Education Misrepresentation

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There are fraudsters in every industry, and that includes the growing for-profit education market. The Times of India has reported a case in which the managers of a few for-profit universities exploited both recipients of domestic student financial aid and those with international student visas, to collect almost $9 million in fraudulent funding.

The report tells of a group of greedy executives, who all happen to be related to one another, operating two for-profit higher education institutions with multiple campuses in New York and New Jersey. They were arrested in May 2014 for stealing $1 million in education grant funding from the U.S. Department of Education; money that was allocated for domestic students with an ongoing financial need. The executives intentionally falsified required documentation that discloses to financial aid providers when there is a change of status for a student, so that they could continue collecting financial aid for university drop-outs. (Probably keeping their enrollment numbers propped up in the process.) But these scamming schools didn’t stop there: They also took advantage of international study opportunities to collect an additional $7.4 million by fraudulently billing student visa programs.

For international students to retain U.S. student visas, they must demonstrate that they are actively enrolled in a full course load at a ”bona fide” American school. However, these executives inaccurately reported the course loads carried by their international students, who, for unexplained reasons, demonstrated delinquent attendance for the number of classes required by the U.S. Department of Immigration to maintain a visa. When one of the schools would come under investigation for misrepresenting its international students, it quietly transferred those students to a different campus and continued the scam. (As if that’s not at all disruptive to a quality education.)

Ultimately, an extensive probe by U.S. federal agencies, including the Immigration and Customs Enforcement’s Homeland Security Investigation unit, the State Department’s Diplomatic Security Service and the Education Department’s Office of the Inspector General, uncovered this elaborate student financial aid and visa fraud scheme. Tried by the U.S. Attorney General’s Office, two of the defendants each were sentenced to one year plus one day in prison; another received six months of house arrest. Additionally, all three were ordered to turn over to the U.S. Education Department $7,440,000 in fraudulent student visa proceeds and pay the agency $1 million in restitution for the stolen student financial aid.

Stealing from a finite supply of financial aid money decreases the number of low-income students, for whom a solid education can make a significant difference. Moreover, lying to the U.S. government about the status of foreign nationals presents a whole slew of immigration missteps as well. Let this be a lesson to other for-profit schools, that the federal government takes the exploitation of students incredibly seriously.

Source: Today’s ”Fraud of the Day” is based on ”3 Indian-Americans sentenced for student visa fraud,” published by The Times of India on January 29, 2016.

NEW YORK: Three Indian-Americans have been sentenced by a US court to terms ranging from six months of home confinement to to an year in jail for involvement in a USD 7-million student visa fraud scheme.

The Manhattan court sentenced Suresh Hiranandaney, Lalit Chabria and Anita Chabria — all relatives — in the over $7.4-million fraud.

US district judge Paul Oetken sentenced Hiranandaney and Chabria to one year and a day in prison, while Anita was sentenced to six months of home confinement.

The three were also found guilty of having roles in a student financial-aid fraud scheme in which they defrauded the Department of Education of $1 million in grant funds.

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Larry Benson
Larry Benson is currently the Director of Strategic Alliances for Revenue Discovery and Recovery at LexisNexis Risk Solutions. In this role, Benson is responsible for developing partnerships for the tax and revenue and child support enforcement verticals. He focuses on embedded companies that have a need for third-party analytics to enhance their current offerings.