NYT accuses software firm of running fake degree empire

Published May 19, 2015
The Times story caused quite a stir in the mainstream and social media, as almost every major news network in the country picked the story and ran it in their main bulletins  — Photo courtesy: Axact website
The Times story caused quite a stir in the mainstream and social media, as almost every major news network in the country picked the story and ran it in their main bulletins — Photo courtesy: Axact website

KARACHI: The parent company of an infant media conglomerate came under the spotlight on Monday when The New York Times accused it of selling fake diplomas and degrees online through “hundreds of fictitious schools” in the United States.

The lead story — Fake Diplomas, Real Cash: A Net of Made-Up Schools — by veteran reporter Declan Walsh and carried on the front page of the Times described Axact as a “secretive” Pakistani software company that offers “everything from high school diplomas for about $350, to doctoral degrees for $4,000 and above”.

However, Axact — the parent company of the BOL Network — denied all allegations levelled against it in what it called the defamatory article and pointed finger at rival media organisations for getting published the report “to counter the success of BOL”.

The Times story caused quite a stir in the mainstream and social media, as almost every major news network in the country picked the story and ran it in their main bulletins. It went viral on Twitter, Facebook and other social media sites and by 10.30pm the number of comments on the Times website crossed 540, while the Axact’s response at its website was shared 2.3 million times on Facebook.

The Times report says that the Axact’s response to repeated requests for interviews over the past week, and to a list of detailed questions submitted to its leadership on Thursday, was a letter from its lawyers to The New York Times on Saturday. In the letter, it issued a blanket denial, accusing a Times reporter of “coming to our client with half-cooked stories and conspiracy theories”.

Axact condemns the report as baseless and defamatory and says it will pursue legal action against the publication

According to the Times, Axact makes tens of millions of dollars annually by offering diplomas and degrees online through hundreds of fictitious schools. Fake accreditation bodies and testimonials lend the schools an air of credibility. But when customers call, they are talking to Axact sales agents in Karachi.

Axact employs over 2,000 people and calls itself Pakistan’s largest software exporter. It does sell some software applications. But according to former insiders, company records and a detailed analysis of its websites, Axact’s main business has been to take the centuries-old scam of selling fake academic degrees and turn it into an internet-era scheme on a global scale.

Quoting unnamed former employees as telling the Times, the story reads: “At Axact’s headquarters telephone sales agents work in shifts around the clock. Sometimes they cater to customers who clearly understand that they are buying a shady instant degree for money. But often the agents manipulate those seeking a real education, pushing them to enrol for coursework that never materialises, or assuring them that their life experiences are enough to earn them a diploma.

“To boost profits, the sales agents often follow up with elaborate ruses, including impersonating American government officials, to persuade customers to buy expensive certifications or authentication documents.”

“Revenues, estimated by former employees and fraud experts at several million dollars per month, are cycled through a network of offshore companies. All the while, Axact’s role as the owner of this fake education empire remains obscured by proxy Internet services, combative legal tactics and a chronic lack of regulation in Pakistan.

“The accounts by former employees are supported by internal company records and court documents reviewed by The New York Times. The Times also analysed more than 370 websites — including school sites, but also a supporting body of search portals, fake accreditation bodies, recruitment agencies, language schools and even a law firm — that bear Axact’s digital fingerprints.”

The Times report went on to say little of this is known in Pakistan, where Axact has dodged questions about its diploma business and has portrayed itself as a roaring success and model corporate citizen.

It says “winning and caring” is the motto of Axact’s founder and chief executive Shoaib Ahmed Shaikh, who claims to donate 65 per cent of Axact’s revenues to charity, and last year announced plans for a programme to educate 10 million Pakistani children by 2019.

More immediately, says the Times report, he is working to become Pakistan’s most influential media mogul. For almost two years now, Axact has been building a broadcast studio and aggressively recruiting prominent journalists for BOL, a television and newspaper group scheduled to start this year.

Just how this ambitious venture is being funded is a subject of considerable speculation in Pakistan. Axact has filed several pending lawsuits, and Mr Shaikh has issued vigorous public denials, to reject accusations by media competitors that the company is being supported by the Pakistani military or organised crime. What is clear, given the scope of Axact’s diploma operation, is that fake degrees are likely providing financial fuel for the new media business, the report adds.

“Hands down, this is probably the largest operation we’ve ever seen,” Allen Ezell, a retired FBI agent and author of a book on diploma mills who has been investigating Axact, told the Times. “It’s a breathtaking scam.”

