On September 21, California Attorney General Rob Bonta announced the arrest of the leader of a multi-million-dollar, multi-year national student debt relief scam.
The defendant owned a network of third party debt relief companies based in Orange County. They employed managers and sales agents to operate several call centers who contacted people across the country promising them to reduce or eliminate their federal student loan debt. Instead, the owner, along with four call center managers and two sales agents, allegedly stole more than $ 6,130,000 in less than three years from more than 19,000 victims, including 3,000 in California.
Two other defendants were arrested for their alleged connection to this scheme.
All of the defendants face multiple charges, including grand theft under false pretenses, computer access and fraud, and unauthorized use of personally identifiable information. The main accused was charged with all 87 counts in the indictment, as well as special allegations of money laundering over $ 2.5 million and aggravated white-collar crimes.
“Millions of Californians – myself included – know what it’s like to finish school, to begin the often decades-long journey to pay off student loans,” Bonta said. “Life comes along, and whether it’s because someone is out of work, faced with an unexpected medical bill, or some other life change, many find it difficult to make those monthly payments. When greedy companies prey on vulnerable people and use deceptive tactics to steal them, they must be held accountable. I thank our local and federal law enforcement partners for their work in this investigation. Now the work begins to bring those responsible for these alleged actions to justice. “
“The victims are the most important people to remember in this case,” said Orange County Sheriff Coroner Don Barnes. “All the work of the entire team, including the OC Sheriff investigators, is well worth the effort to do justice to the unsuspecting students who thought they were paying off their student loans. Although it is a sad fact, the crooks will take advantage of the victims for their personal financial gain. The best defense against these scams is to be informed about the different types of fraud and how you can avoid falling victim.
“This case demonstrates our shared commitment to protect the US taxpayer’s investment in federal student loan programs and we are proud to be involved in this state, local and federal partnership that has led to today’s actions,” said Tom Harper, Jr., Special Agent in charge of the Inspector General’s Office of the Technological Crimes Division of the United States Department of Education, the unit that works to protect programs education and network infrastructure by investigating technology crimes. “This should serve as a warning to anyone who uses these and other scams targeting student and student borrowers: you will be caught and held accountable for your criminal acts. “
“The United States Postal Inspection Service is committed to protecting U.S. mail from criminal abuse and is proud to be a part of this large-scale investigation with our law enforcement partners,” Carroll said. Harris, inspector in charge of the Los Angeles division. “Together, we seek to prevent these crooks involved in illegal computer access, fraud, identity theft and money laundering from continuing to defraud and victimize thousands of individuals located in the United States. “
Between 2017 and 2020, sales agents at third-party debt relief call centers contacted approximately 380,000 student loan borrowers who were struggling to meet their monthly debts.
These agents allegedly feigned association with the US Department of Education and, without authorization to do so, guaranteed borrowers to enroll in programs to reduce their monthly payments and obtain loan forgiveness. If borrowers became suspicious or unsure, agents would allegedly exert more pressure by implying that their business was the only way to sign up for these plans and that their offers only applied for a limited time.
By tricking victims into believing that they were part of the US Department of Education or that they were a commercial entity with the authority to acquire loans or enroll students in a federal loan cancellation plan, the Call centers allegedly led borrowers to disclose personal identifying information and then use that information to access and make changes to borrowers’ federal student aid accounts without consent. Apparently, many victims also unknowingly signed a third party authorization form or power of attorney contract that purported to give third party debt relief centers permission to make decisions on their behalf.
Each victim paid – or had to pay – the upfront third-party call center fees and additional monthly fees totaling over $ 1,000 for services provided free of charge by federal loan services. Most victims believed that these payments were being applied by third party call centers to their student loan debt when in reality they were not. This belief has led many victims to stop making their monthly payments on their actual student loans, resulting in late payment notifications, increased loan balances, and sometimes defaulting on their student loans.
Bonta reminds all federal student loan borrowers that the US Department of Education and its federal loan departments never charge a fee to qualify borrowers for loan cancellation programs, change repayment plans, reduce monthly payments loan, consolidate multiple loans, defer payments due to temporary hardship, or obtain loans in the event of default.
Visit www.studentaid.gov/resources/scams for more information on how to avoid student aid scams.
The case was investigated by the Orange County Sheriff’s Department, the United States Postal Inspection Service and the Office of the Inspector General of the United States Department of Education. United. The eCrime unit of the California Department of Justice will handle the prosecution.
DOJ’s eCrime unit (oag.ca.gov/ecrime) investigates and prosecutes large-scale multi-jurisdictional organizations, networks and criminal groups that commit identity theft crimes, use any device or electronic network to facilitate a crime or commit a crime targeting an electronic device, network or intellectual property.
It is important to note that a criminal indictment contains charges that must be proven in court. Anyone accused is presumed innocent unless or until proven guilty.
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