oversight

Ringleader of $500,000 Financial AID Fraud Scheme Sentenced to prison. 55 of 64 defendants have been sentenced to date. Phoenix, AZ., May 11, 2010

Published by the Department of Education, Office of Inspector General on 2010-05-11.

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

OIG Investigative Reports, Phoenix, AZ-Ringleader of $500,000 Financial AID Fraud Scheme Sentenced to prison. 55 of 64 defendants have been sentenced to date
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FOR IMMEDIATE RELEASE:
Tuesday, May 11, 2010
Office of the United States Attorney
District of Arizona
For Information Contact Public Affairs
WYN HORNBUCKLE
Telephone: (602) 514-7573
Cell: (602) 740-2422
RINGLEADER OF $500,000 FINANCIAL AID FRAUD SCHEME SENTENCED TO PRISON
55 of 64 defendants have been sentenced to date
PHOENIX - The ringleader of a half-million dollar student financial aid fraud conspiracy, Trenda Lynn Halton, 38, of Peoria, Ariz., was sentenced Monday to 41 months in prison, and ordered to pay $581,060 in restitution to the United States Department of Education and ordered to perform 100 hours of community service, by U.S. District Judge Neil V. Wake in federal district court in Phoenix.
On January 12, 2010, Halton pleaded guilty to one count of Conspiracy, two counts of Mail Fraud and seven counts of Financial Aid Fraud.  Currently, 55 of the 64 defendants charged in the original 130-count indictment have been sentenced to related charges and ordered to pay restitution for their individual roles in the scheme.  Twenty-one of the 64 defendants have been convicted of felony offenses.  Halton was ordered to self-surrender for service of her prison sentence on July 19, 2010.
Nine additional defendants are currently pending sentencing.  The last defendant who had been pending trial recently pleaded guilty before Judge Wake on April 30, 2010.
"Halton quarterbacked a network to steal taxpayer funds intended for real students actually studying," said U.S. Attorney Dennis K. Burke.  "Halton and her co-conspirators have been held accountable for this fraud due to outstanding investigative work by the Postal Inspection Service and the U.S. Department of Education, with invaluable assistance from Rio Salado College."
"Today's sentencing should serve as a strong deterrent to others who would misuse our nation's mail system to commit fraud," stated Phoenix Division Postal Inspector in Charge Pete Zegarac. "Our participation in this investigation underscores our agency's national commitment
In the course of her earlier 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 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.
"Let today's sentence serve as a warning: anyone participating in these types of fraud rings will be caught and prosecuted to the fullest extent of the law," said Kathleen S. Tighe, Inspector General of the U.S. Department of Education. "I'm proud of the work of OIG special agents and our law enforcement colleagues for their tireless efforts in holding Ms. Halton and all of the individuals that participated in this scam accountable for their unlawful actions."
While imposing the sentence, Judge Wake stated: "This was just fraud and dishonesty for greed." Judge Wake then went on to state: "So I believe this kind of a crime does require a statement to the community that says everyone else is out there trying to get an education to better themselves, and they are being honest with the government, with the college, with everyone, and people who engage in this kind of serious extensive costly abuse need have to a public punishment so the other people will see that and not be tempted to make the same decision for themselves."
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.
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 and Rio Salado College. The prosecution is being handled by Frederick A. Battista and Charles W. Galbraith, Assistant U.S. Attorneys, District of Arizona, Phoenix.
RELEASE NUMBER: 2010-092(Halton et al)
CASE NUMBER: CR-09-737-PHX-NVW
# # #
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: 05/12/2010
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