Los Rios District targeted in student loan fraud scheme

Barbara Harvey and Barbara Harvey

A northern California man was sentenced to prison in a Sacramento Federal Court Feb. 6 for his role in a vast student loan fraud scheme that primarily targeted Los Rios Community Colleges.

Brent Wilder, 44, was sentenced to two years and nine months in prison for his participation in a scheme that recruited more than 50 “straw” students, who used falsified applications, to apply for more than $200,000 in Federal Student Aid.

The “straw” students signed up for classes at American River College, Sacramento City College and Cosumnes River College, but in most cases, dropped out shortly after receiving the aid, splitting the money with Wilder and his partner.

A Department of Justice press release stated that, “Wilder has been ordered to pay $19,411 in restitution.”

Wilder’s partner, Sacramento resident Michael Huddleston, 44, pled guilty in December, but is currently free on a $100,000 bond.

According to the press release, “Huddleston and Wilder prepared and submitted the fraudulent student admission and loan applications on behalf of the straw students,” and that “These applications contained false statements such as that the applicant had completed high school or had a GED when they had not. They even applied for FSA funding in their own names with no intention of using the aid for educational purposes.”

This is not the first time that the Los Rios district has been targeted by financial aid fraud rings; According to a criminal complaint filed with the California District Court, “In 2009, 54 individuals were identified as having the same address and course enrollments, as well as having failing grades or withdrawal from class, while enrolled at American River College.”

According to a report by the Department of Education’s Inspector General, student financial aid fraud is growing rapidly; the report stated that “the population of Federal student aid recipients potentially participating in fraud rings had increased 82 percent from 2009 to 2012, which we estimated caused a probable loss during that time period of $187 million in Federal student aid.”

Fraudulent students tend to enroll at community colleges, as the low-cost of tuition allows them to retain excess funds, and in California community colleges, the open-enrollment policy does not require high school transcripts.

In response, the American Association of Community Colleges released a report in 2012 focusing on the prevention of student aid abuse in community colleges, which stated that “no abuse can be tolerated,” as “not only are student aid funds limited—a situation that has caused Pell Grant program eligibility to be cut twice in the last year—but also instances of abuse, when covered by the media, can undermine political support for the programs, giving some parties a reason to oppose funding.”

Fraud results in colleges raising tuition to cover their losses, student loan interest rates rising and financial aid offices spending more time dealing with fraud and less time assisting students.

“(I’m) concerned, because it’s already difficult enough with the loan process,” said ARC respiratory therapy major Jennifer Debusk, while standing in the long line of students waiting for the financial aid window.

American River College, along with other Los Rios colleges, maintains a webpage on how to avoid and report financial aid fraud, encouraging financial aid recipients to report fraudulent activity, stating “Financial Aid students that suspect fraud or abuse of financial aid funds can contact the U.S. Department of Education General’s office to file a complaint…American River College will assist the Office of the Inspector General in the prosecution of fraudulent activities to the fullest extent allowable by law.”

Calls to the Los Rios District for comment were not returned in time for publication.