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Investigative Reports

FOR IMMEDIATE RELEASE:
Chicago, IL October 10, 2003

United States Attorney
Northern District of Illinois
Press Contacts:
:
SAUSA Michael Messer (312) 353-5330
AUSA/PIO Randall Sarnborn (312) 353-5318

Ringleaders and "Students" Among 17 Charged in Case Alleging $285,000 in Student Aid Fraud

Chicago - Taking aim at student financial aid fraud, 17 defendants have been charged in a 31-count criminal indictment with fraudulently obtaining approximately $285,000 from the U. S. Department of Education in the form of subsidized and unsubsidized Stafford loans, Patrick J. Fitzgerald, United States Attorney for the Northern District of Illinois, and Jack Higgins, the Education Department Inspector General, announced today.

The indictment alleges that Anthony Hervey and Gloria Hervey, currently residing in Oxford Mississippi, but then living in Chicago, recruited individuals from the Austin neighborhood of Chicago to pose as "students" and apply for student loans knowing that those individuals were ineligible for those loans and to represent falsely on the loan documents that the individuals were to become full-time students at the City University of London during the 1998-1999 academic year. The total amount of student loans applied for was approximately $285,000. To effectuate the scheme, the Herveys directed and assisted these individuals to fill out falsely the government's Free Application for Federal Student Aid, also known as a FAFSA, as well as an Application/Promissory Note. Among the false representations made on the fraudulent loan application was the misrepresentation that the applicants were enrolled as full-time graduate students at the City University of London in London, England, when, in fact, they were not.

Mr. Fitzgerald announced the charges with Christopher J. Fox, Special Agent-in-Charge of the Midwest Regional Office of the Education Department's Office of Inspector General, which investigated the cases. The prosecutions are being coordinated by Assistant U.S. Attorney Stuart J. Chanen.

"Fraud in student financial aid programs deprives the neediest qualifying applicants of opportunities to pursue higher education because the money earmarked for them is being diverted to less-deserving applicants," Mr. Fitzgerald said. "Cheating by one applicant takes grant or loan money directly out of the pockets of truly eligible applicants who are competing for a finite amount of govenment aid."

The 31-count indictment alleges violations of wire fraud, education fraud, and loan fraud statutes. The Herveys and each of the defendants will be summoned to appear for arraignment in U.S. District Court at a later date.

If convicted, each count of loan fraud carries a maximum penalty of 30 years in prison and a $1,000,000 fine; each count of mail fraud carries a maximum penalty of five years in prison and a $250,000 fine; and each count of education fraud carries a maximum penalty of five years in prison and a $20,000 fine. As an alternative, the Court may impose a fine totaling not more than twice the defendant's gross gain, or twice the gross loss to any victim, whichever is greater. The Court also must order restitution and it will determine the appropriate sentence to be imposed under the United States Sentencing Guidelines.

In each case, the public is reminded that indictments and informations contain only charges and are not evidence of guilt. The defendants are presumed innocent and are entitled to fair trials at which the government has the burden of proving guilt beyond a reasonable doubt.


 
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Last Modified: 02/28/2005