Counterfeit Educational Credentials: Diploma Mills Cost Companies Millions

In 1997, Marion Kolitwenze's 8-year-old daughter, Rose, was diagnosed with type I juvenile diabetes. Marion was told that Rose would need insulin injections the rest of her life. In September 1999, Simon Becker, the doctor treating Rose at the time, believed that a virus was affecting her blood sugars and not diabetes. He referred them to Laurence Perry, a practitioner of naturopathic medicine. Marion took Rose to the office and home of Perry, and was impressed by the seemingly prestigious degrees hanging on his walls. The doctor's office had examination rooms, medical instruments, and other official accoutrements. Perry wore a white coat and even told Marion that he was a consultant on viruses for the government. Within a few weeks, he concluded that a virus had indeed raised Rose's blood sugar level and began a treatment that he said would attempt to "teach" Rose's immune system to stop the virus from affecting the blood sugars. Marion continued to receive instructions over the phone on how to treat Rose. On Oct. 19, just 10 days after the last visit, Perry told Marion to stop the insulin treatments. Two days later, Rose died from diabetic ketoacidosis, caused by lack of insulin.¹

Laurence Perry was convicted of involuntary manslaughter and practicing medicine without a license. The diploma on his office wall indicated that he had a "doctor of medicine" degree from the British West Indies Medical College, but no such school exists.² His prestigious credentials were from a fraudulent degree mill. Most frauds dupe us out of our hard-earned cash; this one took a life.

VERIFYING THOSE DEGREES 

Businesses often conduct background checks on prospective employees, which usually include validating degrees and official transcripts. However, technology now allows fraudulent educational organizations to produce documentation that will satisfy many company investigations.

Numerous legitimate schools offer online degrees to ambitious students with full-time jobs who want to earn degrees to further their careers. But hundreds of fraudsters take advantage of this need by constructing impressive Web sites touting the services of bogus institutions, which bear names that are similar to established universities and colleges. False academic credential businesses in this technological age have become global criminal operations that rake in millions.

"Students" can buy credentials from two types of online phony schools. Diploma mills only offer pieces of paper that can be framed and hung on a wall. Degree mills pose as legitimate institutions and award degrees to those who complete a modicum of work, earn credits from past experience, or both. They have impressive Web sites and even "accredit" themselves through their own (or related) non-recognized accrediting entities.

The Internet has exponentially increased access to fake diplomas, but it didn't create the problem. Phony diplomas have tricked clients and employers for at least 1300 years. In the 14th century, students would forge Oxford or Cambridge degrees to gain access to the University of Paris research facilities.³

Diploma fraud has been a problem in the United States for decades. In 1924, Sen. Royal Copeland, a member of the Senate subcommittee for education and labor, said there were "at least 25,000 fraudulent doctors ... who have fraudulent medical diplomas, practicing in the United States."⁴ Even though diploma and degree fraud was well known in the United States, little was done to prevent it until the FBI launched the DipScam investigations in the 1980s, led by Agent Allen Ezell (one of the authors of this article).

DipScam, which has been the largest U.S. federal effort to date to combat degree mills, significantly reduced the number of mills. The investigation yielded 16 executed federal search warrants, 19 grand jury indictments, 21 convictions, and 40 schools dismantled. DipScam accumulated the names of 12,000 "graduates" in the FBI database. The investigation began after an informant gave Ezell phony degrees from a diploma mill, Southeastern University, which anybody could buy. Ezell passed the information to the local U.S. Attorney, who agreed to prosecute.

After 11 years of DipScam, which ended in 1991, it seemed that the problem of degree mills was declining, but no one could have anticipated that they would return so quickly and forcefully in the Internet age.

This problem isn't limited to the United States. Diploma mills are growing in Europe, where some have made as much as $50 million a year and have as many as 15,000 annual graduates. The number of falsely accredited organizations has swelled from a half-dozen 10 years ago, to 260 in 2003.⁵

Sadly, those who obtain fake degrees actually have a good chance of getting away with it. The Internet is not just the means of obtaining a counterfeit degree, but it hides the identities of the Web site owners. Fraudsters hide both domestic and international identities through Internet search provider companies, which mask or hide their true identities from normal queries.

The U.S. federal government hasn't yet made a valiant attempt to end this fraud because the crime isn't violent or seemingly threatening. But a lot of money is funneled into these schemes. The 1980s DipScam investigation found $2 million operations, but today that's pocket change; some mills now generate as much as $450 million annually. It's not known where all of this money goes, but it's certainly possible that some of it might be linked to terrorist funding.

Don't underestimate the impact of diploma mills. The vendors and most of the customers are guilty of deceiving for their own gain. Some of the mills' consumers genuinely believe that the degrees are legitimate, but anyone who simply buys a diploma without completing any work is clearly committing fraud.

