David Alvey, 49, is charged by complaint with one count of conspiracy to commit wire fraud. Special agents with the U.S. Department of Veterans Affairs, Office of Inspector General, the FBI, and the U.S. Department of Education, Office of Inspector General, arrested Alvey this morning in Maryland. He will appear this afternoon before U.S. Magistrate Judge Stephanie A. Gallagher in Maryland federal court.
“The Post 9/11 GI Bill was designed to provide educational opportunities to a generation of men and women who served in the U.S. Armed Forces following the attacks on 9/11,” U.S. Attorney Fishman said. “Alvey and others allegedly sought to pillage those well-earned benefits as part of a complex $35 million scam that targeted veterans and enrolled them in unapproved online courses without their knowledge. Rooting out fraud against the government is always a priority of this office, especially when the conduct exploits those who serve our country with such courage.”
“The allegations of fraud committed by David Alvey are extremely serious because not only did his scheme potentially harm the Department of Veterans Affairs, it also victimized our nations deserving veterans and their families,” Jeffrey G. Hughes, Special Agent in Charge of the U.S. Department of Veterans Affairs, Office of Inspector General’s Northeast Field Office, said. “The VA’s education benefit program is meant to help our veterans who have selflessly made great sacrifices for our country and now are in need of VA assistance. Any fraud against this program directly impacts our nation’s heroes.”
According to the complaint unsealed today:
From November 2009 through August 2013, Alvey and others engaged in a conspiracy to defraud the United States by obtaining tuition assistance and other education-related benefits under the Post 9/11 Education Assistance Act, more commonly known as the Post 9/11 GI Bill.
The Post 9/11 GI Bill provides educational assistance to eligible veterans of the United States Armed Forces by paying for veterans’ tuition, housing costs, and other educational costs and fees as long as the courses of study meet certain criteria. Due to the fact that the tuition benefits under the Post 9/11 GI Bill are paid by the United States directly to the school, all entities involved in developing and administering the courses must be fully disclosed to the United States in order for the government to properly assess the courses for approval.
Over the course of the conspiracy, Alvey, operating largely through his own company, ED4MIL LLC (“ED4MIL”), partnered with a New Jersey university (the “University”), to obtain approval from the United States to receive tuition and other education benefits under the Post 9/11 GI Bill for several online non-credit training and certification courses. These courses were purportedly developed, taught, and administered by the faculty of the University, but were, in fact, actually developed, taught, and administered by undisclosed and unapproved sub-contractors of ED4MIL, including an online correspondence school located in Pennsylvania.
Alvey and others at ED4MIL developed marketing materials and a script to be used by ED4MIL salespersons at various military bases around the United States in order to market to and enroll thousands of veterans in the courses. These “field representatives” employed by ED4MIL traveled across the United States pitching the fraudulent courses to veterans using the marketing materials and script developed by Alvey and others at ED4MIL. Field representatives were instructed to identify themselves to veterans as employees of the University, and were specifically told not to mention ED4MIL or the online correspondence school in which the veterans were actually enrolled. The marketing materials were emblazoned with the University’s insignia, and the field representatives wore t-shirts and handed out pens bearing the University’s name. The field representatives, and several other employees at ED4MIL, were also given University email addresses with which to communicate with the veterans.
Alvey and others then nominally enrolled the veterans in the University while simultaneously enrolling them in the unapproved online correspondence courses. Due to the fact that Alvey and others concealed the true source of the courses and the contract relationships between the University and ED4MIL, the veterans were unaware that the courses they were taking were actually being taught and administered by the online correspondence school.
Even though the University contributed no content or value to the courses whatsoever, the University charged the Post 9/11 GI Bill between ten and thirty times the prices charged by the online correspondence school for the same courses. While most courses at the correspondence school cost between approximately $600 and $1,000 in tuition, the University charged between approximately $5,000 and $26,000 per course. Over the course of the conspiracy, Alvey and others caused the United States to pay out over approximately $35 million in total benefits.
“The FBI’s stance on corruption and fraud is that of zero tolerance and therefore one of our highest priorities,” said Special Agent in Charge Timothy Gallagher. “Our job is to protect victims, especially our veterans who are on the front lines keeping our country safe, and these charges reflect our commitment to that goal.”
“Scams like this steal money from hardworking taxpayers and legitimate students – and in this case, our veterans – and that is completely unacceptable," Brian Hickey, Special Agent in Charge of the U.S. Department of Education, Office of Inspector General's Northeastern Regional Office, said. "OIG is committed to fighting student financial aid fraud and we will continue to aggressively pursue those that participate in these types of crimes."
The wire fraud conspiracy count carries a maximum potential penalty of 20 years in prison and a $250,000 fine, or twice the gross gain or loss from the offense.
U.S. Attorney Fishman credited special agents of the U.S. Department of Veterans Affairs, Office of Inspector General, Criminal Investigation Division, Northeast field office, under the direction of Special Agent in Charge Jeffrey G. Hughes in Newark; the FBI, under the direction of Special Agent in Charge Timothy Gallagher in Newark; and the U.S. Department of Education, Office of Inspector General, under the direction of Special Agent in Charge Brian Hickey of the Northeastern Region, with the investigation leading to today’s arrest.
The government is represented by Assistant U.S. Attorney David M. Eskew of the Economic Crimes Unit, Assistant U.S. Attorneys Jane Yoon and Lucy Muzzy of the Health Care and Government Fraud Unit, and Assistant U.S. Attorney Jafer Aftab of the Asset Forfeiture and Money Laundering Unit.
The charge and allegations contained in the complaint are merely accusations, and the defendant is presumed innocent unless and until proven guilty.
Defense Counsel: Judith Germano Esq., Montclair