Totally and Permanently Frauded

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Low angle rear view shot of six student`s feet, they are walking outside in the park near te college building, sunny summer day, friends are enjoying their company

De’Reek Banks told more than 500 borrowers that there were special government programs that existed that could authorize the discharge of the borrowers’ loans. Which is true. There are over 120 student loan forgiveness programs across the country that have been established for years. Take for instance, the Higher Education Act of 1965 and updated Higher Education Act of 2008 which discharged the student loan debt for “totally and permanently disabled” veterans. Banks once worked for the VA office and was familiar with this program.  And it was through this program that Banks engineered approximately $48 million in student loans to be fraudulently discharged.

De’Reek Banks told more than 500 borrowers that he could get their student loans discharged — canceled, essentially — in return for a fee. While most of the 500 borrowers were not “totally and permanently disabled”, the individuals believed they were paying for a legitimate student loan debt relief service. He tricked them into believing that he could legitimately obtain federal loan discharges for them. Banks collected almost $900,000 in fees.

What Banks did first was to send letters on fake Department of Veterans Affairs letterhead to Federal Student Aid, the government office responsible for student loans. In these letters, he claimed that the borrowers were veterans with total or permanent disabilities. Then using that fraudulent letter detailing those supposed disabilities, he was able to file for student loan forgiveness.

Banks’ scheme was eventually discovered, and he pled guilty to student loan fraud in March of 2022. After serving his sentence in a prison near Atlanta, Banks will be on supervised release for three years. He has also been ordered to pay $910,416.69 in restitution — even though the court set his fine and cost of incarceration at $0 because of his inability to pay. This is unfortunate for the 500 borrowers.  Not only will they not get their fee reimbursed from Banks, but the loans also previously forgiven on fraudulent applications has been reversed and they are now fully responsible for repayment of their loans.

Great job by the U.S. Department of Education with the investigation of this case.

Today’s Fraud of the Day is based on an article “Georgia man wiped out $48M in student loans with disabled veterans scam, officials say” published by FOX 5 Atlanta on August 25, 2022

A Georgia man will spend years in prison for a fraud scheme that wiped out around $48 million in federal student loans for hundreds of borrowers that he claimed were disabled military veterans, officials say. Officials say 41- year-old De’reek Banks of Lithonia, Georgia operated a business that offered to help student loan borrowers get discharges for federal student loans for a fee.

According to the U.S. Attorney’s Office, Banks told customers that special programs existed for authorizing the discharge of borrowers loans, but instead he was lying to the Federal Student Aid office of the U.S. Department of Education.

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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.