The bankrupt Drake Business School, which shut its doors in June after its president was shot amid a brewing financial scandal, wrongly received more than $4.8 million in state funding for its students, a new audit shows.

According to the audit released yesterday by state Comptroller Alan Hevesi, the Drake School incorrectly certified hundreds of students as eligible for Tuition Assistance Program grants and received $4,839,675 for which it was not eligible.

Mr. Hevesi recommended that the Higher Education Services Corporation – the agency that administers TAP grants – recover the money and applicable interest from Drake.

That could be difficult. The business school chain has scant assets, if any at all, since crumbling into bankruptcy and abruptly closing on June 1.

Ronald Kermani, a spokesman for the Higher Education Services Corporation, said his agency is working with the comptroller’s office and the state Department of Education to recover the money.

“We are making every effort to recover the money through bankruptcy court and we’re doing everything we can to protect the taxpayers’ interest in this case,” Mr. Kermani said.

Although Drake’s financial troubles were widely known, including an auditor’s write-off of up to $4 million in assets for the 2003 fiscal year, the comptroller’s audit provides a microscopic glimpse at how poorly the school was managed.

Of 116 TAP grants received by Drake examined by state auditors, 102 were disallowed for not meeting state requirements.

Seventy-two of the students who received the grants were not attending Drake full-time, 27 received more money than they should have, and nine students were not matriculated at all, according to the audit.

Based on their findings, state auditors disallowed almost 88% of the 3,026 TAP grants awarded to Drake students between June 30, 1998, and June 30, 2001.The grants totaled more than $5.8 million.

To put the Drake audit in perspective, the state comptroller’s office disallowed $2.25 million in TAP grants at 11 institutions over all of last year.

A press release issued by the comptroller said the Drake School disallowance is by far the largest for a single education institution identified by state auditors in recent memory.

At the time the school closed, it had about 1,000 students, each paying an average of $15,000 in tuition.

The school’s president and chief executive officer, David Cary Hart, who was seriously wounded when he was shot in May at a subway entrance in Queens near the school’s Astoria campus, could not be reached yesterday.

Mr. Hart, who was the chief executive at Drake for just three months, reportedly uncovered sweeping financial mismanagement before he was shot. There has been no arrest in the case.