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The Diploma-Mill Scam

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In 1981, Charlie Nichols, a 6th grade choral-music teacher in Nicholasville, Ky., decided it was time to go back to school. If he could earn his Ph.D., he would be eligible for an impressive salary increase--up to $8,000 a year.

But Nichols, 54, could not afford to quit his job and become a full-time student. "I wanted to get a higher degree,'' he says, "but I didn't want to drop teaching to get it.''

Browsing through a music education journal, Nichols saw an ad for North
American University. It offered a combined master's and doctorate in education that could be earned entirely through correspondence courses.

"I called the school several times,'' Nichols recalls. "They assured me the school was accredited. It sounded all legit, so I thought, 'Well, I'll give it a try.'' He completed a simple application form, wrote the "life experience'' resume they requested, and returned both with his check for $4,800. With that, he became a full-fledged student at North American University.

He also ended up in the middle of an FBI probe.

Although he wouldn't know it for two more years, Nichols had stumbled into an ongoing investigation of "diploma mills''-- fraudulent organizations that pose as colleges but sell bogus diplomas to anyone who can afford the fee.

The FBI launched Operation "Dipscam'' (short for diploma scam) in 1980. Since then, according to special agent Allen Ezell Jr., the bureau has conducted 30 to 40 separate dipscam investigations, resulting in 22 convictions and the closing of roughly 40 to 50 diploma mills, including the North American University that bilked Nichols out of his money. (Another North American University, under different ownership, opened last year in Utah. See "A Call To An Admission Officer,'' page 72.)

Education and business are two of the most common fields for which bogus degrees are purchased, Ezell says. In a 1982 trial involving dozens of diploma mills, the names of more than 1,000 elementary and secondary school educators who had purchased bogus degrees were entered as evidence. And a recent FBI investigation found that 100 of 292 degrees purchased were in education. (Most of those who received the bogus degrees were foreign students; only 21 of the 100 who got education degrees had U.S. addresses.)

Many who get involved with diploma mills are out to defraud their employers or the public, but some, like Nichols, are not.

After he sent in his check, North American University gave Nichols a toll-free telephone number to call every few weeks to consult with his "supervisor.'' During the next two years, Nichols says, he was assigned topics, wrote "a whole lot of papers,'' and received a "master's degree'' dated September 29, 1982. In his third year as an NAU "student,'' he completed a 278-page dissertation on how to teach choral music to high school students. "It was just as if you were going to the University of Kentucky,'' Nichols contends. "The work was difficult.''

FBI agents say the saddest part of dipscam investigations is going through such dissertations. "We flipped through a hundred or so, and there were no marks and no grades,'' Ezell says. "Here these people had written huge theses, had them professionally typed and bound at great expense, and no one even looked at them.''

Nichols's first inkling that something was wrong came a week after he sent his dissertation to NAU. It arrived back in his mailbox, marked "address unknown.'' After a month of writing and calling, he realized that NAU had "just dropped out of sight.'' He gave up hope of ever seeing his Ph.D.--or his $4,800.

Ezell, although somewhat sympathetic toward diploma-mill victims, finds it hard to believe that very many people are actually duped. With all the clues, he asks, how can people not become suspicious? Letters, for example, are often postmarked in a different state from the one listed on the letterhead, and callers can never reach "school officials'' or their "advisers'' directly--they're always asked by an answering service or a recording to leave a message. Apparently, Ezell says, "Some people are just more gullible than others.''

Diploma mills, moreover, work hard to confuse applicants. They choose names that sound like reputable institutions. Darthmouth College, for instance, is meant to sound like Ivy League Dartmouth College, and Stamford University is easily mistaken for Stanford University.

A legitimate university in Philadelphia is often confused with an identically named "school'' that authorities believe is a diploma mill. The admission director at the Philadelphia school says that every month his office receives several requests for information about the other "school.'' "It's gotten to the point where we have a standard letter we send out,'' he says.

Diploma-mill operators realize that, like Nichols, most people expect a college to be accredited, so they emblazon brochures and advertisements with accreditation agency "seals.'' But these phony accreditation agencies also play the name-confusion game: One diploma mill claims accreditation by an organization that models its name after the legitimate Council on Postsecondary Accreditation. Charlie Nichols's "school'' gave him the phone number of its accrediting agency so he could verify things for himself. Usually, the accreditation agency and bogus "school'' are run by the same person.

To further make their operations seem on the up and up, diploma mills provide phony transcripts of courses never taken and grades never earned. One mill even sold class rings to "graduates.'' The operators of a string of diploma mills, who pleaded guilty to federal fraud charges in 1985, ran several organizations, including "Joel Jewelry,'' which sold school rings; various alumni associations; and a vocational-guidance company that referred potential "students'' to certain "accredited colleges.''

Stamping out diploma mills is surprisingly tough, as the FBI discovered.

Charlatanical schools can survive, says Ezell, because people continue to buy their product. "It's a simple case of supply and demand,'' he notes. In a system where most school districts link higher salaries and promotions to continuing education, teachers learn that getting academic credits pays off.

Consequently, diploma mills continue to operate. They spring up overnight like mushrooms, operate from one locale for a while, and then move on. Education consultant John Bear, who runs a legitimate nontraditional education program, has worked closely with the FBI. He blames the survival of mills on both naive school district officials, many of whom don't even know diploma mills exist, and a lack of state involvement. State regulations vary, he points out, and diploma mills tend to show up in the states with either no laws or ineffectual ones, such as Hawaii, Wyoming, Missouri, Utah, and Louisiana.

