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Scammers Employ ‘Straw Students’ for Federal Aid Scam at Community Colleges



Federal officials are moving to prosecute 21 suspects responsible for a statewide financial aid scam that took a total of $770,000 out of Santa Barbara City College and 14 other community and online colleges.

Of the 21 suspects in custody, two have been identified as leaders that planned, participated and recruited others to join the scheme. The offenders reportedly enrolled themselves in classes in multiple colleges and pocketed the federal disbursement aid awarded to them.

According to Lauren Horwood, a representative for the U.S. Attorney’s Office for the Eastern District of California, the scammers succeeded in stealing such a large sum because of the sheer number of participants involved in the fraud.

“Various people found a way to make money by fraudulently applying for student aid and recruiting others to apply as well,” Horwood said. “There were as many as 50 people. They would recruit people that did not even have a high school degree and give half the money to these straw students.”

U.S. Attorney for the Eastern District of California Benjamin Wagner released a statement condemning the fraud and promising punishment for the offenders.

“Those who rip off federal aid funds can expect to find themselves in a prison cell instead of a classroom,” Wagner said.

According to the statement, online and community colleges enroll students on an open admission policy and do not require transcripts, making them more susceptible to fraud. Many of those benefitting from the scheme did not even have high school diplomas.

One indicted scammer, a 32-year-old Palmdale woman named Shauna Marie Fabrega, recruited “straw students” with no intention of attending class, to enroll in college courses and receive financial aid. Fabrega allegedly committed mail and wire fraud to steal identities and receive $70,000 in Pell grants and other federal aid.

17 of the 21 accused thieves pleaded not guilty to felony charges which included conspiracy, financial aid fraud, identity theft, mail fraud and wire fraud. The other four defendants have already been charged earlier this year. If convicted, the perpetrators may face up to 20 years in prison on top of fines.

Third-year SBCC culinary student Lacey Smith said the widespread scam is unfortunate to see, and hopes that these types of problems do not persist.

“It is not fair for those of us that work really hard in our classes,” Smith said. “There are some people who need the money who do not qualify for financial aid because of limited funds.”

Horwood said the scheme to steal financial aid hurts students who legitimately needed the money to attend college.

“Someone would falsify the documents to the detriment of other people,” Horwood said. “With the Pell Grant, there are limited funds available so when those funds are gone they are gone to students that need it.”

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