Beauty is Only Skin Deep


The phrase, ”beauty is only skin deep,” suggests that a person’s character is more important than how they actually look. A woman who ran a cosmetology school in Fort Wayne, Indiana used her beauty school to hide an ugly $3 million student loan scam.

The former head of the beauty school ran the elaborate student loan scheme by fraudulently obtaining Department of Education loan funds that neither her school nor her students were eligible for. She illegally coded the federal loan proceeds the institution received as cash instead of financial aid funds, then failed to report that information to the institution’s third-party student aid processing contractor. (The government doesn’t like to be kept in the dark about things like that.)

The woman’s scheme involved the school applying for Federal Family Education loans and direct loans for the same students during the same academic period. (Federal law allows students enrolled in this type of educational program to receive up to $30,000 in student loans, but they cannot obtain Federal Family Education loans or direct loans at the same time.)

And that’s not all. The woman had her students sign promissory notes for the loans, but did not show them the debt details. She also told them they were being awarded loans under a new government program that required only minimal payments. Supposedly her students would not have to repay the loan in full. (Wouldn’t it be nice if we could borrow money and not have to pay it back?) The woman further deceived her students by granting bogus loans for personal expenses.

The former head of the cosmetology school helped to secure approximately $2.9 million in bad student loans with more than 50 of her students each receiving between $30,000 and $98,000 – apparently way beyond what they were eligible for. Court documents show that she forged more than 150 Family Education Loan checks totaling over $500,000 and deposited them into the school’s bank account.

The woman pleaded guilty to failing to repay student financial aid funds she illegally obtained over more than a year. Even though she faced up to five years in federal prison, she was actually sentenced to two years of probation.She must also pay $300,000 in restitution to the Department of Education.

Further research revealed that dozens of students who previously attended this beauty school now owe between $30,000 and $100,000 for loans that were illegally obtained by the woman who masterminded the scheme. Even though the Department of Education wiped away some of the student victims’ debt, there are those who will need to repair their credit rating.

The impact this woman had on her victims’ lives was definitely not pretty. She can no longer hide behind her cosmetology school, which is now closed. If she ever endeavors to run a similar business, she will definitely need a full character makeover.

Source: Today’s ”Fraud of the Day” is based on an article entitled, ”Masters of Cosmetology head avoids prison for student loan scheme,” posted on on October 21, 2016.

FORT WAYNE, Ind. (WANE) The former head of Masters of Cosmetology who ran a student loan scheme at the beauty school that secured nearly $3 million in bad student loans will avoid prison, a judge determined this week.

Kaydean Geist was sentenced Wednesday in U.S. District Court in Fort Wayne to two years probation. Judge Theresa Springmann ordered the shamed owner and president of Masters of Cosmetology to repay $300,000 to the United State Department of Education.

Read More

Previous articlePsych Test
Next articleTooth Fairy

Larry Benson, Senior Director of Strategic Alliances, LexisNexis Risk Solutions - Government

Larry Benson is responsible for developing strategic partnerships and solutions for the government vertical. His expertise focuses on how government programs are defrauded by criminal groups, and the approaches necessary to prevent them from succeeding.

Mr. Benson has 30 years of experience in sales and business development. Before joining LexisNexis® Risk Solutions, he spent 12 years founding and managing two software technology startups. During the 1990s he spent 10 years as a Regional Director helping to grow a New England-based technology company from 300 employees to 7,000. He started his career with Martin Marietta Aerospace working on laser guided weapons and day/night vision systems.

A sought-after speaker and accomplished writer, Mr. Benson is the principal author of “Fraud of the Day,” a website dedicated to educating government officials about how criminals are defrauding government programs. He has co-authored WTF? Where’s the Fraud? How to Unmask and Stop Identity Fraud’s Drain on Our Government, and Data Personified, How Fraud is Changing the Meaning of Identity.

Benson holds a Bachelor of Science in Physics from Albright College, and earned two graduate degrees – a Master of Business Administration from Florida Institute of Technology, and a Master of Science in Engineering from Lehigh University.