"States don't think it's a big problem, so they don't care and don't regulate,'' Bear says.

Louisiana has become a magnet for scam artists. American and foreign diploma mills alike are flocking to the state, according to Larry Tremblay, research coordinator for the state board of regents. In Louisiana, all degree-granting institutions must register with the state, but that involves "nothing more than filling out a form,'' Tremblay says. The state automatically registers any organization that applies to grant degrees-- no questions asked. Once registered, any school can then truthfully advertise that it has met all legal requirements to operate in the State of Louisiana.

California and Arizona, once a haven for degree mills, tightened their regulations and forced most bogus schools to leave.

Missouri law's "religious loophole'' inadvertently allows diploma mills to operate there. State statute exempts not-for-profit schools from going through the Missouri Department of Higher Education's approval process if they are "owned, controlled, and operated by a bona fide religious denomination or eleemosynary organization which is exempted from property taxation.'' As a result, a diploma mill can open under the guise of a religious organization one day, and start giving out Ph.D.'s the next-- and keep on giving them out, at least until state officials prove the religious front is a fraud.

Another reason diploma mills continue to thrive is that they tend to seek the protective coloration of legitimate nontraditional programs. Superficially, similarities do exist. Because nontraditional schools seek to serve the mature adult who has other responsibilities but wants to work on an advanced degree, they let enrollees earn their degrees through the mail. They are very flexible in awarding credit: Students can earn credit for "life experience'' (having learned Spanish from a grandparent instead of in a classroom, for example), by passing equivalency examinations, or by negotiating course work "contracts'' with the school. Because of this flexibility, nontraditional students earn their degrees more quickly and without spending a lot of money.

Diploma mills also promote a reasonably priced, flexible education. But, unlike degree mills, legitimate nontraditional schools have faculties, offer real courses, expect students to do credible work, and carefully assess and discriminately award credit for prior learning.

Consultant Bear believes diploma mills are getting harder to shut down because their operators are getting smarter. They are conducting their business "really close to the line between what is legitimate and what is not,'' Bear says. One organization's application, for example, requires applicants to sign a disclaimer that seems designed to head off any legal action an unsatisfied "student'' might later try to take against the school. The half-page of small print includes the following statements:

"I...state that [the school] has not...implied the acceptability of any of its degrees....I have been made no promise or guarantee of employment or acceptability of [the school's] degrees to any employer. I further understand that [the school] does not guarantee acceptability of transfer credits to any public or private educational institution....I further certify that I have made a complete investigation of all statements made by [the school] and I am completely satisfied.''

The FBI continues to investigate diploma mills from its regional office in Charlotte, N.C. Ezell says his office is working with law officials in states that have "no laws, loose laws, or laws with no teeth.'' He could not elaborate because, he says, one diploma-mill operator the FBI is trying to catch (who might recognize that Ezell's office is targeting his school) "sues at the drop of a hat.''

"This seller [of bogus degrees] is educated,'' Ezell says. "He's not a dumbbell. He'll use the legal system.'' And a lawsuit, the agent explains, would slow down the investigation.

As a result of federal prosecutions, says an FBI supervisor, "The most blatant of the diploma mills have been put out of business.'' But Bear, in his book, Bear's Guide to Earning NonTraditional College Degrees (Ten Speed Press, 1988), lists more than 350 diploma mills. Prefacing the list, Bear writes, "There are a handful of [additional] schools that I firmly believe are diploma mills, but I do not have sufficient proof to say so in print, and I do not enjoy being sued.''

Buying a diploma from a degree mill to put up on your bedroom wall or over a bar is not illegal, says Ezell. "That's bragging rights,'' he laughs. But it's an entirely different matter, he explains, when someone lists credentials from a diploma mill on a resume, puts a bogus diploma on his or her office wall where clients or customers will see it, or uses such a degree to get work at a federal agency.

Local authorities usually decide what action to take against phonydegree buyers, says Ezell. The FBI has been known to pass the names of degree buyers along to local and state authorities for action. "A prosecutor has to look at each case by itself and determine the criminal intent,'' he says. A prosecutor who can prove a person bought a degree with the intent to defraud can charge the purchaser with violation of fraudby-wire and mail-fraud statutes. Also, purchasers who use bogus diplomas to deceive employers or clients risk indictment under state laws.

More often than not, however, phony-degree sellers, not buyers, are prosecuted.

Selling bogus diplomas is illegal because the sellers intend to defraud the public and because they violate fraud-bywire and mail-fraud statutes. Ezell recalls only two degree buyers prosecuted by the federal government: a postal employee and a psychiatrist at a state mental hospital.

Even without legal action, the costs of lying about academic credentials can be high.

Arizona's 1987 Teacher of the Year listed a false Ph.D. credential on his award application; when state officials discovered the false claim, the teacher resigned from the honorary post. Names of some degree purchasers have been given to state boards of education and published in local newspapers.

Charlie Nichols was lucky. The only costs to him were his $4,800 in fees, the jolting experience of being investigated by the FBI, and his embarrassment at being fleeced. He retained his job at Jessamine County Middle School and says his former superintendent is trying to get him credit for the three years of work he completed. His students did not know of his ordeal. But he thinks other teachers should.

"Make sure the school has real accreditation,'' he says with the conviction of one who has been there. "I took their word, which was a mistake.''

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