Two men who ran a technical school in California pleaded guilty to the largest post-9/11 GI Bill fraud scheme the Justice Department has ever prosecuted, according to a Friday DOJ press release.
Over a span of 10 years, Michael and Eric Bostock -- chief executive officer and director of student services for the California Technical Academy (CTA), respectively -- defrauded the Department of Veterans Affairs resulting in a total loss of over $100 million by falsely reporting veteran enrollment numbers, falsifying records to make it seem as though veterans completed their courses, and posing as enrolled veterans when regulators called to verify information about the program.
"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.
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The Bostocks also served as school certifying officials, or SCOs -- a role within VA-approved schools responsible for communicating accurate student information to the department and ensuring that the academic institution is compliant with veteran benefit policies.
It was not immediately clear at the time of publication whether the two men were related, but they both at one point lived at the same Utah address, according to public records.
Among other accusations, the DOJ said that the Bostocks made "false representations" to the VA regarding the academy's adherence to the "85-15 rule," a policy that ensures veteran and non-veteran students are charged the same amount for tuition and that no more than 85% of enrolled students are funded by the VA.
The department also said that the Bostocks went to elaborate lengths to conceal their scheme, operating burner phones with falsified veteran contact information in an attempt to dupe VA auditors trying to contact actual student veterans.
"When regulators called the falsified phone numbers to obtain information about CTA, the Bostocks and their co-conspirators would impersonate students," according to the press release.
For more than a decade, CTA received over $32 million in tuition payments for 1,793 enrolled veterans, as well as $72 million for "housing and other education-related benefits," according to the Justice Department. The Department of Consumer Affairs reported CTA's 2019 veteran financial aid amount as $3,828,467.
Since 2019, CTA has been listed as a member of the California Association of Private Postsecondary Schools, a coalition of more than 300 tertiary education institutions, according to CAPPS' website. The website also says that CTA, a for-profit school, provided information technology training for students, certifying them "in a variety of computer environments," such as Microsoft and Cisco programs.
CTA claimed a 90% graduation rate with an average annual cost of $28,511, according to the Department of Education.
"My general comment is that I am sorry that the VA and other regulatory bodies did not catch them sooner," CAPPS Executive Director Robert Johnson told Military.com over email. "Every sector has bad actors that stain the reputation of the vast majority of schools that run lawful and appropriate programs.
"Given the high level of scrutiny that our sector schools receive, I hope the VA does a thorough analysis of why these people slipped through the multiple reviews and audits that these programs require," he added.
The Justice Department described the bust as "the largest known incident of Post-9/11 GI Bill benefits fraud prosecuted by the department to date."
In July, the Better Business Bureau received a complaint from the parent of a student, alleging that the FBI had raided the academy while they were dropping off their son and that the school owed them thousands.
Another anonymous complaint to the BBB said, "As of June 22nd I heard that the school has gone out of business and many students are reporting being unable to contact anyone at the school and are unsure what is to happen with their funds."
The school's website appeared to be down as of Monday, and its listed phone number disconnected.
Military.com's attempts to contact the Bostocks were unsuccessful. Military.com requested comment and court records from DOJ prosecutors but was deferred to the department's public relations without response.
"Safeguarding Post-9/11 GI Bill education benefit funds reserved for deserving veterans remains a priority," said VA Inspector General Michael J. Missal in the press release. "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 Bostocks face up to five years in jail and will be sentenced at an unscheduled future date, according to the DOJ press release. The announcement by the department came with an additional five guilty pleas in two other cases involving VA defraudment – including two VA-approved scuba academies that defrauded the department with similar schemes, but for substantially less money.
-- Drew F. Lawrence can be reached at drew.lawrence@military.com. Follow him on Twitter @df_lawrence.
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