The owner of a technical training school pleaded guilty Wednesday to defrauding nearly $30 million worth of benefits over a three-year period from the Department of Veterans Affairs.
Federal authorities discovered an elaborate scheme at Blue Star Learning in Miramar involving students and companies that simply did not exist.
Owner Nimesh Shah, 36, pleaded guilty Wednesday to creating fake non-veteran student profiles with fraudulent social security numbers, phone numbers and email addresses. He further falsified his school’s success rate such as listing 30 fictitious companies as successful employers, all according to the U.S. Attorney's Office report.
The Post-9/11 G.I Bill under the Department of Veterans Affairs allocates financial assistance for veterans such as tuition and housing. As part of the program, the VA usually sends that money directly to the school where veterans are enrolled. Monthly housing and school supplies allowances are also provided directly to veterans.
Shah knew he had to maintain at least 15 percent non-veterans for each course for which the VA was paying for education benefits under the “85/15 Rule,” in order to continue receiving funding, according to the U.S. Attorney’s Office.
Instead, nearly 100 percent of students were veterans receiving educational assistance.
Shah also directed his employees to execute the scheme, emailing 48 fraudulent agreements for fake people who were supposedly non-veterans to the California State Approving Agency for Veterans Education (CSAAVE).
“Shah repeatedly misrepresented to the CSAAVE and the VA that Blue Star Learning was in compliance with the 85/15 Rule,” the U.S. Attorney’s Office said.
Shah further fraudulently reported his students’ success in the job market in yearly reports to the CSAAVE.
“According to Shah’s plea agreement, Shah knew that the vast majority of Blue Star Learning graduates did not obtain jobs in the fields in which they were purportedly receiving training, and that the employment statistics on Blue Star Learning’s website were fraudulent,” the U.S. Attorney’s Office said.
Shah created fraudulent email addresses for Blue Star Learning students and directed employees to answer emails pretending to be employed graduates working in the information technology field, the report said.
Shah also purchased 30 cellular telephones, one for each fictitious employer, and had employees create voicemails so that it would appear that the fraudulent businesses were legitimate if CSAAVE called to check, the court case said.
“This defendant crafted an elaborate scheme to fleece the government and taxpayers, but this case put a stop to this significant fraud,” U.S. Attorney Robert Brewer said.
Throughout Shah’s scheme, the VA issued over $11 million in tuition payments and $18 million in housing allowances and stipends, for a total of $29,350,999, the U.S. Attorney's Office report said.
Shah’s wife Nidhi Shah, 34, pleaded guilty to lying to agents at the time of her interview. She could face up to five years in prison and a $250,000 fine, the report added.
Owner Nimesh Shah could face a maximum 20 years in prison and a $250,000 fine.
Blue Star Learning closed on June 17, 2019, according to the California Office of Student Assistance and Relief.