Charges Against Former Eastern Gateway Administrators Dismissed

STEUBENVILLE, Ohio – The charges against two former Eastern Gateway Community College administrators have been dismissed while a subsequent investigation is just getting started.

The charges against Jimmie Bruce, former college president, and James Miller, a former vice president and chief of staff, were dismissed Monday in Jefferson County Common Pleas Court.

The charges included grand theft, theft in office, unlawful interest in a public contract, telecommunications fraud and misuse of a credit card. Charges were connected to what at the time was described as credit card transactions that were unrelated to legitimate college operations. Both men were indicted in August.

“I can’t discuss what led to the motion for dismissal,” said Special Prosecutor Thomas N. Anger of the Ohio Auditor’s Office Special Investigations Unit.

He filed the motion for dismissal of charges Jan. 5, and Judge Joseph J. Bruzzese Jr. of Jefferson County Common Pleas Court granted dismissal Monday.

“We don’t anticipate any further charges from the original investigation,” Anger said.

Attorney Aaron Miller, who represents James Miller, declined to comment.

Dennis Willard, an Eastern Gateway spokesman, said the college is pleased to hear that charges against the two former administrators have been dismissed.

“We have always placed our faith in the legal process and the ideal that you are presumed innocent until proven guilty,” he said. “We are continuing to fully cooperate with all agencies interested in improving our operations and helping us achieve our commitment to putting our students first at Eastern Gateway Community College.”

Another investigation is underway. Anger couldn’t say when charges stemming from that investigation might be filed.

Last week, law enforcement searched Eastern Gateway offices on the main campus. The search included agents and officers from the Special Investigations Unit of Ohio Auditor Keith Faber’s Office, the U.S. Secret Service, Jefferson County Sheriff’s Office, Ohio State Highway Patrol Computer Crimes Unit, Columbus Police Digital Forensics Unit and the Ohio Narcotics Intelligence.

At the time, Faber said the warrants were “part of an investigation looking into matters that both have already been charged and are being prosecuted by our special prosecutors and other concerns about financial legal irregularities here at the college.”

It’s the latest in a list of challenges facing the college that has operated a campus in Youngstown since 2009.

Last month, the state Controlling Board approved a $6 million advance to the college from the Ohio Department of Higher Education. The advance is for three months to assure adequate cash flow and ensure it meets payroll. Eastern Gateway will return to the Controlling Board in March. The college had requested a $12 million, or six-month, advance.

In August, the state Controlling Board approved a $3 million advance to the college.

In August 2022, the U.S. Department of Education placed Eastern Gateway on Heightened Cash Monitoring 2 status. That means the college must use its own resources to credit student accounts and then wait for federal student aid reimbursements from USDOE.

The community college has been on probation since November 2021 as designated by the Higher Learning Commission. When the probation was extended in November 2023, the HLC cited expected financial sanctions from USDOE, the college’s 2023 budget that it called unrealistic, ongoing litigation and declining enrollment among the reasons. The probation was extended until November 2024 when HLC will determine the status. Eastern Gateway maintains its accreditation.

The college’s Free College Benefit Program ended after the fall 2023 semester as part of a settlement with USDOE. In 2022, the USDOE ordered the college to stop the program as part of a federal financial aid program review.

The education department alleged that the college was charging students who received Pell grants more than those who didn’t.

Eastern Gateway enrollment swelled to about 40,000 during the free college program, up from about 5,000 students just a few years before. For fall 2023, enrollment dropped to 15,300, and the college expects about 9,000 students for spring 2024, the semester that started Monday.

Eastern Gateway Sued

In 2022, Student Resource Center, the company with which Eastern Gateway contracted for its free college for union and professional association members, sued the college in the U.S. District Court for the Southern District of Ohio. 

It charges that the college breached the collaborative agreement between the two entities. Eastern Gateway in May 2022 alleged that SRC breached the agreement when it removed Michael Perik as its chief executive officer and replaced him.

In its lawsuit, the company said Perik and others at the company “were replaced because they engaged in fraudulent conduct, including making several false representations regarding EGCC’s accreditation status.”

The lawsuit alleges that the college had failed to pay the company money it is owed under the collaborative agreement.

In a lawsuit filed in U.S. District Court in Delaware, Sterling Small Market Fund and SRC Intermediate Holdings Inc. sued Perik and other former SRC executives. 

The two companies that filed the suit in Delaware entered into an agreement with SRC in June 2021 to buy SRC. The purchase price was $120 million.

The lawsuit says the former SRC executives made false statements regarding Eastern Gateway accreditation and then “engaged in a monthslong cover-up scheme after the parties entered the purchase agreement.”

It says that at multiple meetings and follow-up calls, “Sterling representatives asked Defendants about the status of EGCC’s accreditation and whether Defendants knew about or had seen any reports” from the HLC regarding a midcycle review that was underway.

The defendants said they were unaware of any Eastern Gateway accreditation issues. The lawsuit says the two companies that bought SRC later discovered that those statements were “knowingly false.”

Eastern Gateway was placed on probation in November 2021.

“That EGCC had, and continues to have, accreditation issues is a significant operational and financial hardship,” the lawsuit said. 

The probationary status of Eastern Gateway has and will continue to “cause the Company to suffer significant revenue loss and material reputational harm …”

Copyright 2024 The Business Journal, Youngstown, Ohio.