For the first time in the United States, federal investigators in Spokane have obtained indictments against eight people accused of operating Internet-based diploma mills, making millions by selling bogus college degrees and “defrauding consumers worldwide.”
The 40-page indictment accuses the eight of conspiring to commit wire and mail fraud during the past six years as they operated out of businesses in Mead and Hillyard, and a Post Falls office complex.
Accused masterminds Dixie Ellen Randock and her husband, Steven Karl Randock, both of Colbert, also were indicted for conspiracy to launder more than $1 million they collected from selling bogus degrees.
The indictment alleges that during the past six years the Spokane-based operation sold “thousands of degrees,” using various diploma mills including Saint Regis University, Robertstown University, James Monroe University and Trinity Christian School.
The indictment also seeks criminal forfeiture of the Randocks’ late-model Jaguar, their home and acreage at 3127 E. River Glen Drive, and $536,517 that federal agents seized in a series of searches in August.
The Randocks also will be liable for repayment of the money they received as the result of selling the bogus degrees, many of them to foreign nationals who used the credentials to fraudulently obtain easier entry to the United States.
Also named in the indictment was Dixie Randock’s daughter, Heidi Kae Lorhan, a high-school dropout who worked as an “evaluator” for applicants seeking bogus high school and college degrees.
Others indicted were Blake Alan Carlson, a Hillyard stamp shop owner and co-founder of World Chapel Ministries; Amy Leann Hensley; Roberta Lynn Markishtum and Kenneth Wade Pearson, all Spokane residents who worked for the Randocks’ operations.
Also indicted in the mail and wire fraud conspiracy was Richard John Novak of Peoria, Ariz. Novak is accused of helping set up a meeting in Washington, D.C., where a top-ranking Liberian diplomat was secretly videotaped soliciting bribes from the Randocks. They are accused of using the Board of Education in Liberia to accredit their various diploma mills and sell accreditations to similar on-line operations.
“It’s a significant case,” said U.S. Attorney James A. McDevitt. The allegations “again demonstrate that the Internet can be both a benefit and a burden to all of us,” said the region’s federal crime chief.
“Here’s something that was done exclusively on the Internet, and look at the significance of the allegations,” McDevitt said. “The second point is that many of the buyers were foreign nationals who obtained deferred status and could gain entry into the country with less-than-authentic credentials.”
Related court documents say half the degrees were sold to overseas purchasers, a majority of whom were “students” from Saudi Arabia. That revelation caused concern for investigators who said foreign nationals, including potential terrorists, could more easily gain entry to the United States with the fraudulent degrees.
The grand jury indictment came at the end of a nine-month task force investigation, led by the U.S. Secret Service, and also involving the Internal Revenue Service, the Bureau of Immigration and Customs Enforcement, the Postal Inspection Service, the Washington State Attorney General’s Office and the Spokane Police Department.
The defendants are accused of using Internet Web sites to manufacture, print and sell fraudulent academic products, including high school diplomas and college and graduate-level degrees and related documents.
The federal investigation was launched after a November 2003 story in The Spokesman-Review detailed the Spokane-based diploma mills.
“These degrees were sold to consumers throughout the world so those (people) could get hired or promoted in their jobs or obtain H1B (educational) visas,” said Tom Rice and George Jacobs, assistant U.S. attorneys who supervised the investigation.
Left unanswered is whether the Justice Department intends to prosecute consumers, including teachers and federal employees, who knew they were buying bogus degrees and used them for better-paying jobs. A half dozen unemployed auto workers in Indiana used $42,000 in federal educational retraining money to buy worthless advanced degrees from the Spokane-based diploma mills.
“The operators of these ‘universities’ created a sophisticated web of supporting infrastructure using the Internet which gave the operation an aura of legitimacy,” said Kevin M. Miller, agent in charge of the Spokane office of the Secret Service. The defendants “built networks of fake government agencies, accrediting organizations, and credential evaluators.”
“The investigation continues to determine if these documents have been used by individuals to enroll for advanced degrees in U.S. and foreign universities or to seek employment and promotion in both public and private sector companies to include those involved in critical infrastructure,” Miller said.
To make the degrees look official, Carlson manufactured fraudulent rubber stamps and seals, and Pearson acted as the Webmaster for several of the diploma mill Web sites, the indictment alleges.
Markishtum is accused of printing some of the fraudulent documents and falsely confirmed via telephone to employers and potential employers that the degrees purchased were valid, the indictment further alleges.
As part of the scheme to defraud, the Randocks caused a fabricated Web site to be created, which posed as the official and legitimate Web site of the Liberian Embassy in Washington, D.C., the indictment said.
If convicted of the wire and mail fraud conspiracy, the defendants face a maximum of five years in prison. The money laundering charge carries a maximum of 20 years in prison, and a $500,000 fine.
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