Georgia man wiped out $48M in student loans with disabled veterans scam, officials say
LITHONIA, Ga. - A Georgia man will spend years in prison for a fraud scheme that wiped out around $48 million in federal student loans for hundreds of borrowers that he claimed were disabled military veterans, officials say.
Officials say 41-year-old De'reek Banks of Lithonia, Georgia operated a business that offered to help student loan borrowers get discharges for federal student loans for a fee.
According to the U.S. Attorney's Office, Banks told customers that special programs existed for authorizing the discharge of borrowers loans, but instead he was lying to the Federal Student Aid office of the U.S. Department of Education.
Banks was accused of fabricating hundreds of letters from the Department of Veterans Affairs claiming that the borrowers were military veterans who were eligible for student loan discharges due to a total or permanent disability.
"This defendant brazenly stole funds from innocent student loan borrowers by exploiting a financial aid program intended to assist military vets who sacrificed their health for the security of our country," said U.S. Attorney Ryan K. Buchanan. "He tricked borrowers into believing that he could legitimately obtain federal student loan discharges for them while attempting to defraud the U.S. government of almost $50 million."
In total, authorities say Banks illegally took more than $890,000 from more than 500 student loan borrowers and helped fraudulently discharge around $48 million in student loans.
On Monday, Banks pleaded guilty to theft of government property and was sentenced to six years in prison followed by three years of supervised release. He was also ordered to pay restitution of over $900,000.
"The sentencing demonstrates the commitment of the US Postal Inspection Service to bring to justice fraudsters who seek to exploit victims and federal programs for their own personal gain," said Tommy D. Coke, Inspector in Charge of the Atlanta Division. "We are proud to work with our law enforcement partners to unravel and stop this type of fraudulent scheme."