Woman admits to $5M Department of Education fraud scheme involving “straw students”
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In a scheme that seems straight out of a crime thriller, a North Carolina woman orchestrated a bold plan that left many stunned.
Her case has brought attention to potential gaps in the education system and raised questions about oversight in federal funding.
Now, as the case unfolds, it serves as a stark reminder of the risks tied to financial aid programs.
Cynthia Denise Melvin, 59, has pled guilty to a “straw student” scam that siphoned off a staggering $5 million in federal student loan aid.
Melvin's elaborate con involved enlisting over 70 individuals as “student participants”—straw students—who would apply for federal financial aid with no intention of attending classes or pursuing an education.
Melvin applied to colleges on behalf of her recruits, secured financial aid through the Free Application for Federal Student Aid (FAFSA), even went as far as impersonating these students to maintain the illusion of their attendance, completing assignments, and communicating with the schools.
This scheme spanned from 2016 to 2023, making it one of the biggest “straw student” scam in years, as per the news announcement of the Department of Justice.
The consequences of Melvin's actions are severe. She now faces up to 20 years in prison, a $250,000 fine, and three years of supervised release. Additionally, she must repay the stolen funds.
Melvin’s class of fake students enrolled in several schools of higher education across North Carolina, such as community colleges in Wake, Cumberland and New Hanover counties, as per the court filings. FAFSA was reported to spend more than $5 on these fraudulent claims.
This money went to schools to reimburse tuition costs, while the remaining funds went to the students and Melvin, said the prosecutors.
According to the Department of Education Office of the Inspector General's FraudGram newsletter from February, scam operations often focus on community colleges and lower-cost institutions. These schools are targeted more frequently because their lower tuition allows for larger remaining credit balance refunds.
Unfortunately, Melvin's case is not an isolated incident. The Department of Justice announced another student loan fraud case on Wednesday, involving a Texas woman who pleaded guilty to conspiracy to commit mail and wire fraud. Her scheme aimed to secure nearly $500,000 in financial aid using straw students.
However, some of the most significant cases date back a few years. One of the largest involved a Louisiana man sentenced to 11 years in federal prison for orchestrating a straw student scam alongside a COVID-19 relief fraud scheme.
Elliott Sterling, who was 34 at the time of his conviction, was found guilty at trial and ordered to repay $2.8 million to the Department of Education for his role in the scheme, officials announced in 2023.
Sterling’s operation was far-reaching, involving 180 “student participants,” many of whom were unaware their names had been used to take out student loans, according to the US Attorney’s Office for the Middle District of Louisiana.
A Baton Rouge man was found to have falsified academic credentials for 168 students, with 145 of them lacking a high school diploma. During the trial, a witness testified that Sterling paid him $5,000 to produce 42 diplomas with fabricated grades.
Meanwhile, in the Central District of California, a federal case is ongoing against three women accused of using prison inmates' identities to enroll in an Orange County community college and fraudulently obtain nearly $1 million in federal student loans.
Two of the women, sisters Nyisha and Dionne Ramsey, have pleaded guilty to conspiracy to commit wire fraud and are set to be sentenced on May 1, according to the U.S. Attorney’s Office.
The third defendant, Sharyn Barney—Nyisha Ramsey’s mother-in-law—is scheduled to stand trial in 2026.
The Department of Education’s Office of Inspector General emphasized in a September 2024 statement that schools play a key role in identifying student aid fraud rings, stating that early detection efforts help “protect the integrity of the Federal student aid programs.”
One warning sign of fraudulent activity is when multiple students share the same or similar addresses, names, emails, class schedules, and bank accounts, the department noted.
Additional suspicious behaviors include frequent changes to personal information before loan disbursement, attending multiple schools without making academic progress, ignoring verification requests, submitting falsified legal documents, and using virtual private networks to access a school’s intranet.
Also read: Is the Education Department changing? What Trump’s possible executive move could mean
“Although some fraud ring participants do so willingly, fraud rings often steal the personally identifiable information of others to apply for aid,” the office stated.
Fraudulent students often qualify for need-based grants by reporting low family contributions, receive monetary credits from overpayments, lack approved transfer credits, and drop out of classes after securing financial aid, the office added.
If you suspect fraudulent activity happening in college or universities that you may know of through your loved ones, it's crucial to report it to the Office of Inspector General. By doing so, you help safeguard the resources meant to support genuine educational pursuits.
You might be interested: You might be missing out on thousands in college funds—here’s how!
What are your thoughts on this issue? Do you have tips for recognizing and preventing fraud? Share your insights and experiences in the comments below!
Her case has brought attention to potential gaps in the education system and raised questions about oversight in federal funding.
