Bogus scholarship letters fleece tens of thousands Nigerian is indicted in Baltimore in alleged $500,000 mail fraud

October 28, 1998|By Michael James | Michael James,SUN STAFF

"Congratulations!" read the letters mailed to hundreds of thousands of prospective students around the country. "You have been selected by the National Scholarship Program."

More than 50,000 of the future students said, "Why not?" and sent in a $10 processing fee. The result? More than a half-million dollars found its way into the pockets of an alleged con man.

That's the scheme that federal agents say Christopher Nwaigwe engineered from a modest Essex apartment between 1992 and 1996.

An indictment filed Monday in U.S. District Court in Baltimore charges Nwaigwe with mail fraud in the operation of 10 "scholarship programs" that deluded students into thinking they had won grants worth $2,500 to $7,500.

Nwaigwe, 37, is being held in Massachusetts and will be returned to Maryland to face trial, federal officials say.

He is the first to be prosecuted as a result of a Federal Trade Commission investigation into scholarship fraud, a problem that has risen as steadily as college tuition. Each year, hopeful people send millions of dollars to bogus scholarship programs in the form of so-called application and processing fees.

"We're very concerned because there is a never-ending pool of potential victims," said FTC attorney Alice Saker Hrdy. "As long as students are planning to go to college, there will be people out there who try to prey on them."

Court papers say Nwaigwe, a Nigerian immigrant, ran a scheme that involved little more than envelope-stuffing.

Using a list of prospective students that was purchased from a New York company that tracks college-bound seniors, Nwaigwe began mailing out "scholarship offers" by the thousands, court papers show.

Among those who received a letter was Christopher Jones, a Wilmington, Del., resident planning to study exercise and sports science. The letter, dated Dec. 14, 1994, bears a letterhead with the words "National Scholarship Program -- Providing Assistance to America's Future Leaders."

"It just seemed so legitimate, and we thought, well, for $10, why not check it out," said his mother, Margaret Jones. "He was kind of desperate at the time to see what kind of financial assistance he could get, and then this letter came."

Margaret Jones said the family sent a $10 check. "I even received an acknowledgment in the mail afterward, saying they'd received it," she said. But she never heard anything further.

More than 50,000 others -- from nearly every state -- also sent checks, said Paul J. Trimbur, a spokesman for the U.S. Postal Inspection Service in Baltimore, which investigated the case.

Trimbur said scholarship fraud schemes take advantage of students' often critical needs for financial assistance in an age of skyrocketing education costs.

"Students, as a group, are quite often as vulnerable and naive as senior citizens," Trimbur said. "They're unfamiliar with the process of applying for things, and they're used to paying application fees. If they get an offer for a scholarship and there's a $10 fee, they think that's perfectly normal."

The FTC has filed eight lawsuits across the country that have blocked or sought to block suspect companies from sending out fraudulent scholarship offers. Nwaigwe was among those sued, and in 1994 he entered into a consent agreement with postal inspectors to stop soliciting money through scholarship promotional material.

But Nwaigwe "violated that court order by continuing to use the postal service to operate the fraudulent scholarship funds," a federal indictment says.

In his letters, Nwaigwe referred to rented Baltimore-area mailboxes as "suites" so it would appear he had an office, court papers say. Thus, P.O. Box 178 was referred to as "Suite 178."

None of the people who mailed him money received a scholarship. Prosecutors say none of the money -- more than $500,000 -- has been recovered. Nwaigwe spent it over the past five years or provided it to other Nigerians living in the United States, a federal source said.

The cost of mailing the letters was well over $30,000, investigators said.

Joyce K. McDonald, the assistant U.S. attorney who will prosecute Nwaigwe in Baltimore, said the dollar loss to each applicant is minimal, but the crime of scholarship fraud has broad implications.

"It's very sad to think that thousands of people who were at the start of their academic careers were victimized like this," McDonald said. "Their first experience in going off to college was that they were the victim of a fraud."

For information on college scholarship fraud and ways to prevent it, visit the Federal Trade Commission's Web site at http: // www.ftc.gov or the Scholarship Scam Alert at http: //www.finaid.org/finaid/scams.html.

Pub Date: 10/28/98

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