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Axact official charged with collecting $140m through fake scheme

Published Dec 23, 2016 07:02am

WASHINGTON: The US Department of Justice has charged an Axact executive, Umair Hamid, with collecting about $140 million through a ‘fake-diploma mill’ scheme.

Mr Hamid, a 30-year-old Karachi resident, is charged with one count of conspiracy to commit wire fraud and two counts of wire fraud — each of which carries a maximum prison sentence of 20 years; and one count of aggravated identity theft, which carries a mandatory minimum imprisonment of two years.

A statement released by the US Justice Department identified Mr Hamid as an associate vice president of Axact. US federal agents arrested Mr Hamid on Monday in Kentucky where he had travelled to open a bank account. On Tuesday, he was produced before a US federal court in Fort Mitchell, Kentucky.

Axact describes itself as a software company but is accused of running numerous websites selling fake academic degrees. In May 2015, the Federal Investigation Agency launched a criminal investigation into Axact’s business dealings and arrested its founder Shoaib Ahmed Shaikh and other officials. The arrests triggered a global crackdown on the company. Mr Shaikh was later acquitted in a number of cases and released on bail in one case.

Manhattan US Attorney Preet Bharara, who pursed a criminal case against Indian diplomat Devyani Khobragade, is representing the justice department in this case.

The criminal complaint, filed jointly by the Federal Bureau of Investigation and the US Postal Service, charged Mr Hamid, also known as Shah Khan or Shah, with collecting $140m from tens of thousands of consumers through “a worldwide diploma mill scheme”.

The justice department said that Mr Hamid and his co-conspirators made false and fraudulent representations to consumers on websites and over the phone to trick them into enrolling in purported colleges and high schools, and issued fake diplomas upon receipt of upfront fees from them.

“As alleged, while promising the rewards of a higher education, Umair Hamid was actually just peddling diplomas and certifications from fake schools,” Mr Bharara said. “Hamid allegedly took hefty upfront fees from young men and women seeking an education, leaving them with little more than useless pieces of paper.”

US Postal Inspection Service’s Inspector-in-Charge Philip R. Bartlett said: “Mr Hamid took advantage of the aspirations and dreams of thousands wanting a college education by devising a scheme to issue college coursework, degrees and certifications not worth the paper they were printed on.”

He said that postal inspectors and their law enforcement partners would spare no resource to bring these scammers to justice, protecting those striving for higher education.

FBI Assistant Director-in-Charge William F. Sweeney Jr. said: “Thousands of people’s hopes were crushed as this alleged diploma mill scheme came crashing down. Victims took at face value the lies Hamid and his co-conspirators are alleged to have sold them. Today, we’re rewriting the lesson plan.”

The federal complaint against the accused said, “Mr Hamid and his accomplices operated a massive education diploma mill through the Pakistani company Axact, which has held itself out as one of the world’s leading information technology providers”.

Axact promoted and claimed to have an affiliation with approximately 350 fictitious high schools and universities, which Axact advertised online to consumers as genuine schools. During certain time periods since 2014, Axact received approximately 5,000 phone calls per day from individuals seeking to purchase Axact products or enrol in educational institutions supposedly affiliated with Axact.

When consumers asked where the schools were located, sales representatives were instructed to give fictitious addresses.

Once a consumer paid for a school certificate or diploma that falsely reflected a completed course of study, Axact sales agents were trained to use sales techniques to convince the consumer that the consumer should also purchase additional “accreditation” or “certifications” for such certificates or diplomas to make them appear more legitimate.

Mr Hamid served as Axact’s assistant vice president of international relations. While based in Pakistan, he was involved in managing and operating online companies that falsely held themselves out to consumers over the Internet as educational institutions.

Published in Dawn, December 23rd, 2016