “certification” that he required full-tuition reimbursement that Venezia is alleged to have issued was actually one sentence in a complicated forty-page document, Sultan said.
The question a jury will have to decide, Sultan said, is “Did he knowingly, intentionally, and willfully sign a statement which he knew to be false?” Sultan added that, “Lots of people sign federal forms all the time,” and sometimes make mistakes, but that doesn’t make them criminals.
Venezia was released from prison on Jan. 15 for $10,000 cash bail following a hearing before a criminal judge magistrate. Another hearing is scheduled for this afternoon, when the government will have to demonstrate probable cause for the case to continue. Sultan expects the government to successfully pass this “very low bar.”
Assuming this likely outcome, prosecutors will have 30 days in which to bring an indictment, Sultan said.