November 19, 2007

Another case of student loan fraud

Posted in Misc at 8:17 AM by Joe From Boston


I am constantly surprised by people who try to make money by scamming student loans. I mean, let’s look at this realistically – the government keeps a close eye on what is going on. And the loans are provided by banks who have legions of people looking for fraud.

Yet every year some new schmuck thinks he or she can make a quick buck and not get caught. Read about the latest incident I’ve heard of, courtesy of LawFuel.com:

The criminal complaint, filed on November 8, 2007, alleges that from 2003 to 2007, Gallagher submitted over 200 student loan applications via the Internet to various financial institutions. The majority of these loan applications originated from one of eight different America On-Line (AOL) email accounts registered in the name of Stephen Gallagher. He submitted loan applications in his own name as well as in the names of unsuspecting individuals, later adding these other individuals to his bank account so he could deposit the student loan checks which were made payable in the name of the borrower. Supporting documentation, such as proof of employment and residence verification, was submitted to each financial intuition via FAX machine. Much of this documentation was determined to be fraudulent.

To date, the Federal Bureau of Investigation has identified approximately 42 fraudulent student loans totaling $624,287.32 to be associated with Gallagher.

A conviction for bank fraud carries a maximum penalty of 30 years in federal prison, a $1 million fine, or both. A criminal complaint is simply the method by which a person is charged with criminal activity and raises no inference of guilt. An individual is presumed innocent until competent evidence is presented to a jury that establishes guilt beyond a reasonable doubt.

The investigation was conducted by the Federal Bureau of Investigation with assistance from the U.S. Department of Education.

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2 Comments »

  1. Penelope Adams said,

    How can you report a possiblable student fraud? i would like someone to look at a persons background of getting grants from the goverment and if they have done this on the up and up..
    please let me know who to report name address etc

  2. Gwyn Walcoff said,

    Monique- you make an excellent point about the “legions of people at the banks on the lookout for fraud”. Let me add to that that banks are under immense federal and internal reviews and regulations to insure they are complying with standards of transparency and quality business practices.

    So, you can understand why the lending industry cries foul at allegations of system-wide fraud touted by AG Cuomo and others when in fact it is barely a micro-fraction of those who would abuse the system.

    it is good to know that keen-minded people in our country still understand that it is always the sensational story that gets the press.


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