[House Hearing, 108 Congress]
[From the U.S. Government Printing Office]





  ARE CURRENT SAFEGUARDS PROTECTING TAXPAYERS AGAINST DIPLOMA MILLS?

=======================================================================

                                HEARING

                               before the

              SUBCOMMITTEE ON 21st CENTURY COMPETITIVENESS

                                 of the

                         COMMITTEE ON EDUCATION
                           AND THE WORKFORCE
                     U.S. HOUSE OF REPRESENTATIVES

                      ONE HUNDRED EIGHTH CONGRESS

                             SECOND SESSION

                               __________

                           September 23, 2004

                               __________

                           Serial No. 108-72

                               __________

  Printed for the use of the Committee on Education and the Workforce



 Available via the World Wide Web: http://www.access.gpo.gov/congress/
                                 house
                                   or
            Committee address: http://edworkforce.house.gov


                                 ______

                    U.S. GOVERNMENT PRINTING OFFICE
95-958                      WASHINGTON : 2004
____________________________________________________________________________
For Sale by the Superintendent of Documents, U.S. Government Printing Office
Internet: bookstore.gpo.gov  Phone: toll free (866) 512-1800; (202) 512�091800  
Fax: (202) 512�092250 Mail: Stop SSOP, Washington, DC 20402�090001

                COMMITTEE ON EDUCATION AND THE WORKFORCE

                    JOHN A. BOEHNER, Ohio, Chairman

Thomas E. Petri, Wisconsin, Vice     George Miller, California
    Chairman                         Dale E. Kildee, Michigan
Cass Ballenger, North Carolina       Major R. Owens, New York
Peter Hoekstra, Michigan             Donald M. Payne, New Jersey
Howard P. ``Buck'' McKeon,           Robert E. Andrews, New Jersey
    California                       Lynn C. Woolsey, California
Michael N. Castle, Delaware          Ruben Hinojosa, Texas
Sam Johnson, Texas                   Carolyn McCarthy, New York
James C. Greenwood, Pennsylvania     John F. Tierney, Massachusetts
Charlie Norwood, Georgia             Ron Kind, Wisconsin
Fred Upton, Michigan                 Dennis J. Kucinich, Ohio
Vernon J. Ehlers, Michigan           David Wu, Oregon
Jim DeMint, South Carolina           Rush D. Holt, New Jersey
Johnny Isakson, Georgia              Susan A. Davis, California
Judy Biggert, Illinois               Betty McCollum, Minnesota
Todd Russell Platts, Pennsylvania    Danny K. Davis, Illinois
Patrick J. Tiberi, Ohio              Ed Case, Hawaii
Ric Keller, Florida                  Raul M. Grijalva, Arizona
Tom Osborne, Nebraska                Denise L. Majette, Georgia
Joe Wilson, South Carolina           Chris Van Hollen, Maryland
Tom Cole, Oklahoma                   Tim Ryan, Ohio
Jon C. Porter, Nevada                Timothy H. Bishop, New York
John Kline, Minnesota
John R. Carter, Texas
Marilyn N. Musgrave, Colorado
Marsha Blackburn, Tennessee
Phil Gingrey, Georgia
Max Burns, Georgia

                    Paula Nowakowski, Staff Director
                 John Lawrence, Minority Staff Director
                                 ------                                

              SUBCOMMITTEE ON 21st CENTURY COMPETITIVENESS

            HOWARD P. ``BUCK'' McKEON, California, Chairman

Johnny Isakson, Georgia, Vice        Dale E. Kildee, Michigan
    Chairman                         John F. Tierney, Massachusetts
John A. Boehner, Ohio                Ron Kind, Wisconsin
Thomas E. Petri, Wisconsin           David Wu, Oregon
Michael N. Castle, Delaware          Rush D. Holt, New Jersey
Sam Johnson, Texas                   Betty McCollum, Minnesota
Fred Upton, Michigan                 Carolyn McCarthy, New York
Vernon J. Ehlers, Michigan           Chris Van Hollen, Maryland
Patrick J. Tiberi, Ohio              Tim Ryan, Ohio
Ric Keller, Florida                  Major R. Owens, New York
Tom Osborne, Nebraska                Donald M. Payne, New Jersey
Tom Cole, Oklahoma                   Robert E. Andrews, New Jersey
Jon C. Porter, Nevada                Ruben Hinojosa, Texas
John R. Carter, Texas                George Miller, California, ex 
Phil Gingrey, Georgia                    officio
Max Burns, Georgia


                                 ------                                
                            C O N T E N T S

                              ----------                              
                                                                   Page

Hearing held on September 23, 2004...............................     1

Statement of Members:
    McKeon, Hon. Howard P. ``Buck'', Chairman, Subcommittee on 
      21st Century Competitiveness, Committee on Education and 
      the Workforce..............................................     2
        Prepared statement of....................................     3
    Kildee, Hon. Dale E., Ranking Member, Subcommittee on 21st 
      Century Competitiveness, Committee on Education and the 
      Workforce..................................................     3

Statement of Witnesses:
    Cramer, Robert J., Managing Director, Office of Special 
      Investigations, U.S. Government Accountability Office, 
      Washington, DC.............................................    21
        Prepared statement of....................................    22
    Ezell, Allen, Retired Agent, Federal Bureau of 
      Investigations, Apollo Beach, FL...........................     5
        Prepared statement of....................................     8
    Morse, Jean Avnet, Executive Director, Middle States 
      Commission on Higher Education, Philadelphia, PA...........    14
        Prepared statement of....................................    16

 
   ARE CURRENT SAFEGUARDS PROTECTING TAXPAYERS AGAINST DIPLOMA MILLS?

                              ----------                              


                      Thursday, September 23, 2004

                     U.S. House of Representatives

              Subcommittee on 21st Century Competitiveness

                Committee on Education and the Workforce

                             Washington, DC

                              ----------                              

    The Subcommittee met, pursuant to notice, at 11:05 a.m., in 
room 2175, Rayburn House Office Building, Hon. Howard P. 
``Buck'' McKeon [Chairman of the Subcommittee] presiding.
    Present: Representatives McKeon, Petri, Castle, Ehlers, 
Tiberi, Osborne, Gingrey, Burns, Kildee, Tierney, Wu, Holt, 
McCarthy, Van Hollen, and Ryan.
    Staff present: Kevin Frank, Professional Staff Member; 
Sally Lovejoy, Director of Education and Human Resources 
Policy; Catharine Meyer, Legislative Assistant; Krisann Pearce, 
Deputy Director of Education and Human Resources Policy; 
Samantar, Deborah L., Committee Clerk/Intern Coordinator; 
Kathleen Smith, Professional Staff Member; Jo-Marie St. Martin, 
General Counsel; Ricardo Martinez, Minority Legislative 
Associate/Education; Alex Nock, Minority Legislative Associate/
Education; and Joe Novotny, Minority Legislative Assistant/
Education.
    Chairman McKeon. A quorum being present, the Subcommittee 
on 21st Century Competitiveness of the Committee on Education 
and the Workforce will come to order.
    We are holding this hearing today to hear testimony 
addressing the question, ``Are Current Safeguards Protecting 
Americans Against Diploma Mills?'' Under Committee Rule 12(b), 
opening statements are limited to the Chairman and the Ranking 
Minority Member of the Committee. Therefore, if other members 
have statements, they will be included in the hearing record.
    With that, I ask unanimous consent for the hearing record 
to remain open 14 days to allow members' statements and other 
extraneous material referenced during the hearing to be 
submitted in the official hearing record.
    [No response.]
    Chairman McKeon. Without objection, so ordered.

