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Louisiana Man Convicted for Money Laundering and Fraud Scheme Involving Financial Aid Fraud

Louisiana – Elliot Sterling, 33, of Baton Rouge, Louisiana, was convicted today, according to United States Attorney Ronald C. Gathe, Jr. On August 3, 2020, a federal grand jury indicted Sterling and charged him with wire fraud, financial aid fraud, and engaging in monetary transactions involving property derived from specified illegal activity.

Following an eight-day trial before District Judge Brian A. Jackson, the jury unanimously convicted Sterling of five counts of wire fraud involving a scheme to defraud the Department of Education’s federal student aid program, two counts of financial aid fraud, and two counts of wire fraud involving the Small Business Administration Economic Injury Disaster Loan program, which was designed to assist businesses during the Covid-19 pandemic. Mr. Sterling was also found guilty on six counts of money laundering stemming from the proceeds of his two wire fraud schemes. The jury also ordered the forfeiture of $422,632.38 in fraud proceeds seized by the FBI in the case.

According to the evidence at trial, Mr. Sterling received $1,468,239 in federal student aid loans and grants associated with 180 Baton Rouge Community College (BRCC) students into his personal bank account and the business bank account of his company, Sterling Educational Consulting, LLC, in relation to the Department of Education wire fraud and financial aid fraud counts. Mr. Sterling used the personal identifying information of his purported students to electronically fill out and submit their Free Applications for Federal Student Aid (FAFSAs), sign master promissory notes on their behalf, enroll them in classes at BRCC, and create and manage the student BankMobile accounts that received federal student loans, according to the evidence presented at trial.

Mr. Sterling directed Department of Education funds to be paid directly into his own bank accounts through his control of the students’ accounts.

Mr. Sterling concealed his role as the FAFSA preparer and pretended to be the students when he logged on with their credentials, clicked through the loan counseling in less than three minutes, and signed promissory notes in their names to circumvent Department of Education controls designed to inform students about the financial obligations of student loans. Typically, the students did not have access to the email addresses or login information created on their behalf by Mr. Sterling, nor did they have access to their own FAFSA, BRCC, or BankMobile accounts.

Furthermore, Mr. Sterling lied to the Department of Education about the academic qualifications of 168 students, 145 of whom lacked even a high school diploma or equivalent (e.g. a GED). A witness testified at trial that Mr. Sterling paid him $5,000 to create 42 diplomas with fictitious grades. Following BRCC’s request for verification of the student’s academic credentials, these diplomas were provided to BRCC. Mr. Sterling received funds for 180 students, none of whom advanced academically at BRCC, and 172 of whom failed or withdrew from every class in which they were enrolled. When their FAFSAs were submitted, promissory notes were signed, or federal student aid was disbursed into Mr. Sterling’s bank accounts, some students were imprisoned.

Instead of directing the funds he received to the students, Mr. Sterling kept more than 60% of the funds for himself, and for 25 students, he kept 100% of the loan proceeds. Most of the students who received funds from Mr. Sterling’s scheme were unaware that they had signed up for student loans and that Mr. Sterling had signed master promissory notes in their names requiring them to repay the full amount. The students were also unaware of the true amount of refunds awarded in their names, as well as the true amount retained by Mr. Sterling as his share.

Regarding the SBA wire fraud, Mr. Sterling submitted a loan application on behalf of his company, Sterling Educational Consulting, LLC, that falsified the company’s revenues and costs while concealing his prior guilty plea to felony theft. As a result of these false statements, the SBA loaned Mr. Sterling $90,000 to cover his business’s operating costs during the Covid-19 pandemic. Mr. Sterling withdrew $75,000 in cash right away. Mr. Sterling also spent more than $253,000 at casinos in Louisiana, Nevada, and Pennsylvania during the course of his schemes.

Mr. Sterling now faces a maximum sentence of twenty years in federal prison for wire fraud, ten years for money laundering, and five years for financial aid fraud, as well as significant fines, restitution, and supervised release as a result of his convictions.

The FBI, the Louisiana Office of Inspector General, and the U.S. Department of Education – Office of Inspector General all looked into this case. Deputy Criminal Chief Elizabeth E. White, Assistant U.S. Attorney René I. Salomon, and Asset Forfeiture Chief Brad Casey prosecuted this case.

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