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21 Indicted for Scamming Federal Student Aid Money

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(Sacramento, CA)
Tuesday, September 18, 2012

The indictments say the defendants organized groups of people to sign up for classes, paid tuition, and then pocketed the remaining financial aid intended for books and lodging.   

Six fraud rings are charged with taking $870,000 in taxpayer-funded aid. 

The U.S. Attorney for the Eastern District is Benjamin Wagner.  He says 17 online schools and community colleges made for easy targets, "When people sign up for online programs they're not there in person. There's very little or no direct face-to-face contact between the institution of  higher education and the student who is applying."

The Inspector General's office at the U.S. Department of Education says it has been urging schools to do a better job screening their students.  Though several schools failed in that regard, investigators are crediting them for discovering the fraud after the fact. 

The indictments say the University of Phoenix, and community colleges in San Diego, Santa Barbara, Modesto, and Sacramento were among those victimized. 
In the Sacramento Region, Sacramento City, American River, and San Joaquin Delta College all are listed by the U.S. Attorney's office as schools that gave aid to people not going to class.
The Department of Education's Inspector General's Office says in the last five years nationwide, there have been successful prosecutions of financial aid fraud totaling $8 million.  
U.S. Attorney Wagner says this investigation is not over.  He expects more conspirators to be indicted soon.
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