Louisiana Man Sentenced to 11 Years for Financial Aid and Disaster-Related Fraud and Money Laundering Scheme

Baton Rouge, Louisiana - A 34-year-old Louisiana man was sentenced to 132 months (11 years) in federal prison and 3 years of supervised release for wire fraud, financial aid fraud, and engaging in monetary transactions involving property derived from specified unlawful activity.

Elliott Sterling, 34, of Baton Rouge, Louisiana, was sentenced to 132 months in federal prison by U.S. District Judge Brian A. Jackson on Wednesday, January 11, 2023, following his convictions for wire fraud, financial aid fraud, and engaging in monetary transactions involving property derived from specified unlawful activity. Sterling was also sentenced to three years of supervised release following his prison term, as well as $2,760,422 in restitution to the US Department of Education and $90,000 to the Small Business Administration.

The jury unanimously convicted Sterling of five counts of wire fraud involving a scheme to defraud the Department of Education 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 aid businesses during the Covid-19 pandemic. Sterling was also found guilty on six charges of money laundering for the proceeds of his two wire fraud schemes. The jury also ordered the forfeiture of $422,632.38 in fraud proceeds recovered by the FBI in the investigation.

According to the evidence presented at trial, 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. 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. Sterling used his influence over the students' accounts to direct Department of Education funds to his own bank accounts.

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. The students typically did not have access to the email addresses or login credentials created on their behalf by Sterling, nor did they have access to their own FAFSA, BRCC, or BankMobile accounts.

Furthermore, 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 Sterling paid him $5,000 to create 42 diplomas with fictitious grades. After BRCC requested proof of the student's academic credentials, these diplomas were supplied to them. None of the 180 kids for whom Sterling received funds advanced academically at BRCC, and 172 failed or dropped every class in which they were enrolled. When their FAFSAs were submitted, promissory notes were signed, or federal student aid was deposited into Sterling's bank accounts, some students were imprisoned.

Sterling pocketed almost 60% of the monies he received rather than directing them to the students, and for 25 students, Sterling kept 100% of the loan revenues. Most of the students who received money from Sterling's plan had no idea they had signed up for student loans or that Sterling had signed master promissory notes in their names requiring them to repay the full amount. The pupils were also uninformed of the exact amount of refunds given in their names, as well as Sterling's portion.

Regarding the SBA wire fraud, Sterling submitted a loan application on behalf of his company, Sterling Educational Consulting, LLC, that inflated the company's revenues and costs while concealing his earlier guilty plea to felony larceny. As a result of these misleading assertions, the SBA granted Sterling $90,000 to cover his business's running expenditures during the Covid-19 outbreak. Sterling immediately withdrew $75,000 in cash. Sterling allegedly spent more than $253,000 at casinos in Louisiana, Nevada, and Pennsylvania during the course of his schemes.

Louisiana Inspector General Stephen Street commented, “Elliott Sterling put a great deal of time and effort into his calculated scheme to steal millions of financial aid dollars from the U.S. Government and the taxpayers. He shamelessly broke the law out of pure personal greed. We were very pleased when a criminal jury found Sterling guilty on all charged counts, and even more so with the 11-year prison sentence imposed by the Court. This significant prison sentence was entirely appropriate given the brazen nature of the fraud and will hopefully send a strong message of zero tolerance. The Louisiana Inspector General remains committed to rooting out this corruption wherever it may be found.” Street added, “I want to thank United States Attorney Ron Gathe and his staff for their usual outstanding work, as well as our partners at the FBI and the US Department of Education OIG for another successful outcome.”

The FBI, the Louisiana Office of Inspector General, and the U.S. Department of Education's Office of Inspector General all looked into this case. Deputy Criminal Chief Elizabeth E. White and Asset Forfeiture Chief Brad Casey prosecuted this case.