Officials said Wednesday that a woman from North Carolina admitted to stealing $5 million in financial aid from the Department of Education over the course of several years through a complex plan called “straw student.”
Federal court documents say that Cynthia Denise Melvin of Fayetteville planned a scam in which she recruited more than 70 “student participants.” She put in applications to schools and government aid programs on their behalf and then tried to make it look like they were going to class. She and the kids took the money at the same time.
Federal officials say Melvin, 59, pleaded guilty to conspiracy to commit wire fraud in connection with the theft of millions of dollars from the federal student aid program. Melvin could get up to 20 years in prison, a $250,000 fine, or three years of controlled release when he is sentenced later this year. Melvin will have to pay back what he owes as well.
The scam is one of the biggest “straw student” schemes seen in years, according to news stories from the Department of Justice that USA TODAY looked at. Police say Melvin was in charge of the plan from 2016 to 2023.
Charge sheets from the Eastern District of North Carolina don’t name the students Melvin recruited for the plan, but they do say that he got them to apply to and enroll in college programs all over the state. Kevin M. Marcilliat, her lawyer, wouldn’t say anything because there were court hearings coming up.
Scammer pretended to be students
Court documents show that Melvin’s group of fake students registered at several colleges and universities in North Carolina, such as community colleges in Wake, Cumberland, and New Hanover counties.
According to the charging papers, she applied to schools on behalf of the students and even pretended to be them so it looked like they were going to class, doing their work, and talking to the schools.
Melvin used the Free Application for Federal Student Aid (FAFSA) from the Department of Education to get money for the kids. In the end, the department wasted more than $5 million on false claims. The money was given to schools to cover fee costs. Prosecutors say that the money that was left over after the schools were reimbursed went to the kids and then to Melvin.
In a February newsletter, the Office of the Inspector General for the Department of Education said that scam rings go after community colleges and lower-cost schools more often because “the remaining credit balance refunds are higher” when the cost of education is low.
Straw kids all over the country
The DOJ announced Wednesday that there was another case of student loan theft. It was agreed that a woman from Texas would commit mail fraud and wire fraud as part of a plan to get almost $500k in student loans for fake students.
There are, however, some very important cases from a few years ago.
A man from Louisiana got 11 years in federal prison for a Covid relief fraud plan and a straw student scam. This is one of the biggest cases on the Justice Department website.
In 2023, officials said that Elliott Sterling, who was 34 years old at the time, was found guilty of a straw student scheme and told to pay the Department of Education $2.8 million in restitution.
Sterling had a large straw network. From what the U.S. Attorney’s Office for the Middle District of Louisiana can tell, most of the 180 “student participants” didn’t know they had signed up for student loans.
The man from Baton Rouge lied about his academic credentials for 168 of the students; 145 of them didn’t even have a high school diploma. At the trial, a witness said Sterling paid him $5,000 to make 42 diplomas with fake grades.
A federal case is still going on in the Central District of California against three women who are accused of using the names of prisoners to apply to an Orange County community college and get nearly $1 million in federal student loans.
Sisters Nyisha and Dionne Ramsey are two of the women who pleaded guilty to plot to commit wire fraud. The U.S. Attorney’s Office says they will be sentenced on May 1. Sharyn Barney is Nyisha Ramsey’s mother-in-law. Her trial is set to start in 2026.
