DOJ Charges Executive in $140 Million Diploma Mill Scam

Written By ESR News Blog Editor Thomas Ahearn

On December 21, 2016, the U.S. Department of Justice (DOJ) announced the filing of a criminal Complaint charging an executive of a Pakistani company with wire fraud, conspiracy to commit wire fraud, and aggravated identity theft in connection with a worldwide diploma mill scheme that collected approximately $140 million from tens of thousands of consumers, according to a press release from the DOJ’s U.S. Attorney’s Office Southern District of New York.

The Complaint alleges that Umair Hamid, 30, of Karachi, Pakistan – also known as “Shah Khan” or the “Shah” – and his co-conspirators made false and fraudulent representations to consumers on diploma mill websites and over the phone to trick them into enrolling in purported colleges and high schools, and issued fake diplomas upon receipt of upfront fees from consumers.  Hamid was arrested on December 19, 2016, and was presented yesterday in federal court in Fort Mitchell, Kentucky.

“As alleged, while promising the rewards of a higher education, Umair Hamid was actually just peddling diplomas and certifications from fake schools,” Preet Bharara, the United States Attorney for the Southern District of New York, stated in the DOJ press release about the diploma mill scam. “Hamid allegedly took hefty upfront fees from young men and women seeking an education, leaving them with little more than useless pieces of paper.”

The Complaint claims Hamid and others operated a massive education diploma mill through the Pakistani company Axact – which billed itself as was one of the world’s leading information technology (IT) providers – and made misrepresentations to individuals across the world, including throughout the United States and in the Southern District of New York, in order to dupe these individuals into enrolling in supposed high schools, colleges, and other educational institutions.

The Complaint claims consumers paid upfront fees to Hamid and his co-conspirators in the diploma mill scam, believing that in return they would be enrolled in real educational courses and receive legitimate degrees.  Instead, after paying the upfront fees, consumers did not receive any legitimate instruction and were provided fake and worthless diplomas. Axact promoted and claimed to have an affiliation with approximately 350 fictitious high schools and universities.

People who believe they were victims of the diploma mill scam, including victims entitled to restitution, and wish to provide information to law enforcement and/or receive notice of future developments in the case or additional information, should contact the Victim/Witness Unit at the United States Attorney’s Office for the Southern District of New York, at (866) 874-8900.  For additional information, go to http://www.usdoj.gov/usao/nys/victimwitness.html.

The diploma mill problem is worldwide. A 2011 report from Verifile Accredibase defined diploma mill providers as “mostly online entities that offer substandard or bogus degrees in exchange for payment and not much else.” These degrees are often only based on life experience and little work. The report also found that the United States held “the dubious title of most popular location for diploma mill providers.”

Diploma mill providers that sell worthless degrees without requiring academic achievement are very profitable and make an estimated $200 million annually, according to College Choice, an independent online publication dedicated to helping students find the right college. The warning signs of a diploma mill include cold calls, spam, no exams, and instant degrees within 30 days of application in exchange for lump sums of money.

To combat diploma mill growth in the United States, the Council for Higher Education Accreditation (CHEA) created a Database of Institutions and Programs Accredited by Recognized United States Accrediting Organizations. The U.S. Department of Education (ED) Office of Post-Secondary Education (OPE) also provides a Database of Accredited Postsecondary Institutions and Programs.

How to Avoid Diploma Mill Scams

“A diploma mill creates a danger to employers since educational achievements tell a great deal about a job applicant’s ability, qualifications, and motivation,” explains Attorney Lester Rosen, founder and CEO of Employment Screening Resources® (ESR) and author of ‘The Safe Hiring Manual.’ Rosen  wrote an article about education verifications to explain how employers can avoid being tricked by a diploma mill scam at www.esrcheck.com/Articles/The-Basics-of-Education-Verifications/188/.

NOTE: Employment Screening Resources® (ESR) does not provide or offer legal services or legal advice of any kind or nature. Any information on this website is for educational purposes only.

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