Bogus degrees devalue legitimate ones. This fraud makes all degrees suspect and might confuse employers and professional licensing boards that need to know if a person has an appropriate educational background. And the recent proliferation of counterfeit diplomas issued in the names of legitimate accredited colleges and universities further exacerbates the problem. Anybody can now obtain counterfeits of both diplomas and transcripts along with university seals, letterhead, and envelopes. Perhaps most significantly, those posing as degreed professionals -- engineers, airline pilots, psychologists, medical doctors -- might harm others such as 8-year-old Rose Kolitwenzew.

STINGING A DIPLOMA MILL 

In 2001, Sen. Susan M. Collins, R-Maine, asked the U.S. Government Accountability Office to investigate degree mills and discover if federal employees who had purchased bogus degrees had used them for gain.

This one-year investigation, launched in 2001, focused on Degrees-R-Us, a diploma mill operated by a disbarred attorney now living in Las Vegas, Nev.⁶ Like many mills, the operation offered various types of packages. For example, the investigators paid $1,515 for the premium package that included two diplomas with honors distinctions and a telephone degree verification service that potential employers could access to verify school transcripts.⁷

The investigators obtained a Bachelor of Science in Biology and a Master of Science in Medical Technology, backdated to 1975 and 1988, for a "Susan M. Collins." They came from an institution called Lexington University, not to be confused with Lexington College, a women's school in Chicago. Investigators found that Lexington University, purportedly located in Middletown, N.Y., didn't exist.⁸ When the investigators applied, they were asked to provide three references that could verify Susan Collins' previous work experience in biology and medical technology. However, according to the GAO, these references were never actually contacted.

The degrees arrived with a cover letter listing telephone numbers for the verification service. GAO investigators, pretending to be Collins' potential employers, called the verification service. The person on the line confirmed that Collins was a graduate of Lexington University. The investigators then contacted the mill's owner at the address on the transcripts and learned the mill operated out of the person's home with just the Internet, mail drops, and toll-free numbers. The owner explained to the investigators that he began the business after he watched a TV expos' about the prosecution of a diploma mill operator and decided he could successfully operate a better version.⁹ He said that he only sold degrees to boost the buyers' self-esteem -- a common excuse. The owner said he didn't check the references that people were required to submit because he believed the people purchasing degrees from him were honest!

In its investigation, the GAO obtained from the Oregon State Office of Degree Authorization a list of 43 institutions identified as mills or unaccredited institutions. The investigators then compared academic institutions listed on more than 1,200 federal government employee sum's and found 14 matches from the 43 fake institutions. About 200 of the sums belonged to individuals who held positions of trust and responsibility -- those who had high-level security clearances, and/or were executive managers supervising several employees. Only four employees admitted that they had purchased degrees for career advancement. The government is unwittingly one of the largest supporters of degree mills.

The GAO investigators also found 28 senior-level employees in eight federal agencies who listed degrees from mills or other unaccredited institutions.¹⁰ Laura Callahan, a senior-level employee from the Department of Homeland Security (DHS), obtained her bachelor's, master's, and doctorate degrees from "Hamilton University," not to be confused with the legitimate Hamilton College in Clinton, N.Y. Callahan claimed she was fooled into believing that Hamilton University was valid and that she hadn't obtained the degrees for financial gain but for self-fulfillment.

In 1999, Callahan had set out to find a college that offered distance learning. Web sites warned her not to enroll in a program that didn't require course work. However, Callahan notes that her "own regionally accredited degree [a two-year associate's degree from Thomas Edison State College presented to her in 1992] required no course work at the school, only the transfer of credits from prior learning experience."¹¹

She said she came across the Academic Resource and Referral Center (ARRC), which advertised that it would match students with the right schools based upon their academic and work-related backgrounds. Callahan submitted her portfolio of more than 250 pages and said that within a few weeks ARRC referred her to Hamilton University.

Callahan said Hamilton University sent her "a complete, well-presented student package describing the university, its policies, programs, religious affiliation, accreditation, and enrollment forms."¹² Hamilton said she would have to complete an ethics course on campus or online and prepare a thesis to earn the bachelor's and master's degrees. (The "campus" was a former motel several thousand miles away in Evanston, Wy. The greater the distance between the student and the "school," the smaller the chance the student will visit.) Callahan spent several weeks completing the ethics course online and submitted a thesis proposal that was accepted. She worked on the 20-page thesis for many months, submitted it, and received a B grade. Callahan later received her diplomas, transcripts, and an order form for a school ring.

Callahan said she was proud of herself for completing college. "My family was equally proud, and my mom bragged to anyone who would sit still long enough to listen how her child was one of the first in the family ever to complete school," she said. Callahan submitted her degree information to the human resource advisor at the Department of Labor, who then forwarded it to the Office of Personnel Management (OPM). In August 2000, Callahan said that the human resource advisor told her that the OPM had accepted her information. A year later she completed her doctorate through Hamilton University.

