Financial Aid "Preparers" and Parents Among 26 Charged in Separate Cases Alleging $2.6 Million in Student Aid Fraud

Chicago - Taking aim at student financial aid fraud, 26 defendants have been charged in 23 separate criminal cases with fraudulently obtaining a total of more than $2.6 million from the U.S. Department of Education in the form of grants, work-study and loans, Scott R. Lassar, United States Attorney for the Northern District of Illinois, and Lorraine Lewis, the Education Department Inspector General, announced today. The defendants include two former. City Colleges financial aid advisors, a financial aid consultant and five other so-called "preparers," who assisted parents in filling out false financial aid forms, as well as 18 parents who allegedly falsified income information to fraudulently obtain education grants and other forms of assistance which their children were ineligible to receive. At the same time, Mr. Lassar announced that the U.S. Attorney's Office has filed more than 100 civil cases alleging similar fraud and obtained judgments totaling $825,676 in 96 cases over more than a year. Hundreds of additional civil lawsuits are expected, he said.

The criminal cases include federal grand jury indictments and criminal information that have been filed in U.S. District Court in recent days, charging the defendants with mail fraud and education fraud. Mr. Lassar 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 FBI's Chicago Field Division assisted in the investigation of two of the defendants. The prosecutions are being coordinated by Assistant U.S. Attorney Carolyn McNiven.

All of the charges allege fraud in the major student aid programs administered by the Education Department, including Pell Grants, Supplemental Educational Opportunity Grants and Federal Work Study Program, which provide need-based aid to eligible students for higher education. The government also provides state agencies with money to provide financial assistance to undergraduate students in the form of Student Incentive Grants. In Illinois, the SSIG program is known as the Illinois Student Assistance Commission, Monetary Award program Grants (ISACMAP Grants.) Grant funds typically do not require re-payment and eligibility for either grants or loans is determined by a formula that takes into account such factors as a student's income and often the parents' income and financial condition.

"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. Lassar 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 government aid."

Messrs. Lassar and Fox said that certain cases are reviewed for potential criminal charges, while other cases, usually involving smaller amounts of Pell Grants, are being handled civilly. Nearly all of the civil cases are being resolved with consent judgments in which the defendants agree to pay double the amount of the actual fraud. The actual damages recovered are returned to the Education Department to be used as new grant money for eligible recipients, they added. The civil cases are being coordinated by Assistant U.S. Attorney Linda Wawzenski.

Among the criminal cases, more than half of the total fraud amount was alleged in a 14-count indictment against Marcus Washington, who operated a tax preparation and financial aid consulting business and allegedly assisted at least 75 students obtain through fraud at least $1.5 million in financial aid between 1995 and May 1997.  In 1995, Washington, also known as Joseph Marcus Washington and Marcus Joseph Washington, 30, of 900 Sunset Dr., Glenwood, purchased a business known as Business Aide Company and T.A. & Associates, and renamed the business Joseph & Associates. He operated out of a home and later out of the Hyde Park Bank Building, located at 1525 East 53rd St., Chicago.

The indictment alleges that, for a fee, Washington provided false income tax returns that understated the income of his clients or the clients' parents, knowing that the false returns would be used to support fraudulent financial aid applications. Sixteen of the parents charged with receiving fraudulent financial aid allegedly did so with the assistance of Washington and/or one or two other unnamed individuals. (AUSA McNiven)

Washington 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 mail fraud and education fraud carries a maximum penalty of five years in prison and a $250,000 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 information 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.

A sketch of each additional case is listed below:

CASES AGAINST PREPARERS And FINANCIAL AID CONSULTANTS

Queen Stewart, 53, of Chicago, financial aid advisor at Richard J. Daley College from 1990 to 1999. Six-count indictment alleges that between 1990 and May 2000 she collected fees between $50 and $200 per application from students she assisted in preparing false financial aid applications and fictitious supporting documents understating family income. She allegedly prepared and submitted at least 70 applications containing false income information. As a result, at least 20 students fraudulently received approximately $176,712 in financial aid. (AUSA Phyllis Sumner)

Daisy O'Connor, 56, of Chicago, also a financial aid advisor at Daley College from 1990 to 1999. Six-count indictment alleges that between 1993 and May 2000 she collected fees between $50 and $200 per application from students she assisted in preparing false financial aid applications and fictitious supporting documents understating family income. She allegedly prepared and submitted at least 60 applications containing false income information. As a result, at least 20 students fraudulently received approximately $157,254 in financial aid. (AUSA Sumner)

Myles Smith, 63, of Olympia Fields, operated Smith Tax Consultants, located at 11255 South Western Ave., Chicago. Eleven-count indictment alleges that between 1993 and March 2000 he prepared and submitted numerous false financial aid applications, resulting in at least 50 students fraudulently receiving at least $200,000 in financial aid. (AUSA McNiven)

Horace Celestin, 48, formerly of Gary, Ind., a self-employed financial aid consultant. Six-count indictment alleges that between 1993 and April 2000 he prepared and submitted at least 10 false financial aid applications, resulting in students fraudulently receiving at least $68,000 in financial aid. (AUSA David Styler)

