Searching for College Money?

FTC Cautions: Do Your Own Homework to Avoid Scholarship Service Rip-Offs List of Defendants in PROJECT $CHOLAR$CAM

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As more than nine million students start college classes again this month, tens of thousands of them will have been victimized by fraudulent companies that pose as legitimate foundations, scholarship sponsors and scholarship search services, the Federal Trade Commission said today. And the number of victims is growing as the rise in college costs out paces families’ ability to pay them. Capitalizing on this gap, scam artists guarantee “free money for college” in campus newspapers, flyers, post cards, and on the Internet, and charge from $10 to $400 for their services. According to the FTC, however, students who rely on a fraudulent search service instead of doing their own homework when applying for scholarships or grants will face the upcoming school year bills with nothing for the effort but a hard-earned lesson.

Today, the FTC announced “Project $cholar$cam,” under which it has filed charges in federal district court against five companies, alleging that they took advantage of education finance worries to exploit college-bound students and their families. (See attached list.)

The second half of Project $cholar$cam is a major campaign to school consumers in how to identify a fraudulent scholarship search service. The FTC said the goal of this combined enforcement and education campaign is to help students distinguish between a legitimate and a fraudulent search service, and to substantially reduce the estimated tens of millions a year that consumers lose to financial aid service frauds.

“Bogus scholarship search services are just a variation on the ?you have won’ prize-promotion scam, targeted to a particular audience -- students and their parents who are anxious about paying for college,” said Jodie Bernstein, Director of the FTC’s Bureau of Consumer Protection. “They guarantee students and their families free scholarship money and all they have to do to claim it is pay an up-front fee. By comparison to the scholarship, the fee seems paltry. But even $50 for no good purpose is a significant loss to a young man or woman who is trying to pull together college funding, and many schemes charge much more than that. You don’t need college-level math to know that multiplying those fees by tens of thousands of victims adds up to big money for the scam artists. The potential loss to students is even greater when you add in the lost time and money that could have been spent working with legitimate sources.

“The quiz we want all students and their parents to pass has just one question: ?Will a legitimate search service really guarantee you a scholarship?’ The answer is no,” Bernstein said.

According to a General Accounting Office report released Aug. 15, tuition at 4-year public colleges and universities rose 234 percent from 1980 to 1994, nearly triple the 82 percent growth in median household income during that time. Average student loan amounts rose 467 percent -- from $518 in 1980 to more than $2,400 in 1995, the report states. The nationwide average for tuition at a public in-state school was $2,865 for the 1994-95 school year, but varies widely among states to more than $5,000 in some. Private school tuition can range into the tens of thousands of dollars per year.

Scam artists are notoriously opportunistic, the FTC said, and these figures lay the foundation for their schemes. Fraudulent scholarship search services go through databases of public information and provide a list of purported scholarships and grants for which a student supposedly is eligible to apply. Some of the listed scholarships are for specific disciplines and many students are ineligible. In other situations, the deadlines have expired. In addition, many of the sources on these lists actually have turned out to be either loan programs or contests. The bottom line is, a scholarship search service cannot truthfully guarantee that a student will receive a scholarship.

Any "money-back" guarantee should be studied carefully before paying any money, the FTC said. Some fraudulent companies require the student to apply for every scholarship or grant on the company’s list and to provide proof of rejection for each one before giving any refund, conditions that are not disclosed until after the student pays the up-front fee. Because many of the sources on the lists don’t provide scholarships or have expired deadlines, it may be impossible for consumers to obtain the required rejection letters, the FTC said.

“Filling out scholarship applications is like doing your homework: If you’re going to get anything out of it, you have to do your own work,” Bernstein said. “These fraudulent search firms are not going to fill out those applications, gather recommendations and write those essays for you, even for $300.”

According to Mark Kantrowitz, author of the Financial Aid Information Page on the World Wide Web, many fraudulent search services use some variation on a theme that billions in unclaimed scholarship aid is available, deceptively capitalizing on a two-decade old report about employer-provided tuition benefits. In fact, he said, the benefits touted in that report were available only to the companies’ own employees who had children enrolled in college -- not to the general public. About 95 percent of college aid comes from state or federal government agencies, according to authorities.

Other techniques employed by fraudulent companies include using official-sounding names that are slight variations of the names of legitimate government and private organizations, and Washington, D.C. addresses that turn out to be post office boxes, rather than business locations, the FTC said. Some companies claim to be holding scholarships for consumers, and ask them to provide their checking account numbers to confirm their eligibility.

“Don’t do it,” Bernstein cautions. “A con artist can use the number to drain your checking account. They don’t need your signature on a check . . . only the account number.”

