As Online Courses Grow, So Does Financial Aid Fraud

While serving nine months in a South Carolina prison on forgery charges, Michelle N. Owens capitalized on the explosion in online higher education to tap into a new — and highly lucrative — way to profit from fake documents.

Using information she gathered as she handled paperwork in the prison’s education department, Ms. Owens filed applications for admission and financial aid to Webster University’s distance-learning programs on behalf of 23 unknowing inmates. The applicants were admitted and granted the $467,500 in requested aid, including $124,821 for books, transportation and living expenses — though of course their room and board was already provided by the state. The aid was sent in the form of debit cards to the residential South Carolina address Ms. Owens supplied.

An alert employee at Webster in St. Louis, which has campuses overseas and on dozens of United States military bases, eventually noticed an unusual number of applicants from the same address in Florence, S.C. Ms. Owens, 36, who continued to make fraudulent applications to Webster for more than a year after she was released from Leath Correctional Institution in 2008, was sentenced on Sept. 29 to 51 months in federal prison and ordered to pay $128,852 in restitution.

She is one of 215 participants in 42 financial aid fraud rings who have been convicted since 2005 and ordered to pay $7.5 million in restitution and fines, according to a new report by the Department of Education’s Office of the Inspector General. But those numbers do not reflect the scale of the fraud rings, the report said, since often the ringleaders are the only ones prosecuted.

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THE NEW YORK TIMES

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