A Spokane-based diploma mill operation raked in $4.7 million in fraudulent sales before a federal task force made eight arrests late last year, newly filed court documents say.
The documents outline a plea bargain by Blake Alan Carlson, the owner of a Hillyard stamp shop, who became “Professor Blackwell” and “Chief Provost” as part of the conspiracy that sold bogus online college degrees and accompanying fake transcripts around the world.
More than half the phony diplomas were sold to foreign nationals, including possible terrorists, who may have been using the credentials to gain legal entry into the United States, Justice Department officials say.
Carlson joined the phony diploma conspiracy after his rubber stamp business, at 5210 N. Market, fell on hard times and he needed money, he admitted in the 37-page plea bargain with Assistant U.S. Attorney George J.C. Jacobs and U.S. Attorney Jim McDevitt.
Between July 2002 and last August, Carlson made $41,000 for his part of the scheme, including producing hundreds of engraved seals for diplomas and fraudulent signature stamps, according to the documents he signed.
Carlson described himself as “co-founder of the World Chapel Ministries,” which says it is “dedicated to the mission of helping Christians through the life experiences, missions and ministry attain valid, government-recognized degrees, ordinations and certifications.”
As part of the deal, he pleaded guilty on Tuesday in U.S. District Court in Yakima to conspiracy to commit mail and wire fraud and agreed to be a prosecution witness against seven other co-conspirators. They included Dixie and Steve Randock, of Colbert, who are free on bond as the accused masterminds behind the scheme.
Other defendants are: Heidi Kae Lorhan, who is Dixie Randock’s daughter; Amy Leann Hensley; Roberta Lynn Markishtum and Kenneth Wade Peterson, all of Spokane; and Richard John Novak of Peoria, Ariz. Peterson also is separately charged with possessing child pornography on the same computers he allegedly used to crank out phony degrees.
Carlson won’t be sentenced until after he testifies in the trial of the co-conspirators, now scheduled for this fall before U.S. District Court Judge Lonny Suko.
If prosecutors determine Carlson provides “substantial assistance” to their case, he could receive less than the five years in prison he’s now facing for the federal crime he admitted.
The diploma mill operation, largely based out of business buildings at 14525 N. Newport Highway, in Mead, and 601 E. Seltice Way, in Post Falls, began in August 1999, according to the newly filed court documents. Between that date and last August, “the diploma mill business operated by Dixie and Steve Randock sold approximately $4.7 million in fraudulent academic products to thousands of consumers throughout the world.”
Most of the sales were carried out via Internet spam. The court documents say Dixie Randock made at least two purchases of 1 million e-mail addresses each, and sent e-mail telling people they could “earn a college degree the easy way.” At one point, the conspirators offered “special holiday gift certificates,” that provided purchasers a “free dean list certificate.” On another occasion, the pitch included a January offer to “buy one degree at full price and get a second degree free.”
The federal probe was initiated on Jan. 5, 2005, a little more than a year after the Spokane-based diploma mill operation was detailed in series of articles published in The Spokesman-Review.
The U.S. Secret Service headed a multiagency task force, based in Spokane, that investigated a number of “virtual schools” – ones without physical campuses and existing only in cyberspace for the purpose of fraudulently selling high school and college degrees.
Schools at the focus of the investigation included Saint Regis University, Robertstown University, James Monroe University, James Monroe University High School and Trinity Christian School.
Other court documents allege the Randocks may have sold 12,000 to 15,000 degrees and created more than 300 fictional online colleges, including one that fraudulently used the English birthplace of Winston Churchill as its logo. The diplomas sold for a few thousand dollars each, depending on the type of degree.
The schools were operated under various business names, including A+ Institute and AEIT, with most financial transactions conducted via the Internet and e-mail, the court documents say.
Agents also searched Novak’s home in Arizona and a business office in Post Falls, used for shipping diplomas, and Carlson’s stamp works.
Documents seized in the search show the Hillyard businessman conspired with the Randocks, listing himself as the “dean of studies” of Robertstown University, and “provost and chief academic officer” for Saint Regis University – two of the bogus diploma mills.
The investigation revealed that a top-ranking Liberian diplomat based in Washington, D.C., was soliciting cash bribes from the Randocks and their associates based in Spokane, Post Falls and Arizona.
The Liberian Embassy official, court documents say, demanded bribes in exchange for lining up “accreditation” for Saint Regis University and other diploma mills and for handing out payments of $50 to $100 a month to Liberian educators posing as “faculty members” for the online universities.
Abdullah Dunbar, the deputy chief of the Liberian Embassy, was secretly videotaped in the Mayflower Hotel in Washington, D.C., during the investigation, demanding $5,000 and an expense-paid trip to his homeland to finalize accreditation for the online university, the court documents allege.
That meeting occurred after an undercover Secret Service agent from Spokane attempted to buy an online diploma mill for $100,000.
In the course of the investigation, the undercover agent also purchased a high school degree, a two-year associate of arts degree, and a four-year “bachelor’s degree in pre-law.”