Fayetteville Woman Guilty of Scamming Over $5 Million in College Loan Money

A Fayetteville woman has admitted to orchestrating a scheme that defrauded the U.S. Department of Education of over $5 million in student aid funds.

Cynthia Denise Melvin, 59, pleaded guilty to conspiracy to commit wire fraud this week. She now faces up to 20 years in prison, a $250,000 fine, and three years of supervised release. Additionally, Melvin will be required to pay restitution.

The U.S. Attorney's Office, Eastern District of North Carolina said that between 2016 and 2023, Melvin led a group of more than 70 individuals, referred to as "straw students," in submitting fraudulent financial aid applications to several community colleges in North Carolina's Middle and Eastern Districts. This operation led to the disbursement of over $5 million in federal student aid.

Federal Student Aid (FSA), a division of the U.S. Department of Education, oversees financial assistance programs designed to help eligible students pursue higher education. These programs include grants, loans, and work-study funds. FSA is also responsible for managing the Free Application for Federal Student Aid (FAFSA), which determines students' eligibility for financial support.

"Melvin collected personal identifying information (PII) of straw students in North Carolina and used that information to submit applications for admission at the targeted schools," the release said. "Thereafter, Melvin attempted to make it appear that the straw students were attending classes, completing coursework, and communicating with the targeted schools when, in fact, Melvin impersonated the straw students for these and other purposes. To obtain financial aid, the Melvin submitted FAFSA forms for the straw students through FSA’s website and in so doing concealed her identity as the preparer of the documents. As a result of the scheme, the straw students were awarded tuition, which was wired from the United States Treasury to the targeted schools in North Carolina. The straw students also received student loan refunds, which the schools disbursed after collecting the tuition cost. As the ringleader of the scheme, Melvin received a substantial portion of the refunds."

The investigation into Melvin's activities was conducted by the U.S. Department of Education's Office of Inspector General.

"Office of Inspector General investigators recovered documents and other evidence establishing the operation and mechanics of the scheme, including PII and coursework for the straw students, FSA account usernames and passwords, and bank account and routing numbers."

Melvin's sentencing is scheduled for later this year.