oversight

Lead Defendant Pleads Guilty to 10 Felonies in $500,000 Financial Aid Fraud Scheme. Phoenix, AZ., January 13, 2010

Published by the Department of Education, Office of Inspector General on 2010-01-13.

Below is a raw (and likely hideous) rendition of the original report.

OIG Investigative Reports,  Phoenix, AZ-January 13, 2010 - Lead Defendent Pleads Guilty to 10 Felonies in  $500,000 Financial Aid Fraud Scheme
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Investigation Report
FOR IMMEDIATE RELEASE:
Wednesday,January 13, 2010
Office of the United States Attorney
District of Arizona
Public Affairs
SANDY RAYNOR
Telephone: (602) 514-7625
Cell: (602) 525-2681
LEAD DEFENDANT PLEADS GUILTY TO 10 FELONIES IN $500,000 FINANCIAL AID FRAUD SCHEME
23 of 65 defendants have been sentenced to date
PHOENIX - Trenda Lynn Halton, 38, of Peoria, Ariz., pleaded guilty yesterday to one count
of Conspiracy, two counts of Mail Fraud and seven counts of Financial Aid Fraud before U.S. District
Judge Neil V. Wake in federal district court in Phoenix. Currently, 23 of the 65 defendants charged
in the 130-count indictment have been sentenced to related charges and ordered to pay a total of
$212,013 to the U.S. Department of Education. Halton remains released from custody pending
sentencing set for March 29, 2010.
Twenty-seven defendants are pending sentencing and 14 defendants are pending trial in this
case. The final defendant is currently in custody in another jurisdiction and is expected to appear in
federal court in the near future. Trial for all remaining defendants is currently set for February 2,
2010, before Judge Wake.
“The results of this case represent the diligent and thorough investigative work by the U.S.
Postal Inspection Service and the Department of Education,” stated U.S. Attorney Dennis K. Burke.
“It is our mandate to protect tax payer dollars from being illegally obtained through these types of
criminal schemes.”
“The U.S. Postal Inspection Service uses the Mail Fraud Statute, one the nation’s oldest and
most effective consumer protection laws, to protect the American public against fraud,” said Pete
Zegarac, Phoenix Division Inspector in Charge. “Working in conjunction with our law enforcement
partners, the Mail Fraud Statute was used successfully to bring to justice Ms. Halton and 64 other
defendants in this investigation.”
In the course of her guilty plea, Halton admitted that from July 4, 2006, through October 30,
2007, she recruited individuals to act as “straw students” in order to apply for federal financial aid,
in the form of Stafford Loans and Pell Grants, with Halton’s assistance at Rio Salado Community
College. The applicants were neither active students at Rio Salado nor did they intend to become
active students. Halton also worked with at least three of those charged to recruit additional
individuals to fraudulently apply for, and receive, student financial aid through Rio Salado. Halton
admitted that she also assisted 61 additional straw students who participated in the scheme. As part
of her plea agreement, Halton agreed to repay $581,060.29, which includes any unlawfully and
lawfully obtained Stafford Loans, interest on the loans up to July 23, 2009, and Pell Grant funds,
obtained by her and all of her co-defendants.
“I want to commend OIG Special Agents and our partners in law enforcement whose actions
brought about today's action. I would also like to thank the staff of the school for promptly referring
this matter to our office,” said Mary Mitchelson, acting Inspector General of the U.S. Department of
Education. “Ms. Halton nor the 64 individuals who followed her lead thought they would get
caught. All of them were wrong. We will to continue to work with our colleagues to aggressively
pursue anyone who steals student financial aid.”
Halton admitted that she maintained a system of documents and handwritten records that
contained personal information for approximately 136 straw students and potential straw students in
furtherance of the scheme. The extensive database included items such as dates of birth, Social
Security numbers, drivers license numbers, fictitious and valid wage tax statements, tax returns, tax
transcripts, fictitious and valid high school diplomas and Rio Salado Financial Aid applications.
Halton admitted that she had completed and submitted Rio Salado admission and financial aid
applications containing forged and false statements for at least 64 financial aid applicants.
Halton admitted that she charged a “fee” to straw students ranging from $500 to $1,500. She
also accessed Rio Salado online classes, assuming the identity of the various straw students, in order
to generate records of the straw students’ “participation” in online classes and cause Rio Salado to
authorize financial aid payments to the straw students. During the period of the conspiracy and
scheme, Halton admitted that she and her 64 co-defendants unlawfully caused federally insured loans
and grants to be disbursed to unqualified straw students totaling approximately $538,932.
A conviction for a count of Conspiracy carries a maximum penalty of five years in federal
prison, a $250,000 fine or both. Each conviction for Financial Aid Fraud carries a maximum penalty
of five years in federal prison, a $20,000 fine or both. Each conviction for Mail Fraud carries a
maximum penalty of 20 years, a $250,000 fine or both. In determining an actual sentence, U.S.
District Court Judge Neil V. Wake will consult the U.S. Sentencing Guidelines, which provide
appropriate sentencing ranges. The judge, however, is not bound by those guidelines in determining
a sentence.
An indictment is simply the method by which a person is charged with criminal activity and
raises no inference of guilt. An individual is presumed innocent until competent evidence is presented
to a jury that establishes guilt beyond a reasonable doubt.
The investigation preceding the indictment was conducted by the U.S. Postal Inspection
Service and the U.S. Department of Education, Office of Inspector General, with assistance from the
Surprise Police Department. The prosecution is being handled by Frederick A. Battista and Charles
W. Galbraith, Assistant U.S. Attorneys, District of Arizona, Phoenix.
CASE NUMBER: CR-09-737-PHX-NVW
RELEASE NUMBER: 2010-007(Halton et al)
# # #
For more information on the U.S. Attorney’s Office, District of Arizona, visit http://www.usdoj.gov/usao/az/
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Last Modified: 01/14/2010
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