• October 25, 2014

In Crackdown, 17 Are Charged in Student-Aid Fraud Schemes

Prosecutors have charged 17 people in California over the past several weeks for their alleged involvement in six separate student-aid fraud rings, federal officials announced on Tuesday.

The U.S. attorney in Sacramento, Benjamin B. Wagner, said that the defendants collectively had defrauded the federal government of more than $770,000 in financial aid. Earlier this year, Mr. Wagner's office brought charges against another fraud ring that involved four people and more than $200,000 in disbursed financial aid.

Prosecutors said the leaders of the fraud schemes took advantage of mostly online educational programs at community colleges, and allegedly used a range of tactics to obtain the funds. Some applied for financial aid under stolen identities or in the names of prison inmates. In one case, the defendants recruited more than 50 people who pretended to be students and applied for aid so they could enroll in courses they had no intention of completing, according to prosecutors.

The Department of Education's Office of Inspector General began investigating the cases before referring them to federal prosecutors in California. The department does not publicly discuss how it finds out about instances of fraud, a spokeswoman said.

The crackdown came as financial-aid administrators and Education Department officials have increasingly focused on such aid fraud, especially at distance-learning programs.

In response to a report by its inspector general and calls from lawmakers, the department in April formed a panel to draft new federal student-aid regulations aimed at cracking down on fraud.

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