Henry Ray, 49, of Chicago, a financial aid application preparer employed by Ada S. McKinley Services from 1980 through November 2000. Two-count information alleges that between 1995 and March 2000, he collected fees between $50 and $300 from students he assisted in preparing false financial aid applications, resulting in students fraudulently receiving approximately $188,676 in financial aid. (AUSA Styler)

Marion Snipes, 33, of Calumet Park, also a financial aid application preparer employed by Ada S. McKinley Services from 1995 through 1999. Two-count information alleges that between 1996 and May 1998, he collected fees between $50 and $300 from students he assisted in preparing false financial aid applications, resulting in students fraudulently receiving approximately $11,363 in financial aid. (AUSA Styler)

Barbara A. Olsen, 36, of Chicago, a financial aid counselor at North Park College. Single-count information alleges that between August 1.996 and June 1997 she fraudulently submitted eight student loan applications seeking $124,500 and received $62,836 by falsely claiming that she, her mother and her husband were students at North Park College, when, in fact, they were not. After receiving the loan checks at the college financial aid office, she allegedly forged her mother's and her husband's signatures and kept the proceeds for herself. (AUSA L. Felipe Sanchez)

CASES AGAINST PARENTS

Donald Casey, 67, of Chicago, one-count indictment alleging that he fraudulently received $20,426 for one child over five years, Claimed annual income of between $8,114 and $14,580; actual income during those years was between $79,827 and $90,708. (AUSA Styler)

Lloyd Norman, 51, of Chicago, one-count indictment alleging that he fraudulently received $30,484 for one child over five years. Claimed annual income of between $13,986 and $15,014; actual income during those years was between $77,409 and $85,925. (AUSA Styler)

Arthur Young II, 62, of Chicago, four-count indictment alleging that he fraudulently obtained $13,320 for two children over five years. Claimed annual income of between $18,000 and $25,000; actual income during those years was between $68,000 and $100,000. (AUSA McNiven)

Frances Smith, 48, of Country Club Hills, one-count information alleging that she fraudulently obtained $17,647 for one child over three years. Claimed annual income of between $20,315 and $21,073; actual income during those years was between $80,730 and $88,462. (AUSA Kevin Powers)

Fred Holloway, 60, of Carol Stream, one-count information alleging that he fraudulently received $24,897 for one child over five years. Claimed annual income of between $17,400 and $25,800; actual income during those years was between $93,000 and $110,500. (AUSA McNiven)

Elizabeth Clark, 58, of Chicago, two-count information alleging that she fraudulently obtained $30,920 for one child over five years. Claimed annual income of between $19,500 and $28,500; actual income during those years was between $63,000 and $103,000. (AUSA Abra Siegel)

Patricia Ward, 47, of South Holland, two-count indictment alleging that she fraudulently received $31,435 for one child over four years. Claimed annual income of between $21,000 and $22,000; actual income during those years was between $77,597 and $105,799. (AUSA Lela Johnson)

Robert Green, Jr., 50, of Matteson, one-count information alleging that he understated his family income and fraudulently obtained $26,576 for two children over five years. (AUSA John Kocoras)

Patricia Garner, 48, of Chicago, one-count information alleging that she fraudulently obtained $12,480 for one child over two years. Claimed annual income of between $20,873 and $21,059; actual income exceeded $108,000 in each of those years. (AUSA Kocoras)

Geraldine Johnson-Bell, 45, of Palatine, two-count indictment alleges that she fraudulently obtained $13,610 for single child over three years. Claimed annual income of between $15,961 and $21,530; actual income during those years was between $76,878 and $78,914. (AUSA Powers)

Burma Thomas, 50, of Country Club Hills, two-count information alleging that she fraudulently obtained $16,463 for one child over three years. Claimed annual income during two of those years of between $27,056 and $17,922; actual income during those years was between $116,282 and $112,182. (AUSA Chris Niewoehner)

Darnell Jones, 48, and Sharon Jones, 47, of Chicago, two-count information alleging that they fraudulently obtained $16,374 for one child over three years. Claimed annual income of between $19,501 and $25,638; actual income during those years was between $91,518 and $130,835. (AUSA Niewoehner)

Peter Martin, 57, and Emma Martin, 54, of Chicago, two-count information alleging that they fraudulently obtained $18,013 for one child over three years. Claimed annual income of between $15,000 and $23,000; actual income during those years was between $108,000 and $138,000. (AUSA Siegel)

Gloria Harris, 50, of Broadview, two-count information alleging that she fraudulently obtained $7,981 for one child. Claimed annual income of between $18,479 and $22,623; actual income was between $64,151 and $85,309. (AUSA Siegel)

Nathaniel St. Clair, 55, and Lillie St. Clair , 53, of Chicago, two-count indictment alleging that the fraudulently obtained $31,585 for two children. Claimed annual income of between $19,067 and $27,380; actual income during was between $78,832 and $94,323. (AUSA Deborah Steiner)