Inconsistencies in Callahan's story caused some to question her honesty, but conceivably she could have been duped. By June 2003, just before a second GAO investigation began, reports surfaced that Callahan, then a senior director in the DHS's Chief Information Office, had obtained multiple degrees from a diploma mill in Wyoming. The DHS immediately put Callahan on leave, and by March of 2004 she had resigned.

FIGHTING DIPLOMA AND DEGREE MILLS 

The Oregon State Office of Degree Authorization works to protect the integrity of post-secondary education in the state. The office's Web site is filled with pages of information on mills and ways to detect them, lists of accredited schools, and links to multiple sites on post-secondary education. If you use a college degree as an academic credential in Oregon from an institution not approved by the ODA, you're breaking the law and could be arrested.

Rep. Betty McCollum, D-Minn., recently introduced a bill (H.R. 773) "to reduce and prevent the sale and use of fraudulent degrees in order to protect the integrity of valid higher education degrees that are used for federal purposes."¹³ The bill points out that mills have increased in recent decades because technology has grown, but law enforcement has been inconsistent. It also says that the increase in revenue for fraudulent credentials -- $500 million a year -- imperils national security. We've seen cases in which people have used fake diplomas and certifications (coupled with fake high school diplomas and bogus certificates) to obtain work and student visas to enter the United States illegally.

The bill calls for the federal government to "have uniform standards to determine, for federal purposes, the legitimacy of degrees, diplomas, certifications, and degree-granting institutions (Bill H.R. 773)." If passed, the secretary of education will turn over lists of recognized accrediting agencies, institutions, and other groups to the DHS and other federal agencies that will help with employee background checks and screening of illegal immigrants. The bill would require that foreigners could receive student visas only if they're accepted by valid institutions approved by the secretary of education. Also, anybody seeking employment with the federal government will be required to have a degree from an eligible institution.¹⁴

Of course, you can check on the validity of degrees through Web search engines and on the Web sites of the U.S. Department of Education and the American Association of Collegiate Registrars and Admissions Officers. To further investigate, call a local college or university and ask if they'll accept transfer credit for a specific school at a specific address. Some books provide detailed guidance such as "Accreditation Mills," by Allen Ezell, CFE, published in 2007 by the American Association of Collegiate Registrars and Admissions Officers.

PERPETUAL BOGUS CREDENTIALS 

Proliferating phony academic institutions are raking in millions from mostly lazy would-be students who are trying to further their careers at the expense of their unsuspecting employers. These cynical diploma mills use the Web and advanced technology to dupe companies that think they don't have the time to conduct thorough background checks. Don't be fooled. Encourage your organization to spend a little more time and money to investigate those sums. Don't give the diploma mills a chance. 

Richard G. Brody, Ph.D., CFE, CPA, is The Rutledge Professor of Accounting at the Anderson Schools of Management of the University of New Mexico in Albuquerque and a member of the Fraud Magazine Editorial Advisory Committee. 

Allen Ezell, CFE, a former FBI agent, is a vice president of the corporate fraud investigative service at Wachovia Corporation.  

References 

1 North Carolina Court of Appeals. State of North Carolina v. Laurence Perry. NCCA Publication No. COA02-1356) (July 15, 2003) www.aoc.state.nc.us/www/public/coa/opinions/2003/021356-1.htm

2 S. Barrett. "Bogus Naturopath (Laurence Perry) Convicted of Manslaughter." (April 16, 2002) www.quackwatch.org/11Ind/perry.html

3 A. Ezell, A., and J. Bear. "Degree mills: The billion-dollar industry that has sold over a million fake diplomas." Amherst, NY: Prometheus Books (2005). p. 30.

4 Ibid. p. 31.

5 S. Armour. "Diploma mills insert degree of fraud into job market." USA Today online. (Sept. 29, 2007) www.usatoday.com/money/workplace/2003-09-28-fakedegrees_x.htm

6 U.S. General Accounting Office. "Purchase of Degrees from Diploma Mills." (2002) GAO Publication No. GAO-03-269R. www.gao.gov/new.items/d04771t.pdf

7 Ibid.

8 Ibid.

9 Ibid.

10 U.S. General Accounting Office. "Diploma Mills: Federal Employees Have Obtained Degrees from Diploma Mills and Other Unaccredited Schools, Some at Government Expense." (2004) GAO Publication No. GAO-04-771T. www.gao.gov/new.items/d03269r.pdf.

11 A. Ezell, A., and J. Bear. "Degree mills: The billion-dollar industry that has sold over a million fake diplomas." Amherst, NY: Prometheus Books (2005). p. 291.

12 Ibid. p. 293.

13 U.S. House of Representatives. "H.R. 773: Diploma Integrity Protection Act of 2007." HR Bill No. HR 773 IH. www.govtrack.us/data/us/bills.text/110/h/h773.pdf.

14 Ibid. 

[Some links may no longer be available. —Ed.]

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