Strategic Federal And State Criminal Defense

California man admits to student loan fraud scheme

On Behalf of | Dec 24, 2019 | Federal Crimes |

A California man who ran three financial services companies that offered to help borrowers to reduce their student loan obligations has pleaded guilty to money laundering and wire fraud. The 42-year-old Sonoma County resident faces up to 20 years in a federal prison on each count when he is sentenced. The guilty pleas were announced on Dec. 20.

The man’s companies, which were all based in Rhonert Park, offered to help borrowers to apply for Department of Education programs that consolidate or forgive student debt or reduce monthly loan payments. He has admitted to using deceptive sales tactics between January 2014 and November 2018 that led to losses for his clients of at least $25 million. Prosecutors believe the losses could reach $65 million. The man’s sales representatives were instructed to mislead borrowers about the chances of their applications being approved and sell them a package of additional services without disclosing the cost.

The man has also admitted trying to conceal the money his student loan reduction scheme generated. He began transferring funds to offshore banks in 2015 according to U.S. attorneys. These efforts were stepped up in 2017 when the Federal Trade Commission took legal action against the man. He was apprehended by federal agents in December 2018 as he attempted to board a flight bound for Mexico at a San Francisco Airport.

The penalties for committing federal crimes are usually harsh, but prosecutors may offer to reduce them in return for a guilty plea. Experienced criminal defense attorneys could encourage federal prosecutors to be lenient by offering them a successful outcome and a speedy resolution. Attorneys could also point out the challenges of arguing complex cases before a jury and proving guilt beyond a reasonable doubt.

Source: The U.S. Attorney’s Office for the Northern District of California, “Sonoma County CEO Pleads Guilty To Charges Stemming From $25-65 Million Student Loan Repayment Services Scam”, Press release, Dec. 20, 2019