GAO: Government bilked for fake degree fees

GAO investigators testified this morning that they have uncovered more than $150,000 in federal payments to unaccredited schools on behalf of federal employees, and that the true extent of improper payments likely is much larger.

Robert J. Cramer, managing director of GAO's Office of Special Investigations, told the Senate Governmental Affairs Committee that his agency uncovered $169,470.74 in federal payments to unaccredited schools.

GAO found in looking at only five schools that the federal government had paid for about 70 federal employees to enroll in diploma mills and other unaccredited institutions.

"We believe that this number understates the number of federal employees at these agencies who have such degrees," Cramer said.

He cited several obstacles to identifying employees with questionable degrees, such as incomplete federal records and the deliberately confusing names diploma mills adopt.

The audit agency report cited the cases of five unnamed federal employees who had received degrees from unaccredited schools: three from the National Nuclear Safety Agency, one from the Transportation Department and one from the Homeland Security Department.

The facts GAO presented about the DHS official, whom it identified as Employee No. 5, matched the career of Laura Callahan, a senior director in the department's CIO office who recently resigned after being on paid leave following the disclosure by Government Computer News and Washington Technology that her degrees came from a diploma mill.

The employee identified in the GAO report as Employee No. 4 had an academic career that exactly matches that of DOT CIO Dan Matthews. Matthews received a degree in less than eight months from Kent College, an unaccredited school, after completing three research papers and paying $3,500.

In 1992, he listed his degree from Kent College on his application to Strayer College for a master's degree program, without identifying Kent as an unaccredited school. Strayer, an accredited school, accepted his application and he completed the master's degree program. (Click for GCN story)

Today's hearing featured testimony by Rep. Tom Davis (R-Va.), chairman of the House Government Reform Committee who has worked with Governmental Affairs Committee Chairman Susan Collins, a Maine Republican, to commission the GAO report and cope with the diploma mill issue.

Davis said the solution to the bogus degree problem "involves fundamentally changing government classification of institutions of higher education."

He noted that some non-accredited schools provide legitimate education.

Davis said Congress, the Education Department and the Office of Personnel Management all have important roles to play in stemming diploma mill use by federal employees.

Davis suggested that Congress may have to pass new criminal laws to help federal law enforcement agencies investigate and prosecute diploma mill activity.

Alan Contreras, administrator of the Office of Degree Authorization of the Oregon Student Assistance Commission, highlighted the potential that diploma mill degree holders could be blackmailed'a serious issue for those who hold security clearances.

For example, Contreras said, in North Dakota misrepresenting a diploma mill degree is a felony. Other states such as Oregon, New Jersey and Indiana also penalize diploma mill degree holders, he said.

After the hearing, Contreras said, "As a society, we have become addicted to paper credentials...we think you need a degree to advance. I would like to see de-emphasis on paper credentials."

Contreras said most of the complaints his office receives about diploma mill degrees concern public sector employees, many in the public safety, medical administration and educational fields.

Laurie Gerald, a former employee of diploma mill Columbia State University who is awaiting sentencing after pleading guilty to one count of mail fraud, testified that "Columbia State had no faculty, qualified or otherwise, no curriculum, no classes, no courses, no tests, no one to grade tests, no educational facilities, no library and no academic accreditation."

Gerald described the cynical frauds and flamboyant behavior of Columbia State owner Ronald Pellar, who grossed $20 million from the scam.

Pellar carried a briefcase with $100,000 in cash and buried gold coins in his back yard, she said. He brazenly faked accreditation, transcripts, testimonials and other marketing materials for the school and was convicted of several crimes.

Collins, in her opening statement, noted that diploma mills devalue education, cheat legitimate students, employers and their clients, menace public safety and have bilked taxpayers.

Collins distinguished between diploma mills that simply sell pieces of paper and those who practice "a more sophisticated form of deception," with attendant higher charges.

"All the schools we investigated give credit for prior work or life experience'even for advanced degrees'which is very rare among accredited institutions. One institution's list of life experiences that could qualify for academic credit included horseback riding, playing golf, pressing flowers, serving on a jury and planning a trip," Collins said.

The committee's hearings are to continue tomorrow morning.