The former financial aid director at the now-closed Masters of Cosmetology in Fort Wayne, Indiana pleaded guilty in federal court to fraudulently obtaining school loans for students, according to WANE-TV’s website.
Rachel Crawford was charged in U.S. District Court in Fort Wayne with obtaining Family Federal Education Loans by fraud and materially false statements. She agreed to plead guilty to the charge and is also helping with the investigation into the school. A judge will determine her sentence at a later date.
Crawford’s plea comes after the school’s owner, Kaydean Geist, was sentenced to two years probation for being the ringleader in a student loan scheme that secured nearly $3 million in illegitimate student loans.
Geist pleaded guilty in April 2016 to failing to repay student financial aid funds she helped students secure fraudulently between April 2009 and August 2010. She was also ordered to repay $300,000 to the United State Department of Education. She had been facing up to five years in federal prison for the scheme, which officials called “an exceptional case of extensive fraud.”
Under federal law, students enrolled in programs like those at Masters of Cosmetology, which offered classes for students interested in a career in cosmetology, hare not allowed to obtain more than $30,000 in student loans, or obtain Federal Family Education loans and direct loans at the same time. But Geist allowed the school to apply for both Federal Family Education loans and direct loans for the same students for the same academic period.
According to court documents, Geist also had students sign promissory notes for the loans without showing them details, informed students they were being awarded with false loans, and granted students sham loans from the school for their personal expenses that were actually federal loans. She also forged more than 150 Family Education loan checks for over $500,000 that was deposited into a private account that named herself and her family as beneficiaries.
More than 50 Masters of Cosmetology students received between $30,000 and $98,000 in loans, and Geist and the school helped secure around $2.9 million in bad student loans. As a result, the Department of Education agreed to cancel certain FFEL loans that were illegally acquired by the school. “The Department of Education, I’m happy to say, that on the vast majority of these loans, they are going to deem them unenforceable and the students will be released from liability on those loans,” David Capp, the U.S. attorney for the Northern District of Indiana, said.