    STATEMENT OF HON. HOWARD P. ``BUCK'' McKEON, CHAIRMAN, 
  SUBCOMMITTEE ON 21st CENTURY COMPETITIVENESS, COMMITTEE ON 
                  EDUCATION AND THE WORKFORCE

    Chairman McKeon. Good morning, and thank you today for 
joining us for this very important hearing on the issue of 
diploma mills. This hearing is intended to examine questions 
about what constitutes a diploma mill, and hear more about the 
safeguards that currently exist in the law to protect 
consumers, taxpayers, and the Federal Government from the 
proliferation and tactics of fraudulent institutions claiming 
to provide a legitimate higher education.
    I want to start by welcoming our witnesses today and 
thanking them for joining us.
    No formal legal definition exists for a diploma mill, but 
they are generally regarded by many as an entity that lacks 
accreditation from a state or a professional organization. 
Diploma mills are also described as selling college and 
graduate degrees that are fraudulent or worthless because of a 
lack of standards in curriculum, instruction, and completion.
    However, there is more to the definition than that. It is 
important to differentiate between non-accredited institutions 
of higher education and diploma mills. I hope our witnesses 
will be able to draw that distinction for us here today.
    Additionally, stories and conversations about diploma mills 
tend to turn into conversations about online institutions and 
education over the Internet. Although many diploma mills 
operate their phony institutions of higher education over the 
Internet, it is important to distinguish between these scams 
and legitimate, credible online institutions that operate 
quality, accredited distance learning programs.
    Diploma mills harm students, taxpayers, and both Federal 
and state governments. They mislead consumers and employers, 
and pose dangers to legitimate institutions of higher 
education.
    Reliance on phony degrees is not a victimless crime. Take 
the deserving story of an individual claiming to be a physician 
in North Carolina who treated an 8-year-old girl for 
complications with diabetes. The girl's mother trusted the 
``doctor,'' based on his M.D. degree, and took her daughter off 
of insulin, as instructed. Sadly, her daughter died. The 
physician--he earned his degrees from bogus institutions. All 
of his diplomas came from diploma mills.
    Although the Federal Government has been successful in 
keeping phony institutions out of the Federal student aid 
programs, in recent years policymakers at both the Federal and 
state levels have begun to recognize the need to find ways to 
keep diploma mills out of business all together.
    I hope our witnesses can talk more about current safeguards 
that are in place, as well as offering insight into what more 
can be done to keep fraudulent institutions out of the 
marketplace.
    Thank you again for joining us here today to discuss this 
important topic. I want to also thank Congressman Castle for 
bringing this to our attention, and asking us to hold this 
hearing. He is a great colleague and a great member of this 
body.
    I look forward to hearing your testimony here today so that 
my colleagues and I can learn more about this very serious 
issue. I will now yield to Congressman Kildee for his opening 
statement.
    [The prepared statement of Chairman McKeon follows:]

Statement of Hon. Howard P. ``Buck'' McKeon, Chairman, Subcommittee on 
 21st Century Competitiveness, Committee on Education and the Workforce

    Good morning and thank you for joining us today for this very 
important hearing on the issue of diploma mills. This hearing is 
intended to examine questions about what constitutes a diploma mill and 
hear more about the safeguards that currently exist in the law to 
protect consumers, taxpayers, and the federal government from the 
proliferation and tactics of fraudulent institutions claiming to 
provide a legitimate higher education.
    I want to start by welcoming our witnesses and thanking them for 
joining us here today.
    No formal legal definition exists for a diploma mill, but they are 
generally regarded by many as an entity that lacks accreditation from a 
state or a professional organization. Diploma mills are also described 
as selling college and graduate degrees that are fraudulent or 
worthless because of a lack of standards in curriculum, instruction, 
and completion.
    However, there is more to the definition than that. It is important 
to differentiate between non-accredited institutions of higher 
education and diploma mills. I hope our witnesses will be able to draw 
that distinction for us here today.
    Additionally, stories and conversations about diploma mills tend to 
turn into conversations about on-line institutions and education over 
the Internet. Although many diploma mills operate their phony 
institutions of higher education over the Internet, it is important to 
distinguish between these scams and legitimate, credible on-line 
institutions that operate quality accredited distance learning 
programs.
    Diploma mills harm students, taxpayers, and both federal and state 
governments. They mislead consumers and employers and pose dangers to 
legitimate institutions of higher education.
    Reliance on phony degrees is not a victimless crime. Take the 
disturbing story of an individual claiming to be a physician in North 
Carolina who treated an 8-year old girl for complications with 
diabetes. The girl's mother trusted the ``doctor'' based on his MD 
degree, and took her daughter off of insulin, as instructed. Sadly, her 
daughter died. The physician? He earned his ``degrees'' from bogus 
institutions; all of his diplomas came from diploma mills.
    Although the federal government has been successful in keeping 
phony institutions out of the federal student aid programs, in recent 
years, policy makers at both the federal and state levels have begun to 
recognize the need to find ways to keep diploma mills out of business 
altogether. I hope our witnesses can talk more about current safeguards 
that are in place, as well as offer insight into what more can be done 
to keep fraudulent institutions out of the marketplace.
    Thank you again for joining us here to discuss this important 
topic. I look forward to hearing your testimony so that my colleagues 
and I can learn more about this very serious issue.
                                 ______
                                 

STATEMENT OF HON. DALE E, KILDEE, RANKING MEMBER, SUBCOMMITTEE 
ON 21st CENTURY COMPETITIVENESS, COMMITTEE ON EDUCATION AND THE 
                           WORKFORCE

