Posts Tagged ‘fraud’

Houston Church Leaders Charged with Student Loan Fraud

November 22, 2008 Leave a comment

Eric and Sheila Washington, pastors of Texas church Fishers of Men Worhsip Center, along with the church’s secretary and treasurer,  have been charged by federal prosecutors with student loan fraud.  From

Prosecutors claim the accused would recruit church members who were students, file for student loans in their names and pocket the cash.

They are also accused of committing fraud against FEMA by overstating the number of Katrina victims their church was assisting.


Lawyers for Plaintiff in Sallie Mae Case Withdraw

November 6, 2008 Leave a comment

I’ve just learned that the lawyers for Michael Zahara, the ex-Sally Mae employee who has filed a Federal False Claims Act against the company alleging “a pattern and practice of fraudulent conduct” in connection with the Federal Family Education Loan Program (FFELP) have withdrawn from the case. 

The lawyers, Larry Zoglin of Phillips & Cohen, LLP and Kathleen Sweeney of Schembs Sweeney Law, argued that there was “an irremediable breakdown in the trust necessary to sustain the attorney client relationship” with Zahara in their motion to United States Magistrate Judge Jane Magnus-Stinson.  The motion was granted on October 29, 2008, and it’s not yet clear what the implications will be for Zahara’s case.

Here’s the official Entry on the Motion to Withdraw



Student Loan Company Reaches Settlement Agreement for Deceptive Tactics

November 3, 2008 1 comment

The New York Times reported yesterday that Goal Financial has reached a settlement with the New York attorney general, who has been investigating reports of deceptive lending tactics. 

“Goal Financial had used mailings that looked as though they came from the federal government and had offered iPods, spa gift cards and other items to lure borrowers.

Under the terms of the agreement, Goal will adopt a marketing code of conduct developed by the office of the attorney general, Andrew M. Cuomo, and will pay $350,000 to a fund maintained by his office for educating students about the financial aid process.

Eight other lenders have already agreed to abide by the code of conduct, which sets out rules for companies to follow in their direct-to-consumer marketing efforts. Seven of those companies have contributed more than $1.4 million to the attorney general’s fund.”

The Times also reports that in 2006, Goal was one of the top 10 largest providers of student debt consolidation loans.  One interesting thing about this whole mess – no report of what, if any remedies, the students who took out these loans are going to get.

Lawsuit Against Sallie Mae Alleges Fraud

November 2, 2008 7 comments

The Chronicle of Higher Education recently reported that a former Sallie Mae employee has filed a federal False Claims Act against the company alleging that Sallie Mae “had been using the practice of granting forbearances to systematically balloon student-loan debts.”  From the article:

In the system of government-guaranteed student loans, the tactic was part of a strategy to grow student debts as large as possible, increasing Sallie Mae’s profits, before taxpayers and debtors were stuck with the final bill, said the former Sallie Mae employee, Michael Zahara. 

For the legal geeks out there, I’ve attached a copy of the complaint.  Zahara v. SLM Corporation