OIG: Office of Inspector General
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Investigative Reports

Wednesday, December 1, 2004

U.S. Department of Justice

Office of the United States Attorney
District of Arizona

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Telephone: (602) 514-7625
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Prison Sentence Issued in Fraud Case

PHOENIX, ARIZONA -The U.S. Attorney's Office for the District of Arizona, announced that on November 29, 2004, James Joseph Stevens, D.O.B.,March 23, 1954, of Phoenix, Arizona, was sentenced to 14 months imprisonment, by United States District Judge Stephen M. McNamee, in Phoenix.

Stevens, admitted that while he was an employee of Valley Acceptance Corp., a collection agency specializing in defaulted student loans, he conspired with the company president to submit to SunTrust Bank of Richmond, Virginia, fraudulent applications for new, consolidated student loans. The overall scheme generated in excess of $1 million in commissions for the company. Stevens admitted his part in the scheme was to misrepresent that the applicants were in a repayment status on their prior loans rather than listing their true default status. The false applications also falsely indicated that the applicants had made six payments on their prior loans so that they would qualify for new bank loans that were federally insured by the United States Department of Education. The false information was added to the applications after having been signed by the borrowers. Stevens admitted to preparing 86 fraudulent application, of which 38 were subsequently defaulted by the borrowers causing a loss of $187,664.19, most of which was ultimately paid through insurance from the Department of Education

Stevens had entered a plea of guilty on August 26, 2004 to Conspiracy to Commit Bank Fraud, a violation of 18 United States Code, Section 371.

Judge McNamee noted during the sentencing proceeding that approximately half of the defaulted consolidated loans obtained through Stevens' personal involvement in the conspiracy had been paid off by the actual borrowers and that there was a reasonable expectation that future payments by the borrowers on the remaining defaulted loans would further reduce the actual loss to the government. Stevens was also ordered to make restitution as to the remaining loss.

United States Attorney, Paul K. Charlton, remarked that his office will continue its dedication to vigorously prosecuting individuals who use fraudulent means to obtain government benefits. United States Department of Education Inspector General, John P. Higgins, Jr., noted that this sentence will serve to protect the integrity of federal higher education programs administered by his agency.

The investigation preceding the indictment was conducted by Special Agents from the Federal Bureau of Investigation and the Office of the Inspector General, United States Department of Education.

The prosecution was handled by Richard I. Mesh, Assistant U.S. Attorney, District of Arizona, Phoenix.

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Last Modified: 02/28/2005