A New York Times investigative report last week unearthed an on-going international degree mill scam run by a Pakistani company, Axact. The damning scandal could have died down slowly, just like any other high profile case before it, once the investigators launched the official probe. But it picked up steam, primarily because Axact’s sister-company was gearing up to launch a new television channel.
The unraveling details of the case disclosed that the company had issued fake degrees from phony schools and scammed customers out of billions of dollars. High level fraud had been committed, according to the report. The investigation further revealed that the company had also sold fake State Department authentication certifications bearing the signatures of John Kerry. High level forgery had also been committed. The FIA raid of the company’s offices seized computers, hard drives, manual records, and equipment. It uncovered that Axact was using at least 20 offshore companies to process customer revenues, pay suppliers and purposely create a shield between Axact and the financial affairs of its websites. High level money laundering had been committed.
These three egregious white-collar crimes compelled the US to appear concerned. The US Department of State denied having any relationship with Axact. An administration official, citing that authorities in Pakistan were investigating the case, said that the department “doesn’t have any agreement for any authentication with Pakistan based IT company Axact.” The official remarked that the department website highlights warnings about fraudulent documents or cases through out the world. It provides information on accredited educational institutions too.
The US can not possibly stay out of this matter. In addition, the company, according to the New York Times, left some traces of an American connection. “They include mailboxes in California, Colorado, and Texas, and two Bank of America accounts at a branch in Florida that two former customers of Axact-run school sites said had been provided as a place to send payments.”
The scam also resurfaced a 22 million dollar judgment handed down in August 2012 by the US District Court in Detroit in favor of over 30,000 Americans who received fake degrees via Axact. The Oakland Press reported that a class action lawsuit was filed by two Oakland County attorneys and the money could not be collected because the defendants were outside of the US.
“The crooks behind this scam are using the US mails, they are using the wires here through the internet and telephone, they are utilizing the name and signature of the Secretary of State John Kerry and the former Secretary of State Hillary Clinton and they are ripping off American citizens,” the newspaper’s Aftab Borka quoted one of the lawyers as saying, “all of which gives the US government ample incentive to put a stop to it.”
While these attorneys are convinced that the authorities have enough material to act on the case, the degree mill cases were hardly a priority in the past. There are loose and nearly nonexistent federal laws against such crimes. The federal government has made the regulations of diploma mills and bogus degree business the responsibility of individual states. “States have historically wanted to maintain as much autonomy from the federal government as possible. When it comes to educational institutions, the federal government has largely delegated the matter to the states to regulate,” says Qasim Rashid, author and Corporate Litigation attorney.
Basically, every state for itself. North Dakota, for example, made it illegal to grant phony degrees and the law dishes out penalties of up to $25,000 with a jail sentence. Similarly, it is not a crime to buy a fake degree in Florida, but a first-degree misdemeanor to use it.
There are handful of other states, including Washington, Virginia, and Texas that have taken up the issue seriously. Diploma mills usually capitalize on the consumer desire for a more competitive career edge, and the internet has provided a cover for bogus schools to operate freely. Since the diploma mill is a white collar crime, no large scale enforcement has been set in motion.
However, the Axact scam has a larger scope. Fraudulent activity, and possible money laundering are crimes that fall under strict federal jurisdiction. Faiz e Rasul, an immigration and criminal lawyer and member of New York State Bar, believes that the US must have kicked off its own investigation albeit discreetly. “The US response might not be forthcoming right away, but its interest can not be deterred. This case is more about the government’s good name and credibility,” Faiz said.
He stressed that the Justice Department, FBI and even Secret Service would be looking into this. Each agency has its own anti-cyber crime unit, and their collaboration would expand the US jurisdiction to investigate online scam overseas. The US can freeze assets of any company linked to Axact anywhere in the world.
Pakistan has already sought FBI’s legal assistance. The protocol dictates a procedure followed by a careful review could take a few days. Experts believe that the FBI might also want to wait for the FIA to release its investigation results before providing any expertise.
The unraveling details of the case disclosed that the company had issued fake degrees from phony schools and scammed customers out of billions of dollars. High level fraud had been committed, according to the report. The investigation further revealed that the company had also sold fake State Department authentication certifications bearing the signatures of John Kerry. High level forgery had also been committed. The FIA raid of the company’s offices seized computers, hard drives, manual records, and equipment. It uncovered that Axact was using at least 20 offshore companies to process customer revenues, pay suppliers and purposely create a shield between Axact and the financial affairs of its websites. High level money laundering had been committed.
These three egregious white-collar crimes compelled the US to appear concerned. The US Department of State denied having any relationship with Axact. An administration official, citing that authorities in Pakistan were investigating the case, said that the department “doesn’t have any agreement for any authentication with Pakistan based IT company Axact.” The official remarked that the department website highlights warnings about fraudulent documents or cases through out the world. It provides information on accredited educational institutions too.
The US can not possibly stay out of this matter. In addition, the company, according to the New York Times, left some traces of an American connection. “They include mailboxes in California, Colorado, and Texas, and two Bank of America accounts at a branch in Florida that two former customers of Axact-run school sites said had been provided as a place to send payments.”
The US must have kicked off its own investigation, albeit discreetly
The scam also resurfaced a 22 million dollar judgment handed down in August 2012 by the US District Court in Detroit in favor of over 30,000 Americans who received fake degrees via Axact. The Oakland Press reported that a class action lawsuit was filed by two Oakland County attorneys and the money could not be collected because the defendants were outside of the US.
“The crooks behind this scam are using the US mails, they are using the wires here through the internet and telephone, they are utilizing the name and signature of the Secretary of State John Kerry and the former Secretary of State Hillary Clinton and they are ripping off American citizens,” the newspaper’s Aftab Borka quoted one of the lawyers as saying, “all of which gives the US government ample incentive to put a stop to it.”
While these attorneys are convinced that the authorities have enough material to act on the case, the degree mill cases were hardly a priority in the past. There are loose and nearly nonexistent federal laws against such crimes. The federal government has made the regulations of diploma mills and bogus degree business the responsibility of individual states. “States have historically wanted to maintain as much autonomy from the federal government as possible. When it comes to educational institutions, the federal government has largely delegated the matter to the states to regulate,” says Qasim Rashid, author and Corporate Litigation attorney.
Basically, every state for itself. North Dakota, for example, made it illegal to grant phony degrees and the law dishes out penalties of up to $25,000 with a jail sentence. Similarly, it is not a crime to buy a fake degree in Florida, but a first-degree misdemeanor to use it.
There are handful of other states, including Washington, Virginia, and Texas that have taken up the issue seriously. Diploma mills usually capitalize on the consumer desire for a more competitive career edge, and the internet has provided a cover for bogus schools to operate freely. Since the diploma mill is a white collar crime, no large scale enforcement has been set in motion.
However, the Axact scam has a larger scope. Fraudulent activity, and possible money laundering are crimes that fall under strict federal jurisdiction. Faiz e Rasul, an immigration and criminal lawyer and member of New York State Bar, believes that the US must have kicked off its own investigation albeit discreetly. “The US response might not be forthcoming right away, but its interest can not be deterred. This case is more about the government’s good name and credibility,” Faiz said.
He stressed that the Justice Department, FBI and even Secret Service would be looking into this. Each agency has its own anti-cyber crime unit, and their collaboration would expand the US jurisdiction to investigate online scam overseas. The US can freeze assets of any company linked to Axact anywhere in the world.
Pakistan has already sought FBI’s legal assistance. The protocol dictates a procedure followed by a careful review could take a few days. Experts believe that the FBI might also want to wait for the FIA to release its investigation results before providing any expertise.