Feds bust financial aid fraud ring

Angelica Estacio

Dozens of students at Las Positas College and other Bay Area schools have lost their financial aid for reasons such as unsatisfactory academic progress, yet just over a dozen students were able to defraud the California financial aid system of more than $700,000 without even breaking a sweat. Without even attending a class.

On Sept. 18, an official press release from Benjamin B. Wagner’s (Eastern District of California Attorney) office stated that 17 people had been arrested. They were charged for being involved in six cases of defraud- ing financial aid assistance programs within the state.

Since the arrests federal officers have seized some $770,000 in stolen money.

The most recent arrests come on the heels of another financial aid scam that was busted by Wagner’s office. That bust led to the seizure of approximately $200,000. Four people were also arrested.

Wagner and Kathleen Tighe, Inspector General of the U.S. Department of Education Office said the fraud rings were operating in 15 schools throughout California. Las Positas College’s financial aid office was one of the preyed upon.

“The main reason we were targeted is that our Pell Grant recipients receive a fee waiver and do not have to pay enrollment fees; because of this [the fraud rings] receive nearly 100 percent of the funds,” said Andi Schreibman, LPC’s Financial Aid Officer.

Commentators and educational pundits who have been weighing in on financial aid issues in the media have said community colleges serve as perfect prey for fraud rings because the low tuition rates at these colleges leave plenty money from loans and grants to be spent on the side.

In addition to the Pell grants, direct student loan programs allow would-be college attendees to borrow up to $10,500 a year.

“Depending on each college’s practices, some colleges release loan funds at the beginning of school so these fraud students not only can get away with stealing a Pell grant, but also a student loan,” Schreibman added.

Wagner said the thieves had a very simple mode of opera- tion. They would enlist for classes like regular students, and drop out once they acquire the money. This process is made easier by distant learning programs such as online classes, because of the minimal interaction between students and schools.

“The defendants sometimes applied in their own names. But more often recruited straw students who had no intention of actually attending college,” Wagner said. He was quoted in the online news source, Huffington Post. The site said the group recruited as much as 50 accomplices to carry out their money making scheme.

“The participants in these fraud rings really see these schemes as a quick way to make easy money,” Tighe (OIG inspector general) said in the press release.

As a result of such schemes Las Positas College has been beefing up its in house measures being taken to guard against a repeat attack on the financial resources it procures for students. Instructors have been advised to promptly drop enrolled students when they do not show up for the first day of classes.

Additionally, the financial aid Office requires attendance and student progress verification for new students before approving loans. According to Schreibman, this helps filter out further potential fraud students from receiving loans. She said it is important for schools to be vigilant as the rings continue to grow.

“Federal student aid exists so that individuals can make their dream of a higher education a reality, not for criminals to use as a personal slush fund,” Tighe said in her statement.


Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out /  Change )

Google+ photo

You are commenting using your Google+ account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )


Connecting to %s

%d bloggers like this: