Pay-to-Stay Scheme

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Social security card and resident alien card. Green card american dream concept

Fraudsters typically steal from government programs by lying on official documents or paying kickbacks for benefits. In the case of immigration fraud, fraudsters find people willing to pay to prevent deportation or prison. Today, we look at a “pay-to-stay” scheme in Detroit where about 600 foreign students were lured to enroll in a university that never had any classes.

A Kentucky man is the latest of at least eight people to plead guilty for accepting thousands of dollars from immigrants in a fake college scheme. The plot twist in this case is that the scheme was created by the government. (An undercover sting operation for sure.)

Phanideep Karnati, 35, of Louisville, was sentenced in January to six months in federal prison for collecting money from immigrants who enrolled in a fake university in Detroit that was created by the Department of Homeland Security’s U.S. Immigration and Customs Enforcement, or ICE, in 2015.

Karnati and the other seven, all immigrants from India, accepted thousands of dollars –$250,000 total—from other immigrants to enroll in the “University of Farmington,” which ICE officials said was created to bust a “pay-to-stay” scheme of immigrants trying to overstay their student visas. (Prosecutors said the “recruiters” were aware that the university was not real and were trying to cash in on the students’ desire to stay in the U.S. illegally.) The prison sentences range from six months to two years in federal prison, and they will be deported after their release, according to plea agreements.

While the fake university supposedly located in Michigan is controversial, the point here is that it is illegal for the “recruiters” to profit off immigrants trying to stay in the country illegally. (Unfortunately for this recruiter, he will not be able to pay to stay out of jail.)

Today’s Fraud of the Day comes from the article, “Kentucky Man Sentenced in Phony School Immigration Scheme,” published Jan. 29, 2020 by the Associated Press.

 DETROIT (AP) — A Louisville, Kentucky, man will spend six months in federal prison for his role in recruiting dozens of foreign-born students to attend a phony school in suburban Detroit so they could remain in the U.S.

Phanideep Karnati, 36, was sentenced Wednesday in federal court, according to The Detroit News. Seven other people have pleaded guilty and sentenced in the immigration fraud scheme.

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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.