Eighteen parents are among the more than two dozen defendants who have been charged with fraudulently obtaining more than $2.6 million in student financial aid in the form of federal grants and work-study loans from the U.S. Department of Education.
Scott R. Lassar, the U.S. attorney in Chicago, and Lorraine Lewis, the Education Department’s inspector general, announced the charges March 16 after a four-year investigation in what federal officials have described as the largest probe ever of fraud in federal student financial-aid programs.
Twenty- six defendants have been charged in 23 separate criminal cases. Authorities say the inquiry began after a parent raised suspicion by accidentally sending a copy of a fake tax return with underreported income along with a copy of the actual tax return to a college’s financial-aid office.
Others charged with fraud include two former financial-aid advisers at Richard J. Daley College, a two-year institution in Chicago, and several other individuals, all of whom allegedly helped parents fill out false financial-aid forms.
More than half the total take allegedly went to Marcus Washington, who operated a tax- preparation and financial-aid consulting business in Chicago. The indictment alleges that he helped at least 75 students fraudulently obtain at least $1.5 million in college aid between 1995 and 1997.
Civil Cases Settled
Federal prosecutors said that Mr. Washington, for a fee, would provide false income-tax returns that understated his clients’ income. The faked documents allegedly were used to support support fraudulent aid applications.
Mr. Washington has been charged with seven counts of mail fraud and seven counts of education fraud. He has pleaded not guilty to all counts, each of which carries a maximum of five years in prison and a $25,000 fine. Sixteen of the parents charged with receiving assistance to manipulate their financial-aid forms had help from Mr. Washington or two other, unnamed individuals, prosecutors said.
In one case, a Chicago parent was charged with receiving about $24,000 in scholarship aid for one child over a five-year period by claiming an annual income of between $17,000 and $25,000. The man’s actual income, the indictment states, was between $93,000 and $110,000.
Mr. Lassar called the probe “the largest such investigation that’s been conducted in this country involving fraud in education grants.”
Many others targeted in the probe were not charged criminally. Prosecutors said about 100 civil cases have been settled, with those court judgments totaling about $825,000. Most of those cases involved small Pell Grants and many defendants simply agreed to pay double the amount of the actual fraud.
That money goes to the Education Department, which in turn will channel it back into financial-aid programs for eligible students. Federal officials said they expect to bring several hundred additional lawsuits stemming from the Chicago investigation.
Carol McNiven, an assistant U.S. attorney in Chicago, called the case significant because of the number of parents charged. “These grants are for the poorest of the poor,” she said, “and middle-class parents were getting them.”
A version of this article appeared in the March 28, 2001 edition of Education Week as Parents Implicated in Probe Of Financial-Aid Fraud