Investigating Student Aid Fraud
FBI Plays Supporting Role
It’s a yearly spring ritual: college-bound students, young and old, applying online for much-needed federal student aid in the form of grants or loans.
Unfortunately, a few unscrupulous individuals view Title IV Federal Student Assistance funding as a way to line their own pockets—not to get an education. According to a recent assessment by the U.S. Department of Education’s Office of Inspector General, the number of aid recipients potentially taking part in criminal fraud rings is increasing.
And while the FBI doesn’t generally become involved these cases because of our necessary focus on counterterrorism, cyber crime, and other national security and major criminal threats, we do—as resources allow—assist our partners at the Department of Education and other agencies in rooting out some of the more egregious offenders. The Bureau brings to the table the same investigative methods and techniques we’ve used so successfully against criminals who commit other types of government fraud.
Why the increase in student aid fraud? For one, there are more online higher education opportunities—a single criminal participant can create multiple online student identities and apply for aid in each name. Another reason is the growing popularity of open access, lower-cost schools—like community colleges—where perpetrators can get back a larger percentage of a financial aid award in the form of excess Title IV funds (once the school applies the funds to tuition, anything left over is remitted directly to the “student” to use on related educational expenses like books, supplies, transportation, living costs, etc.).
It’s not just the theft of millions of dollars of taxpayer money, though. Criminals committing federal student aid fraud are stealing enrollment slots from legitimate students and depriving qualified students of the Title IV funds they need. Those grants and loans sometimes make the difference between attending school and not attending school.
But the government and the higher education community are fighting back.
Recently, four people in Montgomery, Alabama were sentenced in federal courtfor their roles in a conspiracy to defraud the Department of Education and various colleges and universities of financial aid money. And just a week earlier, three defendants pled guilty to a federal student aid fraud scheme in San Francisco. The Bureau was involved in both cases. (See sidebar for more information.)
Over the past several years, we’ve played a supporting role in a handful of other student aid fraud cases as well. For example:
- A Baltimore-area school test proctor and an admissions officer pled guilty in a scheme to manipulate test scores of students who were taking assessment exams to qualify for federal grants.
- A former inmate at a South Carolina prison pled guilty to applying for federal student aid using the identities of some of her fellow inmates.
- A San Diego college paid a civil settlement and its financial aid director pled guilty in connection with a scheme to submit falsified financial aid applications to obtain grants for students who were not eligible to receive them.
Investigative entities will continue to identify and bring to justice those who commit federal student aid fraud. And the Department of Education and colleges and universities will continue to put protections in place that make it harder to perpetrate these crimes.
Both actions will help ensure that federal student aid for higher education ends up in the hands of those who need and deserve it the most.
Two Recent Case Examples
A Montgomery, Alabama case began for the FBI when the Department of Education’s Office of Inspector General—which had already opened an investigation into allegations of fraud—requested Bureau assistance in the matter. Working with their investigators, we were able to gather evidence of a conspiracy headed by Bobbie Jean Chilsom, Shawn A. Johnson, and Sharon Johnson that ultimately defrauded the Department of Education and the involved schools of more than $3 million.
From 2008 to 2012, these three individuals—along with 10 others they recruited as “straw students”—first applied for enrollment at various educational institutions using fraudulent high school diplomas or phony GED certificates and then applied online for federal student aid. The financial aid would be sent to the appropriate school of enrollment, which would then credit it to the student’s account. If the amount of financial aid exceeded the cost of tuition, the school would issue the remaining balance to the student—which was supposed to be used for education-related needs, such as books, supplies, transportation, and living expenses. But those excess funds were not used for educational purposes—most of these students didn’t attend school at all or attended minimally. The money, shared by the straw students and the conspiracy leaders, was used for personal purchases. More on the case
A San Francisco case, handled out of our Oakland Resident Agency, was similar. From mid-2007 until early 2011, Kyle Edward Moore, Corto Detrice Wade, and Marcel Devon Bridges recruited third parties—with the promise of financial compensation—to serve as straw students. Moore and others would help these “students” apply online for school admission and then assist them in preparing, signing, and transmitting fraudulent financial aid forms to the Department of Education.
Moore and his co-conspirators knew that many of these straw students weren’t eligible to obtain federal aid because they didn’t graduate from high school and/or they had no intention of attending college.