A Lesson in Trades

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Okay, students… take out your paper and pens – it’s time to take notes. Now, when you plan on committing student loan fraud, there are a few things you should know. But, the golden rule is this? don’t get caught. According to a Tuscaloosa News article, one Alabama woman broke that rule and is now dealing with the consequences.

The application process for students is often a stressful experience, especially when their identities are being fraudulently used by another individual to obtain student loans or financial aid. An Alabama resident, posing as a recruiter for a private university, used the identities (i.e., names, Social Security numbers and related information) of prospective students to apply for the Pell Grant and Federal Direct Student Loan money. (Lesson number one – don’t pose as a recruiter. The students will probably continue to contact you.? The woman obtained the personal information from the individuals themselves, filling out their applications, yet neglecting to tell them that they were accepted to the school. (Lesson number two – don’t lie to the students. Or, at least be more convincing about it.)

An investigation uncovered that the woman obtained $3,182 in federal aid money, which was directed to the university to pay for tuition. In addition, court documents state she accepted $15,232 in aid put on debit cards in the students’ names and then had them sent directly to her address. (Lesson number three – don’t send the cards to your own address. It leads the Feds right to your door.? The investigation led to a local convenience store, where video surveillance tapes show the fraudster using the debit cards in the names of the students to make small purchases, receive cash back and use that cash to purchase gift cards. The recruiter-want-to-be pleaded guilty in April 2012. She received a sentence of two years and eight months in prison and is required to pay restitution in the amount of $18,414.

There is a lesson to be learned in the form of trading – when committing fraud, you may think that trading the illegal funds for cash and gift cards is a good way to cover your tracks. In reality, you will just be trading freedom for life behind bars. Now, that’s a lesson in trade.

Source: Today’s ”Fraud of the Day” is based on an article titled, ”Tuscaloosa Woman Sentenced for Loan Fraud,” published by the Tuscaloosa News on January 9, 2013.

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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.