OIG: Office of Inspector General
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Investigation Report

U.S. Department of Justice
Dennis C. Pfannenschmidt
United States Attorney
Middle District of Pennsylvania
Ronald Reagan Federal Building
228 Walnut Street
P.O. Box 11754, Suite 220
Harrisburg, PA 17108-1754
(717) 221-4482
Fax: (717) 221-2246 or (717) 221-4493

For Immediate Release: September 3, 2009


Federal, State and Law Enforcement Officials Announce Results of a Million Dollar Student Loan Fraud Prosecution Initiative

Dennis Pfannenschmidt, United States Attorney for the Middle District of Pennsylvania, Mary Mitchelson, Acting Inspector General of the U.S. Department of Education, and John B. Whitcomb, Manager of Investigations, Pennsylvania Higher Education Assistance Agency, jointly announced the latest developments in a multi-agency effort to combat educational loan frauds throughout the Commonwealth of Pennsylvania.

According to Mr. Pfannenschmidt on August 27, 2009, Steven Phillips, age 38,of Huntington, West Virginia, was sentenced to 18 months imprisonment, and ordered to make restitution totaling $344,908.00 following his guilty plea conviction on federal student loan fraud charges arising out of a scheme in which Phillips was alleged to have used the identities of innocent third parties to apply for more than $340,000 in federal educational benefits. Phillips was also ordered to serve two years of supervised release following his jail term for this student loan fraud offense.

Mr. Pfannenschmidt stated that the conviction of Steven Phillips is only the latest success in an on-going law enforcement initiative aimed at ensuring integrity in federal education programs. This initiative has been spearheaded by the United States Department of Education, Office of Inspector General, and the Pennsylvania Higher Education Assistance Agency (PHEAA), throughout the Commonwealth of Pennsylvania. This joint state and federal law enforcement partnership has yielded extraordinary results according to federal officials which more than a dozen defendants charged federally or in state courts over the past year for their roles in educational frauds which resulted in more than $1,000,000 in losses. As a result of this unprecedented partnership, the following individuals have been charged in recent months in federal and state courts for their involvement in educational frauds in Pennsylvania:

Raymond Johnson
Middle District of Pennsylvania
Steven Phillips & Angela Clay
Middle District of Pennsylvania
John & Laura LaSota
Middle District of Pennsylvania
Sheri Husted
Western District of Pennsylvania
Brian Fazio
Middle District of Pennsylvania
Linda Abshear, Amanda Johnson & Charles Caudell
Warren County, Ohio Prosecutor
Mary Casey
Middle District of Pennsylvania
Stevenson Clesidor
Middle District of Pennsylvania
Carol Hines
Butler County District Attorney
Sonya Stockton
Middle District of Pennsylvania
Pearl Dunlap
Middle District of Pennsylvania
Approximate Total  

In announcing these results, Mr. Pfannenschmidt stated: "All Americans are entitled to enjoy the educational opportunities provided through the United States Department of Education and its partner, the Pennsylvania higher Education Assistance Agency. When unscrupulous people turn these educational programs into vehicles for fraud, it is the responsibility of law enforcement to step in, and take firm action. The prosecutions which we are highlighting today underscore our commitment to aggressive, effective law enforcement in this vitally important field." Mr. Pfannenschmidt went on to commend the Department of Education Office of Inspector General, the Pennsylvania Higher Education Assistance Agency and the other local, state and federal law enforcement agencies involved in this initiative for their tireless efforts in this area.

The United States Department of Education also emphasized the importance of this initiative. "I want to commend OIG Special Agents and our partners in the Educational Loan Project whose diligent efforts not only brought about today's action, but have led to the prosecution of more than a dozen individuals who fraudulently obtained more than $1 million in student financial aid. Not one of these individuals thought they would get caught. Every one of them was wrong," said Mary Mitchelson, Acting Inspector General of the U.S. Department of Education. "We will to continue to work with our colleagues to aggressively pursue anyone who steals or fraudulently obtains student financial aid."

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Last Modified: 09/09/2009