These and other tips are included in flyers, bookmarks, brochures and on-line public service announcements that are part of the massive Project $cholar$cam consumer education campaign to help students, parents, educators and financial aid administrators identify and avoid scholarship scams. As part of the campaign:

  • the FTC’s web site ( will include information regarding scholarship scams and how to avoid them;
  • Sallie Mae (the Student Loan Marketing Association) has produced packages of materials, including bookmarks, flyers and posters, which the FTC will distribute to high schools across the country; Sallie Mae’s own web site ( will have information about scholarship scams; and it will publicize this campaign to colleges, universities and banks through its newsletters;
  • the Financial Aid Information Page (, a widely-visited web site on grants and scholarships, will hyperlink to scholarship information at the FTC’s web site;
  • the National Association of Student Financial Aid Administrators ( and the American Counseling Association ( will post consumer information on their web sites ;
  • eleven Interactive Service Association members (such as The Electric Library and Kaplan Online) will post public service announcements on their web sites and on-line services for students trying to find scholarship information on line;
  • the Educational Testing Service and ACT, Inc. (formerly, American College Testing), both of which administer standardized tests for admission to college and graduate school,
  • will include warning messages about scholarship scams in their mailings to millions of students over the coming school year; and
  • the National Association of College Stores will distribute consumer education materials through their 3,600 members.

In each of the cases announced by the FTC today, the agency has obtained a temporary restraining order prohibiting the challenged tactics and freezing defendants’ assets in an effort to preserve funds for possible redress to consumers. Ultimately, the FTC is seeking court orders permanently barring the defendants from engaging in similar fraudulent or deceptive schemes, and requiring them to give refunds to their customers.

The FTC vote to file the complaints in these cases was 5-0. They were filed in federal district courts as noted on the attached list. The FTC received assistance in its cases from Mark Kantrowitz; the state of Florida; the Better Business Bureaus of Greater Maryland, Metropolitan Atlanta and South Florida; the Idaho, Maryland and Oregon Attorney General’s Offices; the Florida State Attorney’s Office; the Broward County, Florida, Sheriff’s Office; and the New York City Police Department. The Oregon Attorney General’s Office has secured an Assurance of Voluntary Compliance Order against one of the FTC targets, as noted in the attached list. The Wisconsin Attorney General has served subpoenas against four scholarship search firms.

NOTE: The Commission files a complaint when it has “reason to believe” that the law has been or is being violated, and it appears to the Commission that a proceeding is in the public interest. The complaint is not a finding or ruling that the defendant has actually violated the law. The case will be decided by the court.

Copies of the complaints and the consumer education materials referenced above are available from the FTC’s Public Reference Branch, Room 130, 6th Street and Pennsylvania Avenue, N.W., Washington, D.C. 20580; 202-326-2222; TTY for the hearing impaired 1-866-653-4261. To find out the latest news as it is announced, call the FTC NewsPhone recording at 202-326-2710. FTC news releases, consumer education materials and other documents also are available on the Internet at the FTC’s World Wide Web site at:

Media Contact:
Bonnie Jansen
Office of Public Affairs
202-326-2161 or 202-326-2180
Staff Contact:
Bureau of Consumer Protection
Dean Graybill, 202-326-3303
Heather Hippsley, 202- 326-3285,
or Dana Lesemann, 202-326-3146

(FTC File Nos. noted on attached list.)

List of Defendants in PROJECT $CHOLAR$CAM

1. Career Assistance Planning, Inc.

Does business as College Assistance Planning, College Assistance Program and C.A.P.)
David Chaim Levy
Donna M. Levy (also known as Donna Holeger)
Becky Settles
LOCATION: 400 Colony Square, Suite 2030, Atlanta, Georgia
ALLEGATIONS: Have sent millions of postcards stating recipients “may be eligible” for many grants and scholarships and listing an 800 number. Offered a full refund of its $199 fee for students who do not receive at least $1,000 in scholarship money within one year, or of its $299 fee for those who do not receive at least $2,000. Ultimately supplied a list of scholarships that are no longer available or for which students are ineligible. Some consumers received no list at all. Consumers received only partial refunds, or none at all. Defendants also debited consumers’ checking accounts or charged their credit accounts without authorization.
MEDIA CONTACT: Gregg Shapiro, FTC Bureau of Consumer Protection, 202-326-3549 (FTC File No. 952 3174; U.S. District Court for the Northern District of Georgia, in Atlanta, Civil Action No. 1 96-CV-2187-MHS)