    Mr. Kildee. I thank you, Mr. Chairman. I am pleased to join 
you at today's hearing on diploma mills. This hearing 
represents an important opportunity to learn more about this 
increasingly concerning practice. I know that both of us are 
looking forward to today's hearing and learning about this 
issue from our witnesses.
    Higher education in this country is recognized for its 
standards and the rigorous education it provides our students. 
Accreditation helps assure this rigor, enables us to insure 
that we are protecting taxpayer resources that are utilized for 
student aid.
    The quality of our institutions of higher education enable 
businesses to be certain they are hiring employees with the 
skills and knowledge they need to compete and remain 
profitable. Diploma mills undermine all this.
    Diploma mills impact everyday citizens. Consumers can and 
have been hurt when they receive care or services from 
individuals with false credentials. Doctors and other health 
professionals who practice with fraudulent degrees have 
inflicted irreparable harm upon their customers.
    Diploma mills also harm the integrity and perception that 
the public and employers have about higher education in this 
country. Individuals who purposefully or unknowingly buy 
degrees and other certificates from diploma mills are helping 
to perpetuate this fraud.
    Very simply, diploma mills need to be shut down. States 
need to be more forceful in their prosecution in monitoring 
suspect institutions. But the Federal Government also has an 
important role. The Department of Education needs to be 
vigilant in ensuring that accreditors are maintaining high 
standards when they review their institutions of higher 
education.
    But the Department of Education cannot and should not be 
expected to do this on their own. We need additional focus from 
the FBI and other agencies that can prosecute individuals who 
commit mail or wire fraud. Collectively, the efforts of states 
and the Federal Government can and should end this practice.
    I look forward to learning more today about what can be 
done to combat these fraudulent operations. And again, Mr. 
Chairman, I thank you and Mr. Castle for your deep interest in 
this matter. And I yield back the balance of my time.
    Chairman McKeon. Thank you. I will now introduce our 
witnesses. First, we will hear from Mr. Allen Ezell. From 1960 
to 1991, Mr. Ezell served as an agent for the Federal Bureau of 
Investigation. During his tenure, Mr. Ezell directed the FBI 
investigation of DIPSCAM, a task force that worked to expose 
and shut down fraudulent degree programs.
    Mr. Ezell currently serves as vice president of corporate 
fraud investigative service for the Wachovia Corporation.
    Then we will hear from Ms. Jean Avnet Morse. Ms. Morse 
currently serves as executive director for the Middle States 
Commission on Higher Education, an association that seeks to 
promote and ensure quality assurance and improvement in higher 
education. The Middle States Commission is a regional 
accrediting agency recognized by the U.S. Department of 
Education.
    And finally, we will hear from Mr. Robert Cramer. Mr. 
Cramer currently serves as the managing director of the Office 
of Special Investigations at the U.S. Government Accountability 
Office, which is commonly known as the investigative arm of 
Congress.
    Prior to his current position, Mr. Cramer served as the 
assistant United States attorney in the southern district of 
New York.
    Before you begin, I would like to explain the light system 
we have there. You have 5 minutes to summarize your testimony. 
The green light means start. The yellow light means you have a 
minute left, and the red light means you're done.
    We appreciate your being here, and we're looking forward 
to, as I said, hearing from you. We will begin with Mr. Ezell.

  STATEMENT OF OTHO ALLEN EZELL, JR., RETIRED AGENT, FEDERAL 
           BUREAU OF INVESTIGATIONS, APOLLO BEACH, FL

    Mr. Ezell. Good morning. Can you hear me, sir? Thank you.
    Mr. Chairman, Committee members, it is a pleasure for me to 
appear before the Committee today. Let me commend you for 
recognizing that diploma mills are a problem, and for holding 
these hearings.
    As you know, I am a retired FBI agent. For 11 years I 
conducted DIPSCAM, Operation DIPSCAM. I purchased 10 
bachelor's, 19 master's, 4 Ph.D.s, 2 M.D.s, and I assisted 
other FBI agents in the purchase of their degrees. We executed 
16 Federal search warrants, we obtained 19 grand jury 
indictments, and we convicted 21 people. So as you can see, it 
can be done.
    Our defendants were male and female, black and white, young 
and old. Several had legitimate bachelor's, master's, and 
doctorate degrees. We lost no cases on appeal. The one case 
that went through the fourth circuit to the Supreme Court, the 
Supreme Court refused to hear it, so therefore the lower 
court's affirmation stood.
    In those days, 1980 to 1991, degree mills were less 
sophisticated than they are today. Our largest degree mills 
sold about 2,500 degrees and grossed about $2 million. That is 
nothing compared to today's degree mills.
    As you know, Senator Collins held hearings earlier this 
year and exposed 460 Federal employees, GS-15 and above, with 
these types of degrees, and determined that the government had 
spent $150,387.80 on some of these degrees. And this was just 
from six agencies and the Pentagon. She described this as the 
tip of the iceberg, and I agree.
    I wonder what we would uncover in the other 98 percent of 
the Federal agencies, and what action, if any, has been taken 
against those who were exposed? What word has gotten out? 
Degree mills are well over a $500 million a year business. 
Probably one million Americans have purchased and probably used 
fictitious credentials.
    Upon my retirement in 1991, the FBI no longer had a 
concerted effort in the area of education fraud. Thereafter, no 
Federal law enforcement agency considered this an investigative 
priority. Thus, no one investigated cases except on a catch as 
catch can basis.
    Yes, in recent years, we have seen successful cases 
involving James Kirk, LaSalle University in Louisiana, and 
Ronald Pellar in Louisiana and California, Columbia State 
University.
    Ironically, Kirk has a degree from Southeastern University, 
Greenville, South Carolina--one of my alma maters--my first 
case in DIPSCAM, and probably operated two schools while 
serving time in a Federal prison camp. LaSalle grossed $36.5 
million and the FBI seized about $11 million in 8 bank 
accounts, after which Kirk was indicted and convicted.
    Ronald Pellar, however, holds another distinction. He 
operated his college scam while he was a Federal fugitive in 
another case. Pellar grossed between $20 million to $72 
million, depending on who you believe.
    Still, these revenues are nothing compared with the 
behemoth operation university degree program. I am sure you 
have received one of their millions of spam e-mails which state 
``No required tests, classes, books, or interviews, and 
everyone is approved.'' That's my type of school.
    This operation run by several Americans from boiler rooms 
in Jerusalem and Bucharest, sold degrees, transcripts with 
verifications on at least 18 schools, probably with 20 spin-
offs or clones, from 1998 to 2003, and in my opinion, grossed 
$435 million.
    The registrars brag that the United States residents 
account for the majority of their sales. Since I have a degree 
in accounting, imagine the cost of goods sold when you have no 
facility, no faculty, no depreciation, no salaries, and no 
pensions. You sell bachelor's, master's, and doctorates in 
everything from aviation to zoology, and 26 in the medical 
field.
    The backbone of UDP is their degree verification service 
and recommendation letters from the professors. Where do you 
think these people with degrees in medical majors are doing 
with their degrees? Where do you think they are employed? And 
while no one in Federal law enforcement is doing anything about 
it, these operators have nothing to fear.
    While I was working on my testimony for today, I received a 
return call on a spam that I had responded. I was offered my 
M.D. degree this Tuesday for $1,995 from Somerset University. 
Several hours later, he called me at the end of his shift and 
his price had gone down to $995. Now he was calling me from New 
York, although they have an address in London, England.
    Degree mills have blossomed with the worldwide use of the 
Internet. They have made it possible for legitimate distance 
education, and that's where the degree mills also hide. 
Fictitious credentials are a worldwide problem. Our crooks sell 
our wares to foreign students, and the foreign crooks sell 
their paper to our citizens. The Internet knows no borders, and 
anything is available for a price.
    As you said, degree mills are a problem, because they 
damage by misunderstanding in the public mind, the legitimate 
educational institutions. They devalue earned degrees with 
lookalikes and soundalikes. They confuse the public. They 
defraud students who believe the school is real. They deceive 
employers, customers, clients, and patients. They lower the 
prestige abroad by defrauding foreign students.
    Dr. John Bear and I testified in United States District 
Court in Charlotte on a physician whose degrees came from three 
of my alma maters. He was a ringer. He was convicted and he is 
in Federal prison.
    You, along with employers and real educational institutions 
must not only be aware of the degree mill institutions and 
names of schools you don't recognize. Then you have got 
counterfeit degrees and transcripts on our legitimate colleges 
and universities, because also available on Internet are those 
loss replacement diploma services selling fake degrees and 
transcripts from legitimate, accredited traditional colleges 
and universities.
    I have purchased counterfeit degrees of both universities 
that I have sent my daughters to. Today I can buy a counterfeit 
degree and transcript from George Washington University, 
University of Maryland, and hundreds of others for less than 
$100 with no impunity. It should not be this easy.
    In my opinion, degree mills can be stopped. It is basic 
supply and demand. Have the FBI dedicate one FBI agent to work 
education fraud exclusively, purchase some diplomas, execute 
some search warrants, make some arrests. The word will get out. 
I guarantee it. These people pay attention to the market place.
    At the same time, prosecute and publicize those egregious 
instances where diploma mill paper was used to obtain 
employment, get raises, or where government funds were used, to 
buy the paper to begin with. This will decrease the demand, 
which in turn will dry up the supply side. This can be done if 
you have the desire.
    Encourage the Department of Education to develop their web-
based list of legitimate schools. Encourage states, just like 
you were saying, to adopt legislation similar to that of 
Oregon, and establish an office of degree authorization and to 
maintain a website which indicates which school degrees can be 
used for educational credentials in that state, or the user 
faces arrest.
    At the same time, the Federal Government needs to be 
consistent in all of its handling of Federal employees using 
degree mill degrees. I was appalled that Laura Callahan, the 
official at the Department of Homeland Security, was hung out 
to dry after a 19 year career for her possession of degrees 
from Hamilton University, especially when you consider that the 
position she held held no educational qualifications. She is 
not street-wise. She had heard of degree mills, but not 
accreditation mills, and did not know it was a degree mill.
    She obtained these degrees over a several-year period with 
her own funds, no Federal money involved. In my opinion, her 
agency--then, the new Department of Homeland Security--was gun 
shy as a result of all the publicity they received here in 
Washington. They took the easy way by rescinding her security 
clearance, showing her the door, resulting in her later 
resignation.
    Possession of a degree mill diploma is not itself grounds 
for revocation of a security clearance. With all the degrees 
that I bought, nobody ever came to me and questioned revoking 
my security clearance as an FBI agent.
    What has happened to Charlie Abell, Deputy Under Secretary 
of Defense, with a degree from Columbus University; Jimmy Shirl 
Parker, Federal Technology Service, GSA, California Coast 
University; Daniel P. Matthews, Transportation Department, Kipp 
College; and many, many others?
    In our effort to get this message out, Dr. John Bear and I 
have written a new book titled, ``Degree Mills,'' which will be 
available in January. Additionally, we have a website under 
construction, degreemills.com, which will be operational 
shortly, where we can post up-to-date information on who is 
selling who to what for how much on a daily basis, because 
diploma mills change their names as fast as you and I change 
our socks.
    Further, Dr. Bear and I have associated ourselves with the 
commercial services division of U.S. Investigation Service in 
order to maintain and update their comprehensive degree mill 
data base.
    I know I have gone quickly to summarize this. The field is 
very broad, and you have opened up a can of worms that goes in 
many places. I thank you for the opportunity to be here. It is 
an honor for me. And any questions that I can answer, I will be 
glad to. Thank you.
    [The prepared statement of Mr. Ezell follows:]

