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U.S. Department of Education Office of Inspector General. PREVENTING FSA FRAUD Chance Jones Special Agent Nashville Field Office. OIG MISSION STATEMENT.
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PREVENTING FSA FRAUD
Nashville Field Office
To promote the efficiency, effectiveness, and integrity of the Department's programs and operations, we conduct independent and objective audits, investigations, inspections, and other activities.
“There is no kind of dishonesty into which otherwise good people more easily and frequently fall than that of defrauding the government.”
Lying, cheating, or stealing.
The usual Internet attack tools
Phishing, Spam, etc…
Vices such as substance abuse and gambling.
Extravagant purchases or lifestyle.
Lack of documents (the ‘big flood’ destroyed…)
Common Addresses (mailing, email, and IP)
Pin number and password information the same.
Personal information that does not fit the norm.
Bank information that is the same.
You may have the missing piece of the puzzle we need!
Conspiracy and Aggravated Identity Theft Case
Brian Salyer was sentenced to 45 months incarnation and 3 years supervised release for one count of aggravated identity theft and 1 count of conspiracy to commit fraud. Miranda Salyer was sentenced to 4 months incarceration and 3 years supervised release for 1 count of conspiracy to commit fraud.
The Salyer’s submitted 15 fraudulent student loan applications, for which, they received approximately $173,668. Additionally, the Salyer’s forged Miranda Salyer’s grandfather’s signature on several promissory notes. The court ordered the Salyer’s to each pay $103,227 in restitution, for a total of $206,454.
“Falsified ATB” and “Failure to Make” Refund Case
The three former owners of the Moler Beauty College (MBC), located in Louisiana, were sentenced and fined for conspiracy to commit student financial aid fraud. Our investigation disclosed that the three owners, along with a financial aid administrator and a contracted Ability-To-Benefit (ATB) tester, engaged in a scheme to fraudulently obtain Title IV funds by falsifying student and school records. MBC officials also engaged in a scheme to prevent the return of Title IV funds to the Department. The owners received prison sentences ranging from 12 to 27 months, and were ordered to jointly pay over $164,000 in restitution to the Department.
Former assistant registrar at Southern University sentenced.Cleo Carroll, former Assistant Registrar at Southern University (SU), Baton Rouge, LA was sentenced to 5 months in a halfway house, 5 months home confinement, 5 years probation, a $3,000 fine and a $100 special assessment fee for his role in the grade-buying scheme at SU. Carroll pled guilty to bribery concerning programs receiving federal funds. Carroll, a 30-year SU employee, made fraudulent grade changes and additions. Carroll manipulated SU’s student records system to alter academic transcripts and manually created transcripts using blank transcript paper in exchange for compensation.OIG Investigation Results
Financial Aid Director Sentenced. Magda Jules, former financial aid director of Long Technical College plead guilty to financial aid fraud. She was sentenced to 4 month incarceration, 36 months probation, and ordered to pay $39,641 in restitution. Jules increased student loan amounts, intercepted the student loan checks, forged student signatures and negotiated the student loan checks.OIG Investigation Results
Former collection agency owner sentenced to prison.Robert Hazlett, the former CEO of a collection agency, Valley Acceptance Corporation, was sentenced to 8 months in prison, to be followed by 36 months of supervised release, and ordered to pay restitution of $744,376. Hazlettconspired with four of his employees to submit 537 applications for consolidated education loans that contained fraudulent information and misrepresentations in order to generate over $1 million in commissions for the company.OIG Investigation Results
The former financial aid director of the Troy School of Beauty Culture (TSB), located in New York, was sentenced to 18 months in jail and two years of supervised release for embezzlement. Our investigation disclosed that the former director embezzled over $410,000 in Pell Grant funds over a four-year period. The former director used the identities of at least 25 individuals, including a co-worker, to substantiate draw downs of funds into the TSB Pell Grant account. The former director then wrote checks to “cash” and converted them for personal use.
Co-conspirator pled guilty to conspiracy. Jason Justice, supplied the identification information for at least fourteen inmates incarcerated at the Pulaski Correctional Unit in Dublin, VA to his mother and his sister. They fraudulently enrolled the inmates in Internet distance learning programs at Ivy Tech State College and Owen Community College to obtain student aid refund checks. They also used the information to fabricate and file false income tax refunds.OIG Investigation Results
Former DC Public School Teacher Pleads Guilty to Student Loan Fraud, Social Security Fraud, and False Statements. Deloris LaVelle Ennis plead guilty to Student Loan Fraud, Social Security Fraud, and False Statements in a Bankruptcy Proceeding. ENNIS fraudulently obtained multiple Social Security Numbers and used those identifiers to obtain federally insured student loans to attend Bowie State University. Ennis fraudulently obtained over $94,000 in federally insured student loans. Ennis also filed for bankruptcy using a fraudulently obtained Social Security Number.
OMB Guidance on ARRA Accountability and Reporting Requirements:
Mandatory Reporting to the Inspectors General
Agencies must include in all grants “the requirement that each grantee or sub-grantee awarded funds made available under the Recovery Act shall promptly refer to an appropriate inspector general any credible evidence that a principal, employee, agent, contractor, sub-grantee, subcontractor, or other person has submitted a false claim under the False Claims Act or has committed a criminal or civil violation of laws pertaining to fraud, conflict of interest, bribery, gratuity, or similar misconduct involving those funds.”
Link to OIG’s Distance Education Fraud Ring Investigative Program Advisory Report (IPAR)
Information for Financial Aid Professionals (IFAP) website:
Dear Colleague Letter GEN-11-17:
On September 26, 2011, the Department’s IG issued a report about fraud rings operating on distance education programs offered by institutions participating in the Federal student aid programs. The IG’s report identified an increasing number of cases involving large, loosely affiliated groups of individuals (fraud rings) who conspire to defraud title IV programs through distance education programs. These fraud rings generally target institutions with low tuition in the context of distance education programs and involve a ringleader who:
Detecting fraud before funds have been disbursed is the best way to combat this crime. We therefore seek the help of institutions and advise that you take the following additional actions to identify and prevent the kind of student aid fraud identified in the IG’s report:
Implement automated protocols that monitor information in your student information data system to identify instances where a number of students –
Modify your disbursement rules for students participating exclusively in distance learning programs, which would immediately reduce the amount that fraud ring participants can receive. Institutions have the authority to:
School-based student aid fraud ring activity is a rapidly growing problem. The population of school-based recipients considered as potentially participating in this activity has increased 82 percent from award year (A Y) 2009 (18, 719 students) to A Y 2012 (34,007 students).
Over 85,000 recipients may have participated in this type of student aid fraud ring activity and received over $874 million in Federal student financial aid during this period.
It is estimated that $187 million of this $874 million in Title IV funds are probable fraud loss.
SA Chance Jones
Nashville Field Office