Man posing as BRCC students convicted of stealing $1.4M in federal student aid

Man falsified financial aid applications and spent more than $250K at casinos, according to prosecutors.
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Published: Mar. 22, 2022 at 4:08 PM CDT
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BATON ROUGE, La. (WAFB) - A federal jury has convicted a Baton Rouge man on fraud charges for stealing more than $1.4 million in federal student loans and grants, U.S. Attorney Ronald C. Gathe Jr. announced Tuesday, March 22.

After an eight-day trial, the jury unanimously convicted Elliot Sterling, 33, of Baton Rouge, of five counts of wire fraud, according to Gathe.

The U.S. Attorney said the wire fraud charges Sterling was convicted of were in relation to a scheme in which Sterling defrauded the Department of Education’s federal student aid program.

Sterling was convicted of two counts of financial aid fraud, and two counts of wire fraud involving the Small Business Administration Economic Injury Disaster Loan Program, which was designed to aid businesses during the COVID-19 pandemic.

He was also convicted of six counts of money laundering involving the proceeds of his two wire fraud schemes, Gathe said. The jury further ordered Sterling to forfeit $422,632.38 in fraudulently acquired money that the FBI had seized in the case.

Sterling was previously indicted by a federal grand jury on Aug. 3, 2020, on charges of wire fraud, financial aid fraud, and engaging in monetary transactions involving property derived from specified unlawful activity.

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Gathe said Sterling received $1,468,239 in federal student aid loans and grants that were associated with 180 Baton Rouge Community College (BRCC) students into his personal bank account and the business bank account of his company, Sterling Educational Consulting, LLC.

Prosecutors said Sterling used the personal identifying information of his purported students to electronically fill out and submit their Free Applications for Federal Student Aid (FAFSAs), sign master promissory notes on their behalf, enroll them into classes at BRCC, and create and manage the student BankMobile accounts that received federal student loans.

Since Sterling controlled the students’ accounts, he directed the Department of Education to pay the monies directly into his own bank accounts, according to the U.S. Attorney’s Office.

“In order to circumvent Department of Education controls designed to inform students about the financial obligations of student loans, Mr. Sterling concealed his role as the preparer of the FAFSAs and pretended to be the students when he logged on with their credentials, clicked through the loan counseling in less than three minutes, and signed promissory notes in their names. Typically, the students did not have access to the email addresses or login information that Mr. Sterling created on their behalf and did not have access to their own FAFSA, BRCC, or BankMobile accounts,” Gathe said.

Prosecutors said they also determined Sterling falsified the academic qualifications for 168 students to the Department of Education, and 145 of these students lacked even a high school diploma or equivalent (e.g. a GED).

A witness at trial also testified that Mr. Sterling had paid him $5,000 to produce 42 diplomas with fictional grades, the U.S. Attorney said.

The diplomas were then provided to BRCC after BRCC requested verification of the students’ academic credentials.

None of the 180 students for whom Sterling received money progressed academically at BRCC, and 172 failed or withdrew from every class they were enrolled in, according to the U.S. Attorney’s Office.

Prosecutors said some students were incarcerated when their FAFSAs were submitted, promissory notes signed, or federal student aid disbursed into Sterling’s bank accounts.

“Instead of directing the funds he received to the students, Mr. Sterling kept over 60% for himself, and for 25 students, Mr. Sterling kept 100% of the loan proceeds. Among the students who received money from Mr. Sterling’s scheme, most were unaware they had signed up for student loans and that Mr. Sterling had signed master promissory notes in their names obligating them to repay the full amount. The students were also unaware of the true amount of refunds awarded in their names, and the true amount Mr. Sterling retained as his portion,” Gathe said.

Prosecutors explained Sterling was charged with SBA wire fraud, because he submitted a loan application on behalf of his business, Sterling Educational Consulting, LLC, that falsified the business’s revenues and costs and concealed his prior guilty plea to felony theft.

Due to the false statements, the SBA loaned Mr. Sterling $90,000 in order for him to pay the operating costs of his business during the pandemic, according to the Department of Justice. Sterling then withdrew $75,000 in cash, they said.

Prosecutors said Sterling also spent more than $253,000 in stolen money at casinos in Louisiana, Nevada, and Pennsylvania.

Gathe said Sterling now faces a maximum sentence in federal prison of 20 years per wire fraud count, 10 years per money laundering count, and five years per financial aid fraud count, as well as significant fines, restitution, and supervised release.

This case was investigated by the FBI and the U.S. Department of Education – Office of Inspector General. This case was prosecuted by Deputy Criminal Chief Elizabeth E. White, Assistant U.S. Attorney René I. Salomon, and Asset Forfeiture Chief Brad Casey.

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