 Statement of Otho Allen Ezell, Jr., Retired Agent, Federal Bureau of 
                    Investigation, Apollo Beach, FL

    Mr. Chairman and Members of the Committee:
    It is my pleasure to be here today. Let me commend your for 
recognizing Degree Mills as a problem and for holding these hearings. 
Although I was not present during the January and March, 1924 
Congressional Degree Mill hearings, I was present for Congressman 
Claude Pepper's hearing in December, 1985, and Senator Susan Collins'' 
hearing in May, 2004. Although there was a lot of talk during these 
hearings, there were no lasting actions taken. Now here we are again. 
In fact, the entire matter has just blossomed with the advent of the 
internet.
    For background, staff members for Congressman Pepper were able to 
purchase a Ph.D. for the Congressman from Union University, Los 
Angeles, Ca., and staff for Senator Collins were able to purchase both 
Bachelor and Masters degrees in Biology and Medical Technology 
respectively for her from Lexington University, based in Middleton, New 
York (via www.Degrees-R-Us.com). I find it odd these entities were 
never ``raided'' by federal or state law enforcement in execution of a 
federal search warrants, and their operator's were never prosecuted. I 
have previously arrested Degree Mill operators with less probable 
cause. As high profile as these schools were, and nothing happened, I 
find this unbelievable.
    I agree with Senator Collins that what her committee uncovered is 
just the ``tip of the iceberg''. They found 1,200 resumes as contained 
in a government-sponsored data base, listed degrees from 14 different 
Degree Mills. After a degree audit of six federal agencies, including 
the Pentagon, for GS-15 and above positions, they determined at least 
463 federal employees (at these agencies) had obtained degrees from 
unaccredited schools. The United States Government paid $150,387.80 to 
several of these schools for those federal employees who requested 
reimbursement. Keep in mind these schools do not have a dollar charge 
per credit hour (only X dollars per degree), thus they created a 
fictitious billing statements for a per course/hour charge, which was 
then sent to their agency for payment.
    Thus, if only two percent (2%) of federal agencies were audited at 
which they found 463 employees at a cost of $150,387.80 to the 
government, I wonder what the results would be if a degree audit would 
be conducted at the remaining 98% of federal agencies. Further, Senator 
Collins committee found the five Degree Mills they encountered with the 
above employees had, from 1995-2003, grossed $111,000,000. I also 
wonder what the entire universe of Degree Mills looks like. Senator 
Collins committee estimates Degree Mills gross at least $500,000,000 
each year (and this may even be understand).
    I am a second generation FBI Agent having retired in December, 
1991. For an eleven year period I investigated Degree Mills throughout 
the United States and abroad. Collectively, these many investigations 
were called Operation Diploma Scam (DIPSCAM). During this time, I 
responded to advertisements as a potential buyer, received the school's 
literature via the United States Mails, made and recorded interstate 
telephone calls to and from my schools, all resulting in my purchasing 
various degrees which were accompanied by transcripts.
    In all those years, the most new work I did were several papers 
(not more than 5 pages it length) for Masters Degrees. In some 
instances, I negotiated with the school representative relative on my 
Grade Point Average (GPA). All of my schools offered degree 
verification for employment purposes and some even had alumni 
association, class rings, school decals, sweat shirts, hats, decals, 
etc., all indicia of legitimacy. However, most did not have a campus 
nor an educational facility, faculty, any meaningful academic 
instruction, nor educational motivations, etc. Since their 
advertisements/brochures/literature looked good, thus they must be 
``real''. [Put 1,000 or 2,000 miles between a students mail box and his 
school, anything is possible. The student never knows the school only 
exists at a mail drop/answering service in a distant city].
    During our first investigation, after we had purchased our 
Bachelor, Master, and Ph.D. degrees from Southeastern University, 
Greenville, S.C., all based on life experience (with no new work 
submitted), officials of then North Carolina National Bank (now Nations 
Bank), Charlotte, North Carolina, (in cooperation with the FBI), 
corresponded with officials of Southeastern University and indicated 
two young men had applied for positions with the bank, thus they sought 
verification of their degrees. The President of the Southeastern 
University then verified to bank officers, our degrees (and 
transcripts) via the U.S. Mails, and made glowing remarks about his two 
graduates. When we took a tour of our alma matter, we were recruited to 
raise funds for the university and keep one third for ourselves. During 
our tour, the President of the university showed us where our student 
files were kept along with the files of their many other graduates. 
Later, the Assistant United States Attorney, Western District of North 
Carolina, wanted to be able to prove in U.S. District Court that 
Southeastern Seminary was as crooked as the university, thus a third 
FBI Agent negotiated for a Masters degree in Divinity and agreed on a 
price of $5,000. On 5/4/81, at the appointed time for the Agent to pay 
for, and pick up his degree, we three arrived as FBI Agents with a 
federal search warrant. We took all documents and other items described 
in the search warrant, including a cabinet full of student files. We 
then left for Charlotte, which is about 90 miles North of Greenville, 
S.C. The seized items were then entered into evidence and the 
appropriate paperwork completed--none of the records had yet been 
reviewed.
    The next morning we received a telephone call from local 
authorities in Greenville, South Carolina, who advised that Dr. Alfred 
Q. Jarrett, President and founder, Southeastern University, had 
committed suicide during the evening, after we left his university 
which had been operated from several rooms in his personal residence.
    When we reviewed the records of Southeastern University, we 
determined during its eleven year existence, they had 620 ``graduates'' 
of which 171 were employed by federal, state, and local governments 
employees. Some ``graduates'' held Senior Executive Service (SES) 
positions in Washington, D.C.
    As result of the above, we created a computerized date base of all 
our ``graduates'', then and on an on going basis, we furnished these 
names to the Office of Personnel Management, Inspectors General of the 
Respective agencies, and to the various State Attorneys General. As 
each DIPSCAM case was adjudicated, we entered a list of the schools 
``graduates'' into evidence, thus making it a ``public record'' which 
then became available to universities and the media. At the time of my 
retirement in December, 1991 the DIPSCAM data base contained the names 
and all pertinent information on over 12,000 ``graduates''. Some worked 
in private industry, education, law enforcement, medicine, military, 
and numerous state and federal agencies.
    During DIPSCAM, from 1980-1991, we purchased 40 degrees, executed 
16 federal search warrants, had 19 indictments returned by the Federal 
Grand Jury, convicted 21 persons, and over 40 schools were dismantled. 
We never lost a case and won the only two convictions which were 
appealed. Only one case (with multiple convictions) went to the U.S. 
Supreme Court, which the court declined to hear thus sustaining the 
opinion of the Fourth Circuit Court of Appeals affirming the 
conviction. During DIPSCAM, the highest gross revenues we found were 
$2,000,000 for our Degree Mills. [Details for many of the schools we 
visited are contained in the attached listing and articles].
    Degree Mills are not just recent problems. We have had them in the 
United States since about 1835. As long as we have a credential 
conscious society, where the degree/transcript you possess gets you the 
interview/promotion/salary increase (instead of the requisite 
knowledge/job skills), then we will always have Degree Mills. I say 
this because Degree Mills are nothing but criminal enterprises operated 
for profit. This is Education Fraud and no different from any other 
fraud (and in some instances similar to counterfeiting), only here the 
crooks are selling either fictional or worthless academic credentials 
(and again, sometimes counterfeit documents).
    These crooks are like chameleons, they will change their criminal 
enterprise to adapt to their surroundings and conditions, thus their 
scheme will always ``blend in''. This is what has happened in the last 
decade with the acceptance of the concept of credit for life 
experience, non-traditional education, distance learning, etc. The 
Degree Mill operators due their best to blend in with legitimate 
colleges and universities offering real distance learning. In fact, 
many have copied materials for their web sites from legitimate colleges 
and universities, and in some instances, even named their entity one 
letter or word different from the real school, intentionally wanting 
its victims to confuse it with the real school which has name 
recognition and reputation. These Degree Mill operators know how to 
expertly adapt to current conditions and how to exploit gaps in federal 
and state law, law enforcements priorities, prosecutive guidelines, 
etc.
    I know of one instance where an individual who operates numerous 
Degree Mills, after the horror of 9/11 and resulting creation of the 
Department of Homeland Security, he then created the International 
College of Homeland Security where he offers certificates/diplomas in 
homeland security, in addition to Bachelor, Master, and Ph.D. degrees 
in public administration/homeland security and public safety, along 
with certificates and diplomas in human reliability/beyond crisis 
prevention. He even has a ``Homeland Security Specialist Program'' 
where he discusses our vulnerability to terrorism in his sales pitch. 
If this is not enough, this college states ``all of our course 
designers, developers, and professors are experts in their particular 
field of homeland security and the public safety. Most are former or 
present FBI Agents, criminal investigators, emergency and disaster 
panning professionals, lawyers, U.S. Border Patrol personnel, U.S. 
Customs professionals and homeland security personnel.'' [I highly 
doubt this].
    They also operate Homeland Security University whose motto is 
``Protecting Your Country Through Knowledge'' (www.homeland-security-
college.org). This university also has an on line ``University Store'' 
where various items are for sale bearing the school logo.
    Today, this college indicates it is located in Moscow, Russia; 
yesterday, it was in Washington, D.C.; Rochester, New York; Mariastein, 
Switzerland; Liberia and Canada, even though it is operated by Richard 
J. Hoyer, Rochester, New York, with assistance from Dixie Randock, 
Spokane, Washington, and can be contracted through 
www.4acollegedegree.com. They also operate St. Regis University of 
Monrovia, Liberia and various related entities. St. Regis University, 
(and its related entities), is probably on of the largest Degree Mills 
operating today. These universities are highly mobile, and their 
purported addresses change frequently.
    Degrees from St. Regis University have appeared all over the United 
States. Recently, eleven school teachers in Georgia were found to have 
graduate degrees from St. Regis University and these teachers had been 
paid increased salaries for several years because of these graduate 
level degrees. Once the $36,000 has since been repaid by the teachers, 
whose teaching credentials were later revoked, they all resigned. State 
officials are considering if they will also prosecute these teachers. 
If just one state has 11 ``graduates'' of St. Regis University for 
which they were paid increased salaries for these graduate, I wonder 
how many graduates are employed in the remaining 49 states, and how 
