Justice Department Announces Enforcement Action Involving Over $100 Million in Losses to Department of Veterans Affairs
DOJ Press Release Number: 22-984 - Topic(s): Servicemembers Initiative Financial Fraud
The Department of Justice announced guilty pleas by seven defendants in three separate cases in schemes to defraud the Department of Veterans Affairs (VA) Post-9/11 GI Bill education benefits program, including the largest known Post-9/11 GI Bill fraud case ever brought by the department.
“The Post-9/11 GI Bill was enacted to aid our military veterans and their families on behalf of a nation grateful for their service,” said Assistant Attorney General Kenneth A. Polite, Jr. of the Criminal Division. “These frauds drain funds from a vital veterans’ program and undermine public faith in the administration of government. These cases demonstrate the Criminal Division’s clear commitment to protecting the integrity of federal programs and to holding offenders who would abuse and exploit these programs accountable.”
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The Post-9/11 GI Bill is a VA benefit program that pays tuition, housing, and other costs for eligible veterans seeking post-secondary education and training. Employees of VA-approved education institutions, known as School Certifying Officials (SCOs), are responsible for ensuring the participating educational institution maintains and supplies the VA with true and accurate enrollment, attendance, and course completion records for enrolled veterans; promptly notifies the VA of changes to veteran enrollment status; and maintains compliance with the “85-15 rule,” which stipulates educational institutions (1) charge the same tuition rate to veteran and non-veteran students, and (2) ensure that no more than 85% of the students enrolled in an approved course are funded by the VA. The VA relies on representations made by SCOs in authorizing tuition payments to VA-approved schools and housing and other payments to eligible veterans.
Today’s enforcement action involves SCOs for three VA-approved education institutions that submitted fraudulent claims to the VA in order to obtain millions of dollars in payments in Post-9/11 GI Bill benefits.
“The scope of the fraud uncovered in these investigations is stunning, particularly when you consider the schemes siphoned funds intended for providing legitimate education assistance to former service members,” said U.S. Attorney David H. Estes for the Southern District of Georgia. “We applaud the work of the VA Office of Inspector General in identifying and halting this fraud.”
“Safeguarding Post-9/11 GI Bill education benefit funds reserved for deserving veterans remains a priority,” said Inspector General Michael J. Missal of the Department of Veterans Affairs. “These guilty pleas are a testament of our commitment to working with our law enforcement partners to hold accountable those who would defraud VA’s benefits programs.”
The following charges were announced today as part of this national enforcement action:
United States v. Michael Bostock and Eric Bostock (District of Columbia)
Michael Bostock, 54, of Nampa, Idaho, and Eric Bostock, 47, of Riverside, California, each pleaded guilty to one count of conspiracy to commit wire fraud in the U.S. District Court for the District of Columbia. According to court documents, Michael Bostock was the founder and CEO of California Technical Academy (CTA), a VA-approved, for-profit school that offered technical training programs at three locations in Los Angeles and San Diego. Eric Bostock was CTA’s Director of Student Services. Both were SCOs.
According to court documents, from January 2012 to June 2022, the Bostocks and their co-conspirators made false representations to the VA regarding veterans’ enrollment in CTA’s approved courses of study, class attendance, and grades, and CTA’s compliance with the 85-15 rule. They also falsified course completion records to make it appear as if enrolled veterans completed their programs, when in fact they had not. In order to conceal their scheme, the Bostocks and their co-conspirators falsified veterans’ contact information to ensure that regulators could not contact the veterans by substituting phone numbers they and their co-conspirators controlled. When regulators called the falsified phone numbers to obtain information about CTA, the Bostocks and their co-conspirators would impersonate students.
Between January 2012 and June 2022, when CTA’s VA approval was withdrawn, CTA received more than $32 million in tuition payments for approximately 1,793 enrolled veterans. During the same period, veterans enrolled in CTA’s VA-approved courses received over $72 million in housing and other education-related benefits. In total, Michael and Eric Bostock’s scheme to defraud the VA resulted in a total loss of approximately $104,682,860. This is the largest known incident of Post-9/11 GI Bill benefits fraud prosecuted by the department to date.
Michael and Eric Bostock will be sentenced at a later date and each faces a maximum penalty of five years in prison.
Trial Attorneys Michael P. McCarthy and Lauren Archer of the Justice Department’s Fraud Section are prosecuting the case.
United States v. Robert Lanoue, Judith Lanoue, Kenneth Meers, and David Anderegg (Southern District of Georgia)
Robert Lanoue, 63, and Judith Lanoue, 59, both of Savannah, Georgia, each pleaded guilty to one count of submitting false claims to the VA. According to court documents, the Lanoues were the owners of Scooba Shack, a VA-approved scuba academy located in Bryan County, Georgia, that offered eight courses to eligible veterans. As SCOs, the Lanoues made false representations to the VA regarding Scooba Shack’s compliance with the 85-15 rule, the true hours of instruction for each VA-approved course, attendance and course completion dates, and payments received from non-VA students. To evade compliance with the 85-15 rule, the Lanoues took part in setting up a fake scholarship fund, ostensibly to pay for non-VA funded students who enrolled in Scooba Shack’s VA-approved courses. In fact, the scholarship did not pay out any funds, and instead non-VA funded students were allowed to attend classes for free or at discounted rates in violation of the 85-15 rule. Scooba Shack obtained over $3.2 million as a result of materially false claims submitted to the VA.
David Anderegg, 42, of Richmond Hill, Georgia, also pleaded guilty to submitting false claims to the VA for his role as a Scooba Shack SCO.
Kenneth Meers, 54, of Altamonte, Georgia, pleaded guilty to conspiracy to commit wire fraud for his role in orchestrating the scheme to defraud the VA at Scooba Shack and Diver’s Den, another VA-approved scuba school in Camden County, Georgia, which is described in further detail below.
United States v. Theresa Whitlock and Kenneth Meers (Southern District of Georgia)
Theresa Whitlock, 55, of St. Mary’s, Georgia, pleaded guilty to making false statements to the VA. According to court documents, Whitlock was an owner of Diver’s Den, a VA-approved scuba academy located in Camden County, Georgia. As an SCO, Whitlock made false statements to the VA regarding Diver’s Den’s compliance with the 85-15 rule, true hours of instruction, dates of attendance and completion for certain students, and payments received from non-VA students. Diver’s Den obtained more than $1.1 million as a result of materially false claims submitted by Whitlock and Meers.
Judith Lanoue was sentenced to six months in prison on Sept. 15.
Robert Lanoue is scheduled to be sentenced on Oct. 18 and faces a maximum of five years in prison.
The remaining defendants will be sentenced at a later date. David Anderegg, and Theresa Whitlock each face a maximum penalty of five years in prison. Kenneth Meers faces a maximum penalty of 20 years in prison.
Trial Attorney Michael P. McCarthy of the Justice Department’s Fraud Section and the U.S. Attorney’s Office for the Southern District of Georgia are prosecuting the Scooba Shack and Diver’s Den cases.
For those awaiting sentencing, a federal district court judge will determine any sentence after considering the U.S. Sentencing Guidelines and other statutory factors. All cases were investigated by the VA-OIG with assistance from the Veterans Benefits Administration-Education Service.
Unless otherwise indicated, information on Department of Justice websites is in the public domain and may be copied and distributed without permission. Citation of the Department of Justice as source of the information is appreciated, as appropriate.
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