October 1, 2008 in City

Diploma mill owners tried bribes

Documents reveal efforts made in Russia, India and Italy
Staff writer
 

Operators of a Spokane-based diploma mill, now in federal prison for wire and mail fraud, were attempting to accredit their bogus online universities by bribing officials in Russia, India and Italy, according to court documents.

The documents were filed for Tuesday’s back-to-back sentencings of Amy Hensley, Blake Alan Carlson and Richard J. “Rick” Novak, who were indicted in October 2005 along with Dixie and Steven Randock, the masterminds of the mill.

Immediately after search warrants were carried out in three states in August 2005, Hensley, Carlson and Novak independently began cooperating with state and federal investigators involved in “Operation Gold Seal” in the hopes of getting lighter sentences, Assistant U.S. Attorney George Jacobs said at the sentencing hearings.

With cooperation from a fourth defendant, the U.S. attorney’s office had lined up half of the eight defendants indicted in the case as prosecution witnesses. Ultimately, the four remaining defendants, including the Randocks, also pleaded guilty earlier this year, and there was no trial.

Some of the evidence in the case, however, has been attached to sentencing memorandums filed by the U.S. attorney’s office.

Those documents reveal the Randocks paid $100,000 to an unidentified official in India, hoping to get that country to provide accreditation for their online schools – an apparent attempt to help legitimize the operation as similar accreditation in Liberia began to fall apart.

Novak went to India at Steve Randock’s direction at some point after the Indian official took the money but then failed to provide any accreditation, the documents say.

Dixie Randock, meanwhile, was developing an affiliation with the Russian Education Ministry in the weeks before her arrest, the documents say, and had established an “Italian connection” in Sebora, Italy.

In exchange for their “substantial assistance” to the government, Hensley, Carlson and Novak were placed on three years probation Tuesday by U.S. District Court Judge Lonny Suko for conspiracy to commit wire and mail fraud. The judge also ordered Hensley and Carlson to perform 240 hours of community service and Novak to perform 300 hours of service. While noting their cooperation, the federal prosecutor urged the court to send Hensley, Carlson and Novak to prison for up to a year.

The judge told the defendants the assistance they provided to prosecutors saved them from prison terms. The three detailed the inner workings of the diploma mill, which hauled in almost $8 million, and a series of bank accounts, including some off-shore, set up by the Randocks.

Suko said the probationary sentences he gave the three were appropriate to avoid “unwarranted disparity” with three-year terms given the Randocks, the one-year term given Heidi Kay Lohran and the four-month sentence handed to Roberta Markishtum.

Novak, 58, of Phoenix, took thousands of dollars from the Randocks and used it to pay cash bribes to senior Liberian officials who used their country’s board of education to provide accreditation to more than 100 online high schools and universities set up by the Spokane diploma mill.

Novak traveled to Maryland and Washington, D.C., with the Randocks, who instructed him to deliver the bribes to Liberian officials. Novak also went to Liberia and Ghana to make other payments. He was paid $60,000 for being the Randocks’ “emissary” with foreign government officials, Jacobs told the court.

Carlson pleaded guilty to conspiracy to commit wire and mail fraud and violating the Foreign Corrupt Practices Act by bribing foreign officials. Hensley and Carlson pleaded guilty to conspiracy counts.

Carlson, 61, who owns a Hillyard printing shop, sold bogus degree stamps and diploma seals to the Randocks before working as an online adviser, using the alias “C.B. Blackwell.”

Hensley, 41, worked as an adviser, shipper and bookkeeper for the Randocks’ diploma mill and made $90,000 after initially working for Dixie Randock’s real estate school, A+ Institute.

Carlson also accompanied the Randocks to Detroit, where the trio sold “several degrees” to members of the United Auto Workers.

“I believe in integrity and honesty,” Carlson said, also telling the court he’s a deeply committed Christian who has attended the same church for 25 years.

“I was stupid,” he told the judge. “Once I realized Dixie’s business was a fraud, I was well over my head at that point.” Carlson made $41,000 for his role in the scheme.

The documents also disclose that one of the 10,000 people around the world who bought degrees from the Spokane diploma mill was an ambassador in Asia, whose identity isn’t provided in the documents.

Asked about that outside court Tuesday, Carlson said he couldn’t remember any of those details.

Contact Bill Morlin at (509) 459-5444 or billm@spokesman.com.

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