many tax dollars are being paid. Under the No Child Will Be Left Behind 
Act, most teachers have until 2005-2006 to meet federal standards for 
being ``highly qualified,'' which can include holding an advanced 
degree in the subject they teach. This increased pressure on the 
teachers, in conjunction with teachers busy schedules, may be turning 
them to Degree Mills.
    In San Antonio, Texas, many firemen were recently found to have 
degrees from St. Regis University, thus they received increased 
salaries. This too made its way into the press. Again, I wonder where 
else, and in other professions, where this is happening.
    The Chrysler Foundry in Indianapolis, Indiana, will be closing in 
2007, thus many of these displaced employees feel the need to obtain a 
college degree before they reenter the job market. Chrysler offers it 
employees up to $4,600 each year in tuition assistance, with the 
requirement that the courses are from an accredited institution. 
Chrysler, with the help of the local UAW, promoted and paid for the St. 
Regis program. More than 76 employees enrolled in St. Regis University. 
That's at least $42,000. Now that this scam has been exposed by WTHR TV 
in Indianapolis, may Chrysler workers are embarrassed and outraged. A 
Bachelor's Degree at St. Regis University is just $895. (A listing of 
all Hoyer/Randock's schools is attached). Fictitious or worthless 
accreditation is another integral building block of these Degree Mills.
    These and other Degree Mills do not operate in a vacuum. These are 
professional operations, which take planning, preparation, and 
organization in order to run smoothly and maximize profits. [Note the 
education of its students is not mentioned because this is not their 
goal]. Their window dressing (camouflage) may include:
    A.  A 3rd party academic consultant or referral entity
    B.  An independent accreditation entity to accredit the Degree Mill
    C.  The Degree Mill itself- can be a store front, mail drop, or 
rented office (or just ``virtual'')
    D.  A transcript/records storage/verification service--provides 
certified transcripts to graduates and verification of degrees to 
employers
    E.  A 3rd party academic credential evaluation service...degrees 
from _ are equivalent to _. [Many employers have been fooled by this].
    Thus, the public/business/government must not only beware of the 
Degree Mills which change their names almost daily, then we have the 
Accreditation Mills, Academic Consultants/Referral Entities, 
Transcripts Verification/Records Storage entities, and Credential 
Evaluation services--which support the Mills and are all tied in to the 
Degree Mills. When an organizational chart is prepared for a large 
Degree Mill, it probably resembles an octopus with it numerous 
tentacles.
    Years ago, if a criminal had prayed for a way to reach the public 
without spending a fortune on postage; prayed for a means to get their 
catalogues into peoples hands without incurring great printing costs; 
prayed for an alternative to buying expensive advertising in newspapers 
and magazines; and prayed for a way to run a business anonymously along 
with banking off-shore, electronically and privately, his prayers would 
be answered shortly.
    Along came THE INTERNET. At no other time in the past 25 years have 
I observed such a boon to this type of white collar crime. The internet 
know no borders--our crooks are selling their worthless degrees to 
persons in other countries; conversely, their crooks are selling their 
worthless degrees to our citizens. Several times, our crooks have 
established their base of operation for their Degree Mills in foreign 
countries as a means of thwarting U.S. law enforcement agencies and 
regulators. The reverse is also true--last year I observed a Degree 
Mill whose web site showed the skylines of Jacksonville and Tampa, 
Florida, and they had a local Florida address (a mail drop). When I 
checked to determine where its operators were located, it was Hong 
Kong, China.
    If the above (in conjunction with desk top publishing, cut and 
paste, etc.) is not enough to make you question all academic documents, 
then we have ``lost replacement degree services'' or ``novelty 
documents'' or ``fake diplomas and transcripts'' in the names of 
legitimate, accredited, traditional colleges and universities which are 
available via many web sites today for less than $100. Anything and 
everything is available for sale on the internet today. Some of these 
sites are:
             www.diplomamasters.com, www.diplomaservices.com, 
            www.diplomasforless.com, and www.diplomaville.com (copies 
            of these web sites are attached to this statement).
    For the past ten years, detection and prosecution of Degree Mills 
has been on a catch-as-catch-can basis. There has been no concerted 
effort by any federal or state law enforcement agency to ferret out 
Degree Mills, prosecute their operators, and prosecute those persons 
who knowingly purchase and use these fictitious credentials. Yes, there 
were isolated instances where Degree Mills were investigated by the FBI 
and USPO and prosecuted [La Salle University in Louisiana-operated by 
James Kirk, and Columbia State University in Louisiana/California as 
operated by Ronald Pellar], only after numerous complaints had been 
filed by victims. Both LaSalle University and Columbia State 
University, due to their advertisements in national publication, they 
were highly visible to all, (including law enforcement) especially with 
some of their advertised claims (a degree in 27 days, etc.). 
Ironically, Kirk (a ``graduate'' of one of my alma maters, Southeastern 
University) later operated two schools from his cell at a federal 
prison camp, whereas Pellar operated Columbia State University while he 
was a federal fugitive resulting from another court action. Kirk/
LaSalle University grossed $36.5 million and Pellar/Columbia State 
University grossed somewhere between $20-72 million. But this is still 
pocket change when considered in the shadow of the ``University Degree 
Program''.
    By far, the largest and most sophisticated Degree Mill operation 
ever conducted ``University Degree Program'' probably grossed about 
$435 million from 1998 though early 2003, when the Federal Trade 
Commission filed restraining orders in order to stop another smaller 
fraud (International Driving Permits) which were being sold by the same 
criminals, from the same boiler rooms, via the same computer addresses. 
This operation, run by Yacov Abraham, and relatives, of Boston, New 
York City, and Los Angeles, through two ``boiler rooms'' (telephone 
call centers) in Jerusalem and Bucharest, employed 45 people per shift 
(two shifts daily) in order to primarily call residents of the United 
States and Canada. This is the operation which caused millions of spam 
mails to be sent daily all over our country. The FTC had over 90,000 
different spams from this operation. Generally, initial cost for the 
degree was $2,400, less then $500 ``instant scholarship'', and then the 
bargaining began. The ``graduation kit'' included the diploma, 
transcript (with life long verification service), a sheet containing 
the appropriate telephone numbers for verification services, and two 
letters of recommendation from Professors you have never met nor spoken 
to. You could pay be check, credit card, wire transfer to their 
``accountant'' in London or Cypress. They even accepted American 
Express, Master Card, Visa, etc. [Imagine, getting frequent flyer miles 
at the same time as your degree]. University Degree Program schools 
utilized accommodation addresses in Scotland, United Kingdom (London), 
The Netherlands, Switzerland, etc., with degrees drop shipped abroad 
and re-mailed in the Los Angeles area. This was a very sophisticated 
name/telephone number, knowing exactly where they were in the pitch 
when you were last contacted.
    During this six year period, UDP sold degrees/transcripts on 
eighteen schools, then its employees began their own spin offs, which 
probably total about fifteen more and continue to this day. Many UDP 
employees probably thought, now that they had been trained on the 
operation, and it was so profitable (very little overhead since there 
is no campus, buildings, faculty, retirement accounts, etc.), and I can 
steal the boiler room scripts, why not start my own school-which they 
did. (Details regarding all UDP schools and spin offs, is attached. 
Also attached is a listing of the degrees sold by UDP schools in the 
medical field). Where do you think these ``graduates'' who purchased 
degrees in medical fields are employed? Imagine a business which has 
two telephone marketing rooms, 45 employees each, two shifts per day--
all selling degrees, transcripts, with verifications.
    Ironically, since I still respond to spams, as I write this 
document, at 11:51AM on 9/21/04, I received a call from one Charles 
Baker, in New York State, telephone (917) 254-4102, who introduced 
himself as a Registrar representing Somerset University whose web site 
is located at www.somersetuniversity.org. He stated they are an 
``international correspondence diploma program'' which has been around 
since the 1980's. In less than one minute, he found me qualified for my 
MBA degree (comes with a student identification number, certified 
transcripts, professor letters of recommendation, verification of 
degree details, and we agreed on a modest GPA of between 3.5--3.8 
(magna cum laude). The date of the degree is of my choice. The entire 
package will be sent to me within 10-15 days via Federal Express--all 
for the modest cost of $1,995. He pointed out I can not use this degree 
for transfer purposes (although many have tried), but this is designed 
for ``professional purposes, to get pay raises, and promotions''. He is 
sending me an e mail to confirm what I will get for my money and will 
call back in 30 minutes to see which credit card I want to use. [This 
sounds like a UDP clone to me].
    There are 2,567 unrecognized schools (many of which are Degree 
Mills) and 202 unrecognized accreditors (some are operated by the same 
persons as the Degree Mills). Thus it is easy for the operators of 
Degree mills to ``blend in''.
Staff has asked what I have done to ensure Degree Mills do not 
        proliferate.
    As an FBI Agent, for an eleven year period, I identified as many 
Degree Mills as possible, thereafter ``making cases'' on these entities 
and their operators, resulting in their indictment, arrest, and 
conviction. The side benefit was the closure of the Degree Mill. In not 
a single instance did the Degree Mill survive the arrest and convection 
of its principals. Education Fraud was never an investigative priority 
of the FBI, In fact, the Charlotte FBI office took some heat from FBI 
Headquarters for all its work on Degree Mills. After my retirement and 
the ending of DIPSCAM, the FBI made no organized effort in this arena. 
As if this was not bad enough, The Internet was now world wide and the 
Degree Mill operators quickly realized its potential and its world wide 
market.
    After retiring from the FBI, I have continued to stay abreast of 
Degree Mill comings and goings by responding to advertisements and 
spams, like I mentioned above. It is only in this way one will know--
what is being sold, by whom, and for how much.'' I have written several 
articles on the subject, and have made presentations to both government 
agencies, educational groups, and to law enforcement. I have consulted 
with prosecuting and defense attorneys, and have consulted with federal 
prosecutors in the area, and attended Senator Collins two day hearings 
in May, 2004.
    Dr. John Bear and I have written a reference book on this subject, 
titled ``Degree Mills'' which is being published by Prometheus Books. 
This book will be available in January, 2005. We have also established 
a web site, www.DegreeMills.com which will be operational shortly as a 
means to keeping people up to date on what's happening in the world of 
Degree Mills. Additionally, we are part of a network of like minded 
professions in this area. Further, Dr. Bear and I have associated 
ourselves with the Commercial Services Division of U.S. Investigations 
service in order to maintain and update their comprehensive Degree Mill 
data base.

