Uncle Sam's School for Scandal

0 Comments | Insight on the News, April 30, 2001 | by Sean Paige

With the cost of college tuition these days, it's hard to blame parents for seeking out creative new ways to lighten the financial burden of subsidizing Joe Bob Jr.'s four-year beer blast at the I Felta Thigh fraternity house. But we'll try.

In what is described as the biggest bust of its kind yet -- and an object lesson to otherwise law-abiding parents who might be tempted to shade the facts a bit to get a little extra government help with those soaring tuition costs -- the federal departments of Justice and Education offices of the Inspector General recently charged 27 Chicago-area parents and financial-aid preparers with scamming at least $2.6 million from federal student-aid programs in recent years.

But those charged and the amounts of money allegedly stolen only are the tip of the iceberg, according to one source close to the investigation. Hundreds of parents in the city allegedly paid fees of between $50 and $200 to at least seven student-aid preparers who underreported the parents' incomes and falsified tax documents to make them appear eligible to receive student aid earmarked for lower-income collegians, according to investigators.

One individual who ran a private financial-services company helped about 75 parents obtain at least $1.5 million in student aid for which they did not qualify, according to government attorneys.

Two of the charged preparers worked as financial-aid advisers at Richard J. Daley College (where combined, they allegedly filed at least 130 fraudulent financial-aid applications on behalf of parents). A third was a financial-aid counselor at the city's North Park College, a position she allegedly misused to pocket $62,836 in student aid.

In a typical case, one parent allegedly received nearly $25,000 in federal aid for a child's tuition by claiming an annual income of below $25,800, though his actual income was between $93,000 and $110,000.

If found guilty, some of the most egregious offenders face jail time, while the majority of parents involved are facing civil penalties and fines, of which more than $825,000 already has been collected.