500 Victims of College Scholarship Search Scam To Get Full Refunds

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For Release

Christopher Ebere Nwaigwe and Udoka Maduka, charged by the Federal Trade Commission last year with fraudulently promoting their college scholarship search service, have agreed to settle the charges under separate orders that together provide full restitution to approximately 500 consumers. Each defendant agreed to forfeit consumer funds seized by the FTC at various mail drop locations used by defendants, and the forfeited funds will be returned to consumers under the orders. Additionally, the settlements impose a $10,000 monetary judgment against Nwaigwe and a $9,000 monetary judgment against Maduka. The settlements also would require Nwaigwe to post a $300,000 bond, and Maduka to post a $50,000 bond, before engaging in a scholarship service business in the future.

The FTC had alleged in its case that the defendants sent at least 1,000 letters a day to students nationwide using names such as "National Science Program" and "National Law Scholarship Program." The defendants allegedly misrepresented to students that they administered a scholarship program or foundation and that defendants select students to receive a certain amount in scholarships or a list of scholarships from which students would obtain a certain amount in funding. The defendants allegedly promised refunds of their $10 “processing fee” to students who did not receive a specified level of funding. The FTC alleged that consumers got very little or nothing for their money, and said there is no evidence that any consumer received a refund.

In their direct mail scheme, the defendants operated from mail drops in Baltimore, Towson, College Park, and Silver Spring, Maryland, and in Washington, D.C., and represented that the mail drop was a “suite” or business location from which they conducted their business. Additionally, in dealing with the public, Nwaigwe used the aliases Christopher Maige, Michael Morge, and Michael Norge, and Maduka used the alias Michael Mann, the FTC alleged.

The FTC had filed charges in the case as part of Project $cholar$cam, a law-enforcement and consumer education campaign designed to target firms that exploit the financial worries of college students and their families by "guaranteeing" free scholarship money in return for a relatively small advance fee. In instances where fraudulent search firms actually provide stu dents with a list of potential scholarships, the FTC said many of the sources are for specific disciplines not related to the student’s field of study, don’t exist at all, or have expired deadlines. Refund policies often call for students to provide rejection letters from each firm on the list, a requirement that is very difficult or impossible to meet.

In addition to the redress and bond requirements, the proposed settlements in this case also would prohibit the defendants from falsely representing:

  • that they are affiliated with a scholarship program or foundation that provides a stated amount in scholarship money directly to students;
  • that they provide a list of scholarships likely to yield a stated amount of scholarship money;
  • that they will refund the fee paid by any consumer who uses their service and does not obtain at least a stated amount of scholarship money;
  • that a mail box or mail drop is the physical location of any business from which they operate; and
  • any other fact material to a consumer’s decision to purchase any service offered through a direct mail solicitation.

The proposed orders also would prohibit Nwaigwe and Maduka from using aliases or assumed names and from assisting others in making any of the prohibited false representations. And the orders contain various record keeping and reporting provisions designed to assist the FTC in monitoring their compliance.

The Commission vote to approve the settlements was 5-0. They were filed April 10, 1997, in U.S. District Court for District of Maryland, Northern Division, and require the court’s approval.

NOTE: These consent judgments are for settlement purposes only and do not constitute an admission by the defendants of a law violation. Consent judgments have the force of law when signed by the judge.

Copies of the proposed settlements and a variety of consumer education materials on scholarship search services are available from the FTC’s web site at http://www.ftc.gov and also 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 202- 326-2502. To find out the latest news as it is announced, call the FTC NewsPhone recording at 202-326-2710.

(FTC File No. X960091)
(Civil Action No. HAR-96-2690)

Contact Information

Media Contact:
Bonnie Jansen or Claudia Bourne Farrell
Office of Public Affairs
202-326-2161 or 202-326-2180
Staff Contact:
Alice Saker Hrdy
Bureau of Consumer Protection