Staff has also asked what can be done to identify why Degree Mills are 
        a problem.
    In my opinion, Degree Mills are a problem because they:
      Damage by misunderstanding--similar to counterfeit 
currency, if I can no longer trust the currency I am give, then its 
value diminishes. If I can't rust the educational credentials I am 
presented, then they are worthless.
      Devalue earned degree (look-a-likes and sound-a-likes). I 
have previously purchased counterfeit diplomas from both of my 
daughter's alma maters (University of North Carolina and University of 
Florida). These were exact replicas, except the signatures were 
incorrect for my graduation date. Agreed, I did not have transcripts, 
but those were available to me elsewhere. I realize you will never be 
able to take away the education my daughter's received, however, when 
counterfeit degrees of our legitimate, regionally accredited, 
traditional universities are available for sale via the internet, this 
can do nothing but take some of the glitter off the real earned degree.
      I have also seen instances where the criminal 
deliberately established his internet based school in the exact name as 
a legitimate university two thousand miles away. I recall the Western 
Washington State University which was being operated from Norcross, 
Georgia, and designed for students to believe this was the legitimate 
Western Washington State University in Wellingham, Washington.
      Confuse the public--I recall the United States University 
of America, ostensibly located at an address on Wisconsin Avenue in 
Washington, D.C. In reality, the addresses it used was the physical 
address of the United States Post Office building on Wisconsin Avenue, 
where its post office box was located. They also used the address of 
the Sincerely Yours Answering Service. Needless to say, the school 
colors were red, white, and blue. This school targeted foreign students 
who mistakenly presumed this university tot be government approved/
sponsored based on its name and address in Washington, D.C. [In 
reality, its operator was located in Palatka, Florida, before he later 
fled the United Sates to avoid arrest].
      Defraud ``students''--Many Degree Mills have excellent 
web sites, quality multi colored publications, use all the right buzz 
words, portray a distinguished faculty, pictures of grand buildings 
(some are in reality national historic sties, public buildings, etc.), 
and some even offer a ``virtual tour''. All this, in addition to its 
``accreditation''. Many even pirate their text from the web sites of 
legitimate colleges and universities. These are criminal operations, 
run by slick folds and are designed to deceive its potential students. 
Depending on the sophistication of the Degree Mill, it can be easy to 
fall victim, without truly knowing it is in fact a Degree Mill.
      Deceive employers, customers, clients, patients--Remember 
the Degree Mill is established to sell you the diploma with the backup 
verification of the degree awarded. The heart of its hustle is the 
verification it provides you later for the new job, promotion, etc. Not 
only will they provide you verification, they will provide you with 
letters of recommendation from several professors. [You would have had 
a hard time meeting these Professors in view they did not exist.]. 
Sometimes, we find the same professors at numerous schools.
      Lower prestige abroad--see all the above

