oversight

64 Defendants Sentenced in $500,000 Financial AID Fraud Scheme. Phoenix, AZ 09/01/2010

Published by the Department of Education, Office of Inspector General on 2010-09-01.

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

OIG Investigative Reports, Phoenix, AZ- September 1, 2010 - 64 Defendants Sentenced in $500,000 Financial AID Fraud Scheme
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United States Attorney
District of Arizona
FOR IMMEDIATE RELEASE
September 1, 2010
For Information Contact Public Affairs
WYN HORNBUCKLE
Telephone: (602) 514-7573
Cell: (602) 740-2422
64 DEFENDANTS SENTENCED IN $500,000 FINANCIAL AID FRAUD SCHEME
PHOENIX - All 64 defendants have been sentenced for their roles in a massive scheme to
defraud the United States out of more than a half-million dollars in student loan funds. The case,
known as United States v. Halton et. al., saw each of the 64 defendants plead guilty to charges
including Conspiracy, Mail Fraud, Financial Aid Fraud, Theft of Government Funds and/or False
Statements in Connection with Financial Aid. The final defendant was sentenced on Monday by U.S.
District Judge Neil Wake to a term of home detention and ordered to pay $15,295 in restitution.
“Student loans are scarce resources for serious students, not a honey pot for dishonest people,”
said U.S. Attorney Dennis K. Burke. “These 64 convictions – the largest number of defendants ever
charged in a student loan fraud scheme -- should serve as a strong warning to anyone attempting to
defraud the U.S. taxpayers. You will be caught, held accountable and prosecuted.”
The ringleader of the scheme, Trenda Halton, previously plead guilty to ten counts including
Conspiracy, Mail Fraud and Financial Aid Fraud. She was sentenced to 41 months in prison and
ordered to pay $581,060 in restitution. In sentencing Halton, Judge Wake said, “This was just fraud
and dishonesty for greed.” Judge Wake then went on to state, “People who engage in this kind of
serious, extensive, costly abuse need to have a public punishment so the other people will see that and
not be tempted to make the same decision for themselves.”
From July 2006 through October 2007, Halton and others recruited individuals to act as
“straw students” in order to apply for federal financial aid at Rio Salado College. The applicants were
neither active students at Rio Salado nor did they intend to become active students. Halton would
submit admission and financial aid applications with forged and false information, and then charge
a “fee” to straw students ranging from $500 to $1,500. She also accessed online classes using the
identity of the straw students, to generate attendance records, which caused Rio Salado to authorize
financial aid payments to the straw students.
This investigation was conducted by IRS Criminal Investigation, Social Security
Administration- OIG, Department of Veteranˆs Affairs – OIG, and the Department of Education
– OIG. Assistant U. S. Attorney Michael D. Johnson is prosecuting this case for the United
States.
“This case is an example of how we aggressively pursue anyone who steals or fraudulently
obtains federal student aid,” said Natalie Forbort, Special Agent in Charge of the U.S. Department
of Education Office of Inspector General's Western Regional Office. “I want to commend all of the
federal and state law enforcement agents and the U.S. Attorney Office, whose combined efforts
ensured that all of the individuals that participated in this scheme were identified and prosecuted
for the role they played. I also want to thank the staff at Rio Salado Community College for their
diligence in reporting their initial suspicions to us.”
“Traditional mail fraud schemes rebound as criminals turn to the Internet to operate illegal
schemes on a larger scale and with greater anonymity,” said Phoenix Division Acting Inspector in
Charge Terry Donnelly of the U.S. Postal Inspection Service. “Government agencies that fall prey
to mail fraud scams are afforded the same protection under the Mail Fraud Statute as any
citizen. Postal Inspectors will continue working with our law enforcement partners to leverage
resources and maximize the expertise of each agency.”
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 was handled by Frederick A. Battista and
Charles W. Galbraith, Assistant U.S. Attorneys, District of Arizona, Phoenix.
RELEASE NUMBER: 2010-192(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: 09/02/2010
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