Agents visit diploma mill sites
A task force of federal and state agents, investigating one of the biggest diploma mill schemes in the United States, served search warrants Thursday in Spokane, Post Falls and Arizona.
The search warrants are part of an eight-month investigation that is building a criminal case against Dixie and Steve Randock of Colbert, who are believed to be the masterminds behind the bogus college degree operation.
Hundreds of thousands of dollars in profit from the scheme are being laundered through domestic and off-shore bank accounts, according to documents filed Thursday in U.S. District Court.
Those documents say the Randocks and others are under investigation for possible mail and wire fraud violations and money laundering.
No criminal charges have been filed, but a hint of the scope of the investigation is detailed in a civil suit filed Thursday, seeking forfeiture of a Colbert home and adjoining property owned by the Randocks.
The criminal investigation centers on the Randocks’ involvement “in a number of Internet-based virtual ‘schools’ that offered fraudulent high school and college degrees for purchase over the Internet,” the court documents say.
“Currently, Steve and Dixie Randock and others are involved in manufacturing and selling fraudulent ‘degrees’ to consumers throughout the United States and world over the Internet, using various entities, including Saint Regis University, James Monroe University, Robertstown University, Trinity Christian School and others,” according to the court documents.
The Randocks also have branched out, selling “accreditation” and “transcript verification” to other bogus online diploma mills, the documents stated.
The Randocks couldn’t be reached for comment. They have refused interview requests in the past.
Some of the various business names used by the Randocks and others to operate the fraudulent schools include “A+ Institute; Advanced Education Institute Trust (AEIT); Kaching Kaching and When Pigs Fly,” the court documents say.
“Depending on the type of ‘degree’ a consumer wants to obtain, the suspects … charge fees ranging from $399 to $2,454,” the documents allege. “The ‘degrees’ are then shipped or mailed via interstate carrier or the U.S. Postal Service to the purchasers.”
“Some of the foreign bank accounts which are being used to launder the proceeds of their wire fraud activity are or were located offshore in the islands of Dominica and St. Vincent in the West Indies,” the documents say.
Locations searched Thursday included a Hillyard business, Northwest Business Stamp, 5210 N. Market, which provided gold seals and other printed material for the diplomas. Some of them were mailed from a business office at 601 E. Seltice Way in Post Falls, which also was searched.
The Randocks’ operation was detailed in a November 2003 story published in The Spokesman-Review. It revealed that the Randocks’ first ventures were two bogus online schools – Liberty Prep and Branford Academy, selling high-school degrees and a tassel for $286.
A follow-up story a month later reported that a man who operates the “Christa McAuliffe Academy,” an online school in Yakima, purchased his Ph.D. in “education leadership” from St. Regis University, also affiliated with Dixie Randock.
A story in August 2004 revealed that displaced workers from an Indiana auto plant spent at least $42,000 in federal educational retraining money by buying worthless advanced degrees from the “diploma mill” based in Spokane.
The news stories prompted a series of complaints to the Washington State Attorney General’s Office, now participating in the task force investigation.
Also involved are U.S. Secret Service agents, criminal investigators from the IRS, postal inspectors, the U.S. Bureau of Immigration and Customs Enforcement and the Spokane Police Department.
Thomas O. Rice, the chief criminal prosecutor for the U.S. Attorney’s Office, said Department of Justice guidelines prohibited him from commenting on the status of the investigation.
Task force agents also searched the Spokane Valley home of Dixie Randock’s daughter, Heidi Lorhan and her husband, Doug, who live at 14308 E. 22nd in Veradale.
Searches also were carried out at Dixie Randock’s offices located at 14525 N. Newport Highway in Mead and the residence of Amy Hensley, 8015 E. Baldwin.
In Peoria, Ariz., other federal agents searched the home of Richard Novak, who sources say may have ties to Liberian officials involved in “accrediting” some of the bogus online universities.
As part of the multitiered investigation, the U.S. Attorney’s Office filed a civil forfeiture suit Thursday against the Randocks’ home at 3127 E. River Glen Drive and 25 acres of adjoining undeveloped property in Colbert.
The federal government is seeking forfeiture of the expensive real estate in the belief it’s among assets derived from the criminal enterprise.
The house and adjoining property, the court papers say, were not listed as assets when Steve and Dixie Randock filed for bankruptcy in February 2001.
The owner of the two properties is “Children’s Future Trust,” and Dixie and Steve Randock are officers of that trust, the court documents say.
The mortgage on the two properties was held by OCWEN Federal until January 2002 when it was sold to Oak Creek Mortgage, located at 14525 N. Newport Highway.
Oak Creek Mortgage is operated by Steven Randock Jr. and Larry Randock, “believed to be the sons of Steven K. Randock,” according to the documents.
An IRS criminal investigator who reviewed a “Children’s Future Trust” bank account at the Bank of Fairfield discovered more than $184,000 had been deposited into the account in a three-year period, the court documents say.
Another Bank of Fairfield account, using the name AEIT, appears to have been used “to deposit receipts generated from the Internet sale of ‘degrees’ and related documents,” according to the court records.
Funds from that account were transferred to another account to pay monthly living expenses of Dixie and Steve Randock and make their house payment, the documents say.