Staff has also asked what safeguards and strategies can be developed to 
        ensure that consumers, state governments, and the federal 
        government are protected against fraudulent degrees and 
        institutions.
      Encourage the Department of Education (which held its 
``Diploma Mill Summit'' on 1/15/04) to develop and publish on the 
internet, a web based listing of legitimate (accredited) colleges and 
universities in the United States. Once published, publicize The fact 
this list exists. In this manner, a potential student will not have to 
dig for the information, but can immediately locate this list.
      Encourage all states to develop educational statutes 
similar to or identical to the State of Oregon and the resulting State 
of Oregon, Office of Degree Authorization (www.osac.state.or.us/oda). 
The ODA maintains a web site on which all aspects of the Oregon 
education statues are detailed, along with a list of illegal degrees in 
Oregon for which persons using same as academic credentials in Oregon 
can be arrested. Also listed are unaccredited colleges whose degrees 
are approved by ODA for use in Oregon (mainly Bible schools). (A copy 
of the Oregon statutes and the ODA web site along with its illegal 
schools list is attached).
      We do not need any new federal statutes. The Fraud by 
Wire, Mail Fraud, Computer Fraud, Conspiracy, Money Laundering, and 
Aiding and Abetting statutes will do the job if someone applies them. 
Degree Mills can be stopped, if only someone wants to. Request the FBI 
or U.S. Postal Service to assign one investigator to work on 
Educational Fraud exclusively. Let them respond to some advertisements, 
purchase some degrees and transcripts, do some undercover work, execute 
several search warrants, seize assets, obtain indictments and make some 
arrests. I guarantee you the word will get out immediately in this 
small tightly knit community of Degree Mill operators. Normally, they 
all keep up with their competition.
      Remember the basics of Supply and Demand. If we decrease 
the value of the bought degree and transcript, then correspondingly, we 
will dry up the production (supply) side. If both state and federal 
authorities prosecute the most egregious users of the Degree Mill 
paper, and at the same time arrest and close down the Degree Mill 
operators, we will thus achieve our desired objective. If no one wants 
the papers, then no one will want to produce the paper, since it won't 
sell.
      The Federal Government needs to be consistent in all its 
handling of federal employees using Degree Mill degrees. I was appalled 
that the official at the Department of Homeland Security was hung out 
to dry after a 19+ year career for her possession of degrees from 
Hamilton University, especially when you consider the position she held 
had no education qualification. She is not ``street wise'', had heard 
of Degree Mills bur not accreditation mills, and did not know it was a 
degree mill. She obtained these degrees over a several year period with 
her own funds-no federal money involved. In my opinion, her agency (the 
then new Department of Homeland Security) was gun shy after all the 
publicity this received in the Washington, D.C. press, then took the 
easy way out by rescinding her security clearance, and showing her the 
door, resulting in her later resignation. Possession of a Degree Mill 
diploma is not itself grounds for revocation of a security clearance. 
When I was employed by the FBI, no one came to me to rescind my 
clearance because I was purchasing various degrees. Thus, she became 
the ``poster child'' for government employees with Degree Mill paper, 
even though many, many, more federal employee have been exposed with 
the same type degrees (and some even used federal funds and their jobs 
had an education requirement), and they are still employed. I see no 
consistency in this application.
      What has happened to: Charlie Abell, Deputy Under 
Secretary of Defense--Procurement and Readiness (Columbus University); 
Jimmy Shirl Parker, Chief Information Officer, Federal Technology 
Service, General Services Administration (California Coast University); 
Daniel P. Matthews, Chief Information Officer, Transportation 
Department (Kent College) and many, many others.
    As in the private sector, you lead by example, you must have one 
set of rules, consistently and evenly applied to everyone. From my 
point of view as an outsider, I do not see this happening in 
Washington, D.C. I do wonder why these other high ranking government 
officials are still in their positions, why their security clearances 
were not revoked, and them not shown the door within days of their 
degrees coming to light. If there is a double standard being applied, 
then this is unjust and our government can do better. This is not the 
example we want to set for the rest of the nation.
    The U.S. Senate (and GAO investigators) should finish what they 
started. The other 98% of the federal government should have degree 
audits also conducted by the GAO to determine the use of Degree Mill 
paper by federal employees and exactly how much the federal government 
has paid for these degrees. We all know they have not yet even 
scratched the surface.
    I attended both days of the Degree Mill hearings chaired by Senator 
Collins and Congressman Tom Davis. I applaud them for these hearings, 
the first since 1984. What was missing both days, was anyone from 
federal law enforcement. Not only were they not there as witnesses, nor 
appeared to be in the audience, but no Senator/Congressman/witness, 
even asked the question, Why did law enforcement let the problem get 
this big? and What are they going to do about it? There was not even 
talk of turning over the results of their investigation to the FBI, 
USPO, etc., nor of having a Federal Grand Jury impaneled to force those 
schools which refused to cooperate with the Committee to identify their 
federal employee ``graduates''. It was obvious to me this main piece of 
the puzzle was missing.
    Further, since these hearings, and the expose of all these federal 
employees, we outside of Washington, have neither seen nor heard of any 
action being taken by the Inspector General on all these federal 
employees. It makes one wonder if anything is really happening?
    Be alert, because we are watching, and we do care.
    Thank you for allowing me to appear today and I will answer any 
questions you may have.
                                 ______
                                 
