Ex-Education Dept. official charged with conflict of interest
Examiner Staff Writer
November 1, 2009
A former federal education official has been charged with lying about owning stock in a student loan company while he was in charge of oversight of student loan companies.
Matteo Fontana, a senior officer in the Education Department's student aid office, was charged with conflict of interest and false writing, according to documents filed in federal court in Washington.
Fontana was charged by information, which usually indicates that a plea agreement is in the works because the charges can't be filed without the consent of the defendant.
Both charges are misdemeanors, according to prosecutors. Matteo could face a year in prison for each charge.
In 2007, Fontana became the focus of an investigation into allegations of influence peddling in the $85 billion-a-year college-loan industry after it was learned that the president of Student Loan XPress provided to Fontana stock shares of its parent company, Education Lending Group. Fontana then went to work in the federal student-aid office.
In charging documents filed this week, prosecutors said Fontana owned more than $100,000 worth of stock and made several rulings in favor of private financial aid companies.
As a senior education department employee, Fontana was required to fill out financial disclosure forms. In 2005, prosecutors said, Fontana listed no holdings of Education Lending Group stock and wrote that he had sold it, valued between $100,000 and $250,000.
But prosecutors said he kept some of his shares and bought more.
In charging documents, prosecutors said Fontana influenced a ruling that benefited Student Loan Xpress, a subsidiary of Education Lending Group.
In 2004, when an reviewer in the Education Department denied a request that would allow Student Loan Xpress to expand its business, Fontana forwarded an e-mail from company officials to a colleague saying, "We should probably regroup brain storm how we could help them if it makes sense," according to charging documents.
Later, Fontana fired off an e-mail to a senior official at Student Loan Xpress, "As per our conversation today, I'm working this issue and need a little more time."
Several months later, Fontana directed that the Student Loan Xpress request be granted even though he knew he had a financial interest in the matter, charging documents said.
