Quick Study

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While the Department of Education distributes around $150 billion in student financial aid on an annual basis, tens of millions of dollars go to fraudsters who apply for student aid using stolen identities. (To say that is a lot of money is an understatement.) A Danville, Virginia man committed identity theft and student loan fraud by enrolling dozens of unsuspecting individuals (including people he knew well) in online universities for his own financial gain. As you will see, he was subsequently taught an important lesson about what happens when you get caught for carrying out these types of illegal acts.

The Danville, Virginia man launched his student loan fraud scam by using the personal information of family members and friends. (I’m guessing he has some strained relationships with his kith and kin now. And, he probably doesn’t have any friends left either.) The deceptive Danville man created fake student profiles and enrolled them with eight online universities including Strayer University, Capella University, Post University, the University of Phoenix, Derry University, Kaplan University, Argosy University and Liberty University. (That’s so he could obtain federal student loans in their names.) Obviously, the students did not complete the courses, were given a failing grade or they were withdrawn from the program after the loan funds had been disbursed.

The U.S. Free Application for Federal Student Aid (FAFSA®) program is particularly vulnerable to fraud because the thieves that carry out student loan fraud scams do not have to physically visit a registrar’s office or classroom. Also, the FAFSA system does not require a credit check. Once financial aid is approved, the university gets the money, then subtracts tuition and fees. The remaining funds are disbursed to the registered student to cover living expenses. (Identity thieves typically cash in the checks from the Department of Education and stiff their victims with the bill for the loan.) Many victims don’t find out until they try to apply for a loan or run a credit check. (Surprise! You owe thousands of dollars for an education you didn’t receive.)

When the fraudster ran out of victims from within his personal circle, he posed as a higher education employee and went on to scam low-income residents. He claimed that if they provided their personal information for enrollment, they would receive free government money and other benefits. (Wouldn’t that be nice? Alas, if it were only true.) In total, the Danville man defrauded more than 60 individuals through his scam, causing a loss of more than $1.4 million to the Department of Education and the online universities.

The 31-year-old Danville, Virginia man pleaded guilty to wire fraud, student loan fraud and aggravated identity theft. The fraudster received some important instructions from the judge – he must serve nine years and three months in federal prison and pay restitution of more than $41.1 million to the Department of Education and to the eight universities. (Too bad he didn’t have to reimburse his victims for the hardships he caused them.)

To avoid becoming a victim of student loan fraud, become a quick study and check out this Department of Education Federal Student Aid website. If you suspect fraud, waste, abuse, mismanagement, or violations of laws and regulations, visit this website to submit a report.

Today’s “Fraud of the Day” is based on an article entitled, “Man sentenced to prison for student loan fraud,” posted on CBS19News.com on March 7, 2019.

DANVILLE, Va. (CBS19 NEWS) –A man from Danville has been sentenced to prison for fraudulently enrolling people in online universities for his own personal financial gain.

Thirty-year-old Tyrone Dwayne Young was sentenced to nine years and three months in federal prison for student loan fraud, wire fraud and identity theft.

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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.