Going on to higher education can be quite pricey, so the need for student loans is pretty common. But what about when you start applying for upwards of 90 student loans in the time span of four years? Better yet – what about when you apply for 90 student loans in four years when you’re not even attending college? The broke and unemployed college student takes a new twist in today’s Fraud of the Day from The Trentonian, where a 25-year-old New Jersey woman tried to pass herself off as a full-time college student between 2003 and 2007 to receive fraudulent student loans.
The article reports that beginning in December 2003, the New Jersey woman began filling out applications for financial assistance. In total, she applied for $1.7 million in student loans, and actually received more than $192,000 in assistance through 17 loans. (More than 10% not too bad!) She filed the applications under her name and those of family members, along with the correct social security numbers and dates of birth, all of which she used without permission. (They must all be really close after this.)
At the very least though, this fraudster had some time on her hands and put some real effort into this. She drafted up fake college enrollment letters and paystubs in addition to the work she put into her supposed ‘co-borrower’ information where she made up falsified biographical data, employment data, financial information and even tax forms. (Was any of the co-borrower info checked? If so, how did she get the loan?) The only thing this fraudster didn’t seem to forge was her address – which she used so the loans would go directly to her. (Hasn’t she heard of direct deposit? Fraudsters hate to be inconvenienced.)
Recently, she pleaded guilty to one count of mail fraud, two counts of tax evasion and one count of aggravated identity theft. She was sentenced to 61 months in prison. In addition, once she serves her time in jail, she must undergo five years of supervised release and pay compensation of $136,403. (What?? Look above. She received $192,000. Why is she only repaying $136,403?? Is the difference a reward for taking advantage of the system?? It’s like being paid to rob the government.)
This case offers a prime example of how a fraudster exploited the system by – in many instances – using fake data. At the same time, it points out exactly how much of the fraud could have been prevented: by cross-checking the identity of the applicant against a broader set of data, such as public records. While student loan fraud is the type of fraud perpetrated here, the solution to the problem – use of public records to see a fuller picture of the benefit applicant – is a valuable approach to enhancing existing systems for fraud detection. So, the question for the day is: does your agency have a holistic view of its benefit applicants?