Operation Dipscam

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Operation Diploma Scam: DIPSCAM

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[edit] Congressional Hearing

Taxpayers Still Vulnerable to Diploma Mills Despite Current Safeguards, Witnesses Tell Congress, September 23, 2004

WASHINGTON , D.C. – Federal tax dollars may be vulnerable to abuse by higher education scams providing phony postsecondary degrees – known as diploma mills – despite safeguards that have been put into place, witnesses today told the U.S. House Subcommittee on 21st Century Competitiveness. The hearing uncovered examples of federal agencies or grantees using taxpayer dollars to either purchase the bogus degrees, or employ high-level individuals who hold the worthless credentials.

“Diploma mills harm students, taxpayers, and both federal and state governments. They mislead consumers and employers and pose dangers to legitimate institutions of higher education,” said Rep. Howard P. “Buck” McKeon (R-CA), chairman of the subcommittee.

“Reliance on phony degrees is not a victimless crime,” continued McKeon. “Take the disturbing story of an individual claiming to be a physician in North Carolina who treated an 8-year old girl for complications with diabetes. The girl’s mother trusted the ‘doctor’ based on his MD degree, and took her daughter off of insulin, as instructed. Sadly, her daughter died. The physician? He earned his ‘degrees’ from bogus institutions; all of his diplomas came from diploma mills.”

Retired FBI agent Allen Ezell testified on his involvement with Operation Diploma Scam (DIPSCAM), a series of investigations held from 1980 – 1991 to crack down on illegitimate higher education institutions selling phony degrees. In that time, Ezell and the taskforce executed 16 federal search warrants, obtained 19 federal grand jury indictments, and convicted 21 individuals. Agent Ezell purchased 10 Bachelor, 19 Masters, four Ph.D., and two M.D. degrees from these so-called diploma mills.

“Degree mills are well over a $500 million dollar a year business,” said Ezell. “Most probably, over one million Americans have purchased (and probably use) fictitious credentials.”

The Government Accountability Office (GAO) has conducted a number of investigations into diploma mills, specifically examining whether federal employees hold these faulty credentials, and whether they were paid for at government expense. Robert Cramer, managing director of the GAO Office of Special Investigations, testified on these findings.

“Several factors make it extremely difficult, if not impossible, to determine the extent of unauthorized federal payments for degrees issued by diploma mills,” said Cramer. “First, the data we received from both schools and federal agencies understate the extent to which the federal government has made such payments. Additionally, the way some agencies maintain records of payments for employee education makes such information inaccessible.”

Still, Cramer noted their investigations into eight federal agencies and at least four reputed diploma mills had resulted in significant findings of federal employees holding degrees from these institutions. Three of the supposed diploma mills reported 463 of their students were federal employees, and a total of $169,470.74 in federal payments was found to have been made to two of these schools.

A Senate Governmental Affairs Committee investigation earlier this year revealed federal Head Start grant funds intended for early childhood education programs had been used to purchase phony degrees from a diploma mill. It is not illegal at the present time for Head Start employees to use federal Head Start training funds to acquire a degree from a non-accredited school or diploma mill, Education & the Workforce Committee Republicans noted.

Witnesses examined safeguards in current law that exist to prevent abuse by diploma mills. The accreditation system in the Higher Education Act (HEA) serves as the most visible defense against diploma mills, with stringent requirements in place to keep diploma mills out of the multi-billion dollar federal student aid programs that include Pell Grants and student loans.

Jean Avnet Morse of the Middle States Commission on Higher Education testified on the role accreditors – particularly those recognized by the U.S. Secretary of Education to allow participation in the federal student aid programs – play in protecting the HEA against fraudulent institutions.

“Regional accreditors can bring to the problem over 100 years’ experience in defining quality education, applying standards by using qualified peer reviewers, and changing as higher education has changed,” said Morse. “Accreditation is not just a periodic reporting for compliance. It is a continuous process that emphasizes the institution’s capacity and plans for growth and improvement.”

The witnesses discussed potential solutions to address the diploma mill industry, including national listings of accredited institutions [1], renewal of an initiative like the FBI DIPSCAM series of investigations, greater state coordination and strengthened state licensing requirements, and standards to be established by the U.S. Department of Education for degrees used to gain employment. These are just some of the suggested reforms that could help alleviate the proliferation of diploma mills and the bogus degrees they offer, witnesses noted.

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