Four men charged in a diploma-mill operation that sold thousands of bogus college degrees in education, business, engineering, medicine, and theology pleaded guilty here last week to federal fraud charges.
The case is the latest in a series of prosecutions stemming from the a nationwide federal investigation agents called “Dipscam” (for diploma scam) that began in 1980. (See Education Week, May 25, 1983.)
According to Otho Allen Ezell Jr., special agent for the Federal Bureau of Investigation in Charlotte, the case is “the most sophisticated, has the most number of graduates, and grossed the most monies” of the seven fbi prosecutions to date.
In the latest case, Mr. Ezell said, some 3,000 degrees were sold for a total of more than $2 million.
For the first time in the Dipscam operation, the names of people who bought the phony degrees were released. About 2,225 names were entered into evidence last week in U.S. District Court here. (Records of the other degree recipients, Mr. Ezell said, were destroyed when the house of one of the defendants burned.)
Many of the undergraduate, graduate, and doctoral degrees were awarded in education.
fbi and Internal Revenue Service agents collected information on about 200 of the degree recipients, Mr. Ezell said. Twenty-eight of those case studies, compiled primarily during 1983, are part of court records.
They include interviews and reports on seven people working in precollegiate education--a superintendent of schools, an elementary-school principal, a high-school science-department chairman, a substitute teacher, a welding teacher, a teacher of the academically and socially troubled, and a high-school health and physical-education instructor.
Others who bought diplomas, according to court records, included a duty officer in the “situation room” of the White House, an official in the office of the Undersecretary of the Navy, the chief of medical services at an Indiana hospital, various law-enforcement officials, and an instructor at the Industrial College of the Armed Forces.
“We would like to identify the federal and state and county employees who are using this type of inflated or fraudulent credit to gain employment and to obtain salary increases,” Mr. Ezell said in an interview last week.
“Government prosecutors thought this would serve as a double-bladed deterrent--prosecution of operators on one hand, and the publicity of the buyers on the other,” he added. “If you knock out the demand, you knock out the supply.”
Mr. Ezell said the Dipscam probe is continuing and additional prosecutions will be forthcoming. “The bigger ones,” he said, “are taking us longer.”
In court last week, Anthony James Geruntino of Reynoldsburg, Ohio, James Robert Caffey of Springfield, Mo., and Larry Edward Pfalzgraf of Pickerington, Ohio, each pleaded guilty to one count of conspiring to use the U.S. mail and telephones to obtain money under false pretenses. Donald George Minnich of Sedona, Ariz., pleaded guilty to one count of aiding and abetting fraud by mail. Mr. Geruntino also pleaded guilty to one count of fraud by telephone.
Judge Robert Potter, of the U.S. District Court for the Western District of North Carolina, Charlotte Division, sentenced Mr. Caffey to five years in prison. Mr. Pfalzgraf and Mr. Minnich received “one year, one day” suspended sentences, were fined $1,000 and placed on three years’ probation. Mr. Geruntino is scheduled to be sentenced on July 8.
The four men were charged in a 31-count indictment handed down on Feb. 7 by a grand jury meeting here. Prosecutors said the other charges were dropped in return for guilty pleas and cooperation. Charges against three women also named in the indictment were dismissed last week.
According to the indictment, the defendants conducted business at various times through one or more of 22 organizations. The major “schools” they operated, Mr. Ezell said, were American Western University in Tulsa, Okla., Northwestern College of Allied Science in Tulsa, and Southwestern University in Tucson, Ariz., and in Salt Lake City and St. George, Utah.
The organizations they controlled also included “Joel Jewelry,” through which class rings were sold; alumni associations; accrediting organizations through which the “schools” were certified; and a vocational-guidance company that reviewed an applicant’s background, education, and experience and then recommended specific “accredited” colleges to that applicant.
Diplomas were sold through the diploma-by-mail operation as late as last month.
Mr. Ezell said Mr. Geruntino identified himself as president and chairman of the board of Southwestern University. Mr. Pfalzgraf, he said, earned $40,000 annually in commissions.
Salaried Earnings
Mr. Caffey earned more than $23,000 selling degrees, but he quit in November 1981 after U.S. Postal authorities told him to stop, Mr. Ezell said. And Mr. Minnich, he added, earned $20,000 annually in straight salary, but later3dropped to $12,000 a year.
The indictment notes that college degrees were sold at prices ranging from $51 to $1,450. More recent “college bulletins” entered into court evidence, however, showed that a bachelor’s degree sold for up to $2,090, a master’s degree for $2,040, and a doctoral degree for $2,885.
According to the indictment, minimum requirements for receiving a degree from Northwestern College of Allied Science were advance payment of all fees and the “writing of an acceptable thesis and/or the re-evaluation of present credentials and experience.”
At American Western University, applicants had to submit a resume and “full administrative-fee payment.”
And at Southwestern University, the “minimum requirements for a degree would be the submission of a portfolio of the applicant’s total academic, job, and life experiences along with full payment of the required administrative fees.”
Mr. Ezell said the diploma-mill operation sold degrees by mail to people in all 50 states and numerous foreign countries including Africa, England, Germany, Saudi Arabia, and Tunisia.
“There is an amazing new educational revolution sweeping the entire country that has shaken the Traditional Education System at its foundation,” reads a promotional letter of the Vocational Guidance Inc., one of the 22 entities named in the Feb. 7 indictment.
”... After much inquiring and private research,” the letter continues, “we have uncovered and revealed to our delight that many well-known colleges and universities, domestic and foreign, do grant from High-School Diplomas to Ph.D.'s in just about any career discipline that you can think of and without requiring you to take any additional courses or attend any college at all.”
According to Mr. Ezell, Mr. Caffey began a diploma-mill operation in 1956. In 1979, he joined with Mr. Geruntino, who formed a sophisticated computerized diploma-mill system. The operations were run through post-office boxes in Springfield, Mo., and Tulsa, Okla.
Mr. Minnich represented Mr. Caffey’s schools in the Atlanta area in the late 1970’s but quit in 1981, then rejoined the operation in 1982 as an employee of Mr. Geruntino in Arizona. Mr. Pfalzgraf worked for Mr. Geruntino in Ohio from 1980 to 1984.
Indicted Schools
Other “schools” noted in the indictment were: National College, St. Paul Seminary, and South Union Graduate School. All the schools except Southwestern University, Mr. Ezell said, operated under the auspices of Disciples of Truth Inc., an entity incorporated in Tulsa.
Over the past several years, fbi agents have investigated at least 29 diploma mills under search warrants, and many others in grand-jury proceedings.