Now, as the case unfolds, it serves as a stark reminder of the risks tied to financial aid programs.
Cynthia Denise Melvin, 59, has pled guilty to a “straw student” scam that siphoned off a staggering $5 million in federal student loan aid.
Melvin's elaborate con involved enlisting over 70 individuals as “student participants”—straw students—who would apply for federal financial aid with no intention of attending classes or pursuing an education.
Melvin applied to colleges on behalf of her recruits, secured financial aid through the Free Application for Federal Student Aid (FAFSA), even went as far as impersonating these students to maintain the illusion of their attendance, completing assignments, and communicating with the schools.
This scheme spanned from 2016 to 2023, making it one of the biggest “straw student” scam in years, as per the news announcement of the Department of Justice.
Cynthia Denise Melvin admitted to defrauding the Department of Education out of $5 million through a “straw student” scheme involving over 70 participants. Image source: Ivan Aleksic / Unsplash.
The consequences of Melvin's actions are severe. She now faces up to 20 years in prison, a $250,000 fine, and three years of supervised release. Additionally, she must repay the stolen funds.
Melvin’s class of fake students enrolled in several schools of higher education across North Carolina, such as community colleges in Wake, Cumberland and New Hanover counties, as per the court filings. FAFSA was reported to spend more than $5 on these fraudulent claims.
This money went to schools to reimburse tuition costs, while the remaining funds went to the students and Melvin, said the prosecutors.
According to the Department of Education Office of the Inspector General's FraudGram newsletter from February, scam operations often focus on community colleges and lower-cost institutions. These schools are targeted more frequently because their lower tuition allows for larger remaining credit balance refunds.
Unfortunately, Melvin's case is not an isolated incident. The Department of Justice announced another student loan fraud case on Wednesday, involving a Texas woman who pleaded guilty to conspiracy to commit mail and wire fraud. Her scheme aimed to secure nearly $500,000 in financial aid using straw students.
However, some of the most significant cases date back a few years. One of the largest involved a Louisiana man sentenced to 11 years in federal prison for orchestrating a straw student scam alongside a COVID-19 relief fraud scheme.
Elliott Sterling, who was 34 at the time of his conviction, was found guilty at trial and ordered to repay $2.8 million to the Department of Education for his role in the scheme, officials announced in 2023.
Sterling’s operation was far-reaching, involving 180 “student participants,” many of whom were unaware their names had been used to take out student loans, according to the US Attorney’s Office for the Middle District of Louisiana.
She pleaded guilty to conspiracy to commit wire fraud and could face up to 20 years in prison, a $250,000 fine, and three years of supervised release. Image source: Pepi Stojanovski / Unsplash.
A Baton Rouge man was found to have falsified academic credentials for 168 students, with 145 of them lacking a high school diploma. During the trial, a witness testified that Sterling paid him $5,000 to produce 42 diplomas with fabricated grades.
Meanwhile, in the Central District of California, a federal case is ongoing against three women accused of using prison inmates' identities to enroll in an Orange County community college and fraudulently obtain nearly $1 million in federal student loans.
Two of the women, sisters Nyisha and Dionne Ramsey, have pleaded guilty to conspiracy to commit wire fraud and are set to be sentenced on May 1, according to the U.S. Attorney’s Office.
The third defendant, Sharyn Barney—Nyisha Ramsey’s mother-in-law—is scheduled to stand trial in 2026.
The Department of Education’s Office of Inspector General emphasized in a September 2024 statement that schools play a key role in identifying student aid fraud rings, stating that early detection efforts help “protect the integrity of the Federal student aid programs.”
One warning sign of fraudulent activity is when multiple students share the same or similar addresses, names, emails, class schedules, and bank accounts, the department noted.
Additional suspicious behaviors include frequent changes to personal information before loan disbursement, attending multiple schools without making academic progress, ignoring verification requests, submitting falsified legal documents, and using virtual private networks to access a school’s intranet.
Also read: Is the Education Department changing? What Trump’s possible executive move could mean
“Although some fraud ring participants do so willingly, fraud rings often steal the personally identifiable information of others to apply for aid,” the office stated.
Fraudulent students often qualify for need-based grants by reporting low family contributions, receive monetary credits from overpayments, lack approved transfer credits, and drop out of classes after securing financial aid, the office added.
If you suspect fraudulent activity happening in college or universities that you may know of through your loved ones, it's crucial to report it to the Office of Inspector General. By doing so, you help safeguard the resources meant to support genuine educational pursuits.
You might be interested: You might be missing out on thousands in college funds—here’s how!
What are your thoughts on this issue? Do you have tips for recognizing and preventing fraud? Share your insights and experiences in the comments below!