2. Christopher Ebere Nwaigwe

(also known as Christopher Maige, Michael Morge and Michael Norge)
Uses the names Higher Education Scholarship Program; National Health Scholarship Program, Division of Nursing; National Scholarship Program; National Management Scholarship Program; and National Science Program, Division of Biological Sciences
LOCATION: 724 Dulaney Valley Road, Boxes 131 and 199, Towson, Maryland; 2931 O’Donnell Street, Box 313, Baltimore, Maryland; 8604 Second Avenue, Silver Spring, Maryland; 1220 L Street NW, Box 298, Washington, D.C.; and 2117 L Street, NW, Boxes 250 and 280, Washington, D.C.
ALLEGATIONS: Obtained mailing lists of college students organized by field of study and sent at least a thousand letters a day to students nationwide representing that he has a scholarship for them or soliciting them to purchase a scholarship list for $10. Stated that the fee would be refunded for consumers who do not receive a specified level of funding. Consumers received nothing at all or a list of agencies that purportedly administer scholarships, but which includes scholarships for which deadlines had passed or students were ineligible, incorrect addresses, or sources that did not in fact award scholarships. 
MEDIA CONTACT: Alice Hrdy, FTC Bureau of Consumer Protection, 202-326-2009 (FTC File No. 962 3242; U.S. District Court for the District of Maryland, Northern Division, in Baltimore, Civil Action No. HAR-96-2690)

3. Student Assistance Services, Inc.

Student Financial Services, Inc.
Fred Markowitz
Donald McGovern
LOCATION: 1868 North University Drive, Suite 202, Fort Lauderdale, Florida; and 1802 North University Drive, Suite 200, Plantation, Florida
ALLEGATIONS: Have sent more than 1 million postcards to high school and college students advertising scholarship services and listing an 800 number. Telemarketers told consumers that, for a $179 up-front fee, they could find “unclaimed” scholarship and grant funds from private companies, and guaranteed to refund the fee if the students did not get at least $1,000. Consumers received either nothing at all, or a list of “sources” for financial aid for which they had to apply on their own or which in fact were contests, loans or work-study programs. Many sources were no longer available or not suitable for the student. Students seeking refunds had to apply in writing to each source on the list and provide rejection letters and, even then, many did not receive refunds.
MEDIA CONTACT: Dana J. Lesemann, FTC Bureau of Consumer Protection, 202-326-3146
(FTC File No. 962 3235; U.S. District Court for the Southern District of Florida, Fort Lauderdale Division, Civil Action No. 96-6995 CIV-Roettger)
Oregon Attorney General’s Office secured an Assurance of Voluntary Compliance Order on Aug. 22, 1996 against this company;
MEDIA CONTACT: Jan Margosian, 503-378-4732.  

4. College Assistance Services, Inc.

Linda Love
Conni Canella
Randolph Canella
John Giuffrida
LOCATION: 4567 North Pine Island Road, Sunrise, Florida
ALLEGATIONS: Have mailed more than 1 million post cards to high school and college students stating that they were eligible for the defendants’ College Scholarship and Grant Program and listing an 800 number. Callers were told that the company was a clearinghouse for corporations who give scholarships and that millions of dollars in scholarship funds remain unclaimed. Charged $179 to enroll consumers in their program on the guarantee that the students would get at least $1,000. Students received a list with about 40 sources of aid, many of which were contests, loan or work-study programs, and others of which were no longer in existence, had expired deadlines or specified eligibility requirements the students did not meet. In many instances, the defendants did not give refunds unless students provided a rejection letter from each source or complied with a variety of other conditions.
CONTACT: Darren A. Bowie, FTC Bureau of Consumer Protection, 202-326-2018
(FTC File No. 962 3226; U.S. District Court for the Southern District of Florida, Miami Division, Civil Action No. 96-6996 CIV-Highsmith)

5. Student Aid Incorporated

Adel Kovaleva
Adel Tager
Raimma Tagiev
LOCATION: 1040 First Avenue, Suite 352, New York City; 99-44 62nd Avenue, #2G, Rego Park, New York
ALLEGATIONS: Placed classified ads in college newspapers and posted flyers on campuses that touted “Money for College!!!!” and listed an 800 number. Callers were told that, for an up-front fee of $97, Student Aid would obtain at least $1,000 in scholarships or grants. Debited consumer’s checking accounts without authorization. Sent some consumers a list which included scholarships and grants for which deadlines had passed or students did not qualify. Required students to provide a rejection letter from each source in order to get promised refunds.
MEDIA CONTACT: FTC New York Regional Office -- Michael Joel Bloom, 212/264-1207, and Carole A. Paynter, 212/264-1225
(FTC File No. 962 3217; U.S. District Court for the Southern District of New York; in New York City, Civil Action No. 96 CIV 6548)


Contact Information

Media Contact:
Bonnie Jansen
Office of Public Affairs
202-326-2161 or 202-326-2180
Staff Contact:

Bureau of Consumer Protection
Dean Graybill, 202-326-3303
Heather Hippsley, 202- 326-3285,
or Dana Lesemann, 202-326-3146