The owner of a San Diego technical training school was sentenced Tuesday to 45 months in federal custody for defrauding the Department of Veterans Affairs out of nearly $30 million in a scheme to unlawfully obtain Post-9/11 G.I. Bill benefits.
Nimesh Shah, 37, the owner of Blue Star Learning, invented fake students and falsified documents to ensure the school received VA educational benefits available for schools with a certain percentage of enrolled veterans, according to the U.S. Attorney’s Office.
Shah pleaded guilty late last year to a wire fraud charge.
The VA issued more than $11 million in tuition payments and more than $18 million in housing allowances and stipends as a result of the scheme, the U.S. Attorney’s Office said.
In addition to the custodial sentence, Shah was ordered to forfeit $3,076,361.77 and pay the VA $29,350,999 in restitution.
Shah’s wife, Nidhi Shah, 35, who was also the vice president and director of education at the school, was sentenced to two years of probation for lying to investigators, according to the U.S. Attorney’s Office.
Prosecutors say Nimesh Shah perpetrated the scheme in order to receive funds from the VA under the Post-9/11 G.I. Bill, which requires the school to have at least 15% non-veteran students for each course in which the VA was paying educational benefits, a requirement known as the “85/15 rule.”
Since the school’s student body was made up almost entirely of veterans, prosecutors say Shah created fake enrollment agreements and student files for the supposed non-veteran students and emailed the VA 48 fraudulent enrollment agreements, which included fake dates of birth, social security numbers, addresses, phone numbers and emails for non-veteran students who didn’t exist.
The school was also required to submit vocational attainment data to the California State Approving Agency for Veterans Education to show its graduates were getting jobs in the fields they received training in.
Prosecutors say Shah submitted fake phone numbers, email addresses, employers and employer contact information for each student.
To prevent anyone from discovering the scheme, he hired people overseas to create the email addresses he listed on the documents and respond to inquiries as though they were the students, prosecutors said.
He also hired people to create false email addresses and domain names for fictitious companies that purportedly hired his students. One Blue Star employee was directed to buy 30 cell phones, one for each fake employer, and
each with voicemail greetings created by Blue Star employees in case anyone called to verify the companies existed.
“This was an extraordinary fraud in terms of the elaborate deception, the years-long duration and the amount of money involved,” said U.S. Attorney Robert Brewer. “This defendant knowingly violated the rules to enrich himself, and for that he will go to prison.”
— City News Service
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