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STUDENT LOAN FRAUD
A 56-year old former private school owner has been convicted in what is considered the biggest student loan scam in Canada’s history. Lawrence Mpamugo of the Credit Valley Institute of Business and Technology was found guilty of fraud and attempting to obstruct justice in a scheme that took at least $12 million from the Ontario Student Assistance Program (OSAP).
In this fraud scheme, Mpamugo, a Nigerian-born Canadian, used a legitimate college as a front, filing hundreds of student loan applications for students who never intended to actually go to school. It is alleged that Mpamugo employed agents at $100 a piece to recruit students to register in the college and enroll for OSAP. Once the OSAP cheque arrived, the school kept the tuition portion while the student applicants kept the rest. Very few even attended a single class, and in one extreme, a wheel-chair bound applicant enrolled in a campus that was only accessible by stairs. The prosecutors state that the students were desperate for money and willing to sign anything, even though they had no intention or prospect of paying off their loans or attending classes.
The scheme was first uncovered in 1999, when Mpamugo’s campuses in Toronto, North York, Scarborough and Mississauga were raided by the RCMP on a tip from a former employee. When caught, he tried to cover up the fraud by creating false attendance records, fake test results and other phony documents, arguing that the only ones guilty of fraud were the students who did not attend class.
Mpamugo faces up to 10 years in jail, and the Ontario Court of Justice and the CIBC are suing Mpamugo in civil court to try to recover losses.
Student-loan schemer convicted of fraud: Private school owner procured $12M in loans for students who never showed. M. Friscolanti, National Post. In the Edmonton Journal, September 29, 2004.