    [Attachments to Mr. Ezell's statement have been retained in 
the Committee's official files.]
    Chairman McKeon. Thank you very much. Ms. Morse?

   STATEMENT OF JEAN AVNET MORSE, EXECUTIVE DIRECTOR, MIDDLE 
    STATES COMMISSION ON HIGHER EDUCATION, PHILADELPHIA, PA

    Ms. Morse. Mr. Chairman, members of the Committee, thank 
you very much for the opportunity to testify about the role of 
regional accreditors in protecting the public against degree 
mills.
    I am the executive director of the Middle States Commission 
on Higher Education. I am here testifying on behalf of CRAC, 
which is the national organization of all regional accreditors. 
We accredit over 3,000 colleges and universities, everything 
ranging from community colleges through large research 
universities, and those colleges are attended by over 16 
million students.
    There are other kinds of accreditors that are recognized by 
the U.S. Department of Education. Specialized accreditors, they 
look at programs like law or medicine. And national creditors 
tend to be specialized.
    The three points that I would like to cover from my written 
testimony are how difficult it would be for a degree mill to 
become regionally accredited, what we do to protect the public, 
and what more could be done.
    With respect to the quality of regional accreditation, we 
review every school individually. You need only ask our 
institutions, and they will tell you how very intrusive we can 
be. We have very high standards, and they include standards on 
things such as integrity and student learning.
    It is not easy to become accredited in the first place. 
It's usually a 5-year process with multiple visits and reports. 
We have a very high drop-out rate of institutions that have 
invested years in the process, and finally decide that they are 
just not going to make it.
    Once you become accredited, it is not, contrary to popular 
belief, a matter of being looked at every 10 years. Whenever 
something comes up, we look into it immediately. Whenever there 
is what we call a substantive change--which includes, for 
example, new distance learning programs--we review those in 
advance.
    In Middle States, we have 50 percent rate of asking for 
follow-up when we take an accreditation action. That means more 
reports, more visits. And in addition to that, we have normal 
requirements that apply to everybody: annual reports; 5-year 
reports; 10-year reports. And we have a very large range of 
actions that we can take. We like to say that we are in the 
business of saving souls and not punishing sinners.
    We, ourselves, are very highly regulated by the Department 
of Education. At least every 5 years we are reviewed, we submit 
extensive documentation. We are reviewed by staff, we appear 
before a committee, and we must comply with very extensive 
regulations from the Department of Education that include not 
only our processes, but also--and our resources--but also the 
substance of what our standards must be.
    I would like to address the gray area that you referred to. 
There--I think that one of the things that regional 
accreditation can do very well is look at the institutions that 
really are providing open access to a part of our population 
which wants access to higher education. And that access tends 
to be offered through the innovative kinds of delivery methods 
such as distance learning, accelerated programs, continuing 
education.
    And because we can look at those institutions on a one-by-
one basis over a period of several years with lots of experts--
we have thousands of experts--we really are able to separate 
the wheat from the chaff.
    In terms of what we do to protect the public, we do a lot 
of disclosure of which institutions are accredited. It is true 
that there are some very fine institutions that are not 
accredited, so this doesn't cover everything. But the ones that 
are accredited usually have been through a very complicated 
process.
    We have a website that posts not only the institutions that 
we accredit, but it links to other websites and it gives a lot 
of information. It shows information about the institution, its 
accreditation history, problems that it has had in the past, 
what has happened about those problems.
    We also respond to all complaints that we receive from 
students, faculty, anyone from the public. More could be done. 
There is a list of 6,000 accredited institutions that was 
prepared by ACE and submitted to the Department of Education. 
That could be broadly publicