Domestic, Friend, Fraud, or Fishy, Investors, Legislation, Required - Written by on Monday, October 3, 2011 7:05 - 0 Comments

Debrief: Probe finds fraud in U.S. distance education | Reuters

Angry Judge. photo: flickr user Coco Mault

Angry Judge. photo: flickr user Coco Mault



Just when it seemed the bad news fog might be lifting from the for-profit education sector, in rolls another dark cloud. To recap, here’s the latest list of dirty laundry:  recruitment practices, gainful employment, shady hedge fund dealings— now add outright fraud.

Some students are defrauding Title IV loans. You might think there’s some mastermind plot, but actually students are not required to show ID.

California Watch, founded by the Center for Investigative Reporting, pulled this nugget:

In some cases, swindlers enrolled incarcerated inmates in online classes, converting federal financial aid checks into money orders sent to the inmates in prison. The Department of Education does not have a data-matching agreement with the Department of Justice for its Bureau of Prisons.

The Reuters piece also reports the stocks of these companies will have additional pressure as recommendations might tighten margins.

The Office of Inspector General (OIG) said the findings follow numerous investigations conducted over the past six years.

Since 2005, 215 distance education fraud ring participants from 42 different fraud rings have been criminally convicted due to the investigations but this does not represent the full scale of the fraud rings, the OIG said.

The department said it will form a new team and will give priority consideration to actions that can be taken under existing laws and regulations.

Full OIG report.

via Probe finds fraud in U.S. distance education | Reuters.


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