According to the report, at first glance, Axact’s universities and high schools are linked only by superficial similarities: slick websites, toll-free American contact numbers and calculatedly familiar-sounding names, like Barkley, Columbiana and Mount Lincoln.

But other clues signal common ownership. Many sites link to the same fictitious accreditation bodies and have identical graphics, such as a floating green window with an image of a headset-wearing woman who invites customers to chat.

There are technical commonalities, too: identical blocks of customised coding, and the fact that a vast majority route their traffic through two computer servers run by companies registered in Cyprus and Latvia, claims the Times report.

It also says that some members of the Axact’s sales team pose as American officials, badgering clients to spend thousands of dollars on State Department authentication letters bearing the signature of Secretary of State John Kerry.

Such certificates, which help a degree to be recognised abroad, can be lawfully purchased in the United States for less than $100. But in Middle Eastern countries, Axact officials sell the documents — some of them forged, others secured under false pretences — for thousands of dollars each.

Some Axact-owned school websites have previously made the news as being fraudulent, though without the company’s ownership role being discovered, the report says, adding that in 2013, Drew Johansen, a former Olympic swim coach, was identified in a news report as a graduate of Axact’s bogus Rochville University.

In the Middle East, the Times report says, Axact has sold aeronautical degrees to airline employees and medical degrees to hospital workers. One nurse at a large hospital in Abu Dhabi, United Arab Emirates, admitted to spending $60,000 on an Axact-issued medical degree to secure a promotion.

The report mentioned a former employee, Yasir Jamshed, who quit Axact and moved to the UAE, taking with him internal records of 22 individual customer payments totalling over $600,000.

Mr Jamshed has since contacted most of those customers, offering to use his knowledge of Axact’s internal protocols to obtain refunds. Several spurned his approach, seeing it as a fresh effort to defraud them. But a few accepted his offer.

The report claims that Axact’s role in the diploma mill industry was nearly exposed in 2009 when an American woman in Michigan, angry that her online high school diploma had proved useless, sued two Axact-owned websites, Belford High School and Belford University. The case quickly expanded into a class-action lawsuit with an estimated 30,000 American claimants.

But instead of Axact, the defendant who stepped forward was Salem Kureshi, a Pakistani who claimed to be running the websites from his apartment. The lawsuit ended in 2012 when a federal judge ordered Mr Kureshi and Belford to pay $22.7 million in damages. None of the damages have been paid, it added.

According to Times, Axact does have regular software activities, mainly in website design and Smartphone applications, former employees say. Another business unit, employing about 100 people, writes term papers on demand for college students.

But the employees say those units are outstripped by its diploma business, which as far back as 2006 was already earning Axact around $4,000 a day, according to a former software engineer who helped build several sites. Current revenues are at least 30 times higher, by several estimates, and are funnelled through companies registered in places like Dubai, Belize and the British Virgin Islands.

When reporters for The Times contacted 12 Axact-run education websites on Friday, asking about their relationship to Axact and the Karachi office, sales representatives variously claimed to be based in the US, denied any connection to Axact or hung up immediately.

The online version of the Times story said: “After the initial publication of this article, Axact posted a public response on its website, saying it would seek legal action. Also after publication, some of the testimonial videos and specific website contents cited in this article were taken down without explanation.”

Axact response

In a response posted on its website, Axact condemned the story as baseless, substandard, maligning, defamatory and based on false accusations and merely a figment of imagination published without taking the company’s point of view. “Axact will be pursuing strict legal action against the publications and those involved.”

While lashing out at its local media rivals as well as Mr Walsh, the company said: “The writer quoted references from several imaginary employees to corroborate accusations made out of thin air. None of these accusations have been substantiated with any real proof. Search engines have been used to type ‘fake degrees’ and whatever images have turned up have been portrayed as evidence. Additionally, no proof has been given linking any of these sites and allegations to Axact and widely recognised names, such as that of John Kerry, have been used to increase the impact of the story. In fact the writer himself admits that when he approached these universities, they denied having any links with Axact.

“For information on Axact Education Unit, it is hereby clarified that Axact provides a comprehensive education management system that benefits diverse bodies of students and caters to all types of educational institutions — online and traditional. It is a 360 degree solution for students and faculty around the globe, available on multiple educational platforms being its core capability.

“All 10 business units of Axact are completely legitimate, legal and committed to enhancing the quality of IT services across the world.”

It says that from the very first day of announcement of BOL, certain elements have started campaigning against Axact and BOL.

Published in Dawn, May 19th, 2015

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