Identity theft within federal student aid programs

FBI Law Enforcement Bulletin,The, March, 2004 by Sharon Jones-Davis

Identity theft is a rapidly growing crime that has reached the hallowed halls of academia. Identity thieves have targeted U.S. Department of Education federal student aid programs, with a potential impact on million of students at thousands of institutions of higher learning nationwide. The department processes over 11 million applications for student financial aid and disburses over $60 billion a year in federal student aid funds.

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The department's Office of Inspector General (OIG) serves as its law enforcement arm. With regional offices and over 70 special agents, the OIG investigates allegations of identity theft involving federal student aid funds in conjunction with the U.S. Attorney General's Office. Within the last year and a half, OIG investigations conducted along with other federal, state, and local police have resulted in over $1 million in court ordered restitutions. And, the numbers continue to grow.

The methods that these perpetrators employ vary from the fraudulent use of personal information belonging to family members and friends to conspiracies that involve groups of individuals who have access to student information. Identity thieves also have used the identities of deceased individuals and prison inmates to apply for and obtain federal student aid. Beginning in 2002, the department began checks of Social Security numbers against death records to identify the fraudulent use of numbers formerly issued to deceased individuals.

A recent example of student identity theft resulted in a 26-count indictment against an individual in U.S. District Court, Western District of New York, for his role in allegedly defrauding the Department of Education of over $160,000 by submitting fraudulent student loan applications in the name of his mother and brother. The indictment also charged that the individual prepared and submitted approximately 2,370 additional student loan applications requesting disbursement of approximately $43.8 million. These applications were prepared using multiple fictitious identities that claimed attendance at various colleges in the United Kingdom.

OIG collaboration with the Mesa Police Department, Mesa Community College, the Social Security Administration, and the U.S. Secret Service recently resulted in an individual pleading guilty to one count of student aid fraud and one count of identity theft. He also admitted to forfeiture allegations. The investigation revealed that he had assumed over 50 different identities to obtain approximately $313,000 in federal student aid. Many of the victims were prison inmates. He faces a potential sentence of 20 years and a $270,000 fine. Because he admitted to forfeiture allegations, he faces forfeiture of his house, car, computer and electronic equipment, and nearly $70,000 in cash and bank accounts.

Crimes such as these have resulted in Secretary of Education Roderick Paige, Inspector General John Higgins, and Federal Student Aid Chief Operating Officer Theresa Shaw launching an identity theft prevention initiative to alert students who are particularly vulnerable to this type of financial crime. The Web site www.ed.gov/misused provides information about how to prevent and report identity theft that involves federal student aid funds. The OIG has increased its data-mining efforts to identify potential trends and patterns involving identity theft and other crimes involving fraud against the student aid programs. As a result of data mining, the OIG also was able to assist other federal law enforcement agencies identify foreign nationals with terrorist links who fraudulently obtained student aid.

The OIG will continue in its efforts to combat identity theft by conducting investigations involving individuals who steal personal information to commit fraud within federal student aid programs. The OIG seeks to expand its role in preventing student aid identity theft by working with other law enforcement agencies and educating students to the long-term economic threat this crime poses.

Sharon Jones-Davis is a program management analyst at the U.S. Department of Education, Office of Inspector General, Investigation Services.