Nominating entity:		U.S. Department of Education
Award:		Alexander Hamilton Award
Contact:		Jen Uhlir (202) 205-7938
Nominees:		Puerto Rico Department of Education Team Maureen Duddy, Auditor Celia Ruiz, Auditor Mildred Blanes, Auditor Priscilla Resto, Auditor Julio Echevarria, Special Agent Linda Frocht, Special Agent, FBI Fernando Salich, Special Agent, FBI William Aponte, Supervisory Special Agent, FBI
Citation:		"This award recognizes the outstanding audit and investigative work of the Puerto Rico Department of Education Team. Their work led to the successful federal prosecution of former Puerto Rico Department of Education Secretary Victor Fajardo and former Associate Secretary of Education Jose Omar Cruz for conspiring to extort and obtain approximately $4.3 million from contractors in exchange for contracts valued at $138 million. These contracts were funded substantially with U.S Department of Education funds."

Nomination Statement

The Puerto Rico Department of Education Team unraveled a complex corruption scheme organized by former Puerto Rico Department of Education (PRDOE) Secretary Victor Fajardo and others.

Since March 2001, Education-OIG Audit Services has issued three audit reports identifying $15.5 million in unsupported costs and $2.9 million in questioned costs relative to contracts issued by former Secretary Fajardo. Audit Services also issued an Action Memorandum to the U.S. Department of Education Assistant Secretary for Elementary and Secondary Education identifying $136,133 in Federal Safe and Drug Free Schools and Communities funds expended by Secretary Fajardo for personal use.

Auditors Duddy, Ruiz, Blanes and Resto shared their audit findings with OIG Special Agent Echevarria and the FBI Team members of their audit findings involving various PRDOE contracts. Agent Echevarria and FBI Special Agents Frocht, Salich and Aponte used these findings in their investigation of PRDOE Secretary Fajardo, Assistant Secretary Cruz and several PRDOE contractors. Their investigation disclosed that between late 1994 and September 2000, Fajardo and Cruz conspired to extort and obtain approximately $4.3 million from contractors in exchange for awarding contracts valued at $138 million. Some of these contracts were awarded to companies owned and controlled by Fajardo and Cruz. These contracts were funded substantially with U.S. Department of Education funds earmarked for elementary and secondary education programs. The money was extorted for the benefit of Fajardo and Cruz and for donations to their political party.

In January 2002, a federal grand jury returned an eight-count indictment charging Fajardo and Cruz with conspiracy and extortion. Following guilty pleas, on December 11, 2002, Fajardo and Cruz were sentenced in U.S. District Court, San Juan. Fajardo received a 12 year 7 month sentence and Cruz received an eleven year sentence for their respective roles in the massive extortion, money laundering and program fraud scheme. There is no possibility of early release under these sentences. The sentences included an order to pay nearly $5 million in restitution to the U.S. Government. To date, $1.3 million in cash and various properties have been seized. At sentencing, U.S. District Court Judge Hector Laffitte referred to the defendants as "Mafiosos" and "partners in crime" and added, "...anyone who steals from the children of Puerto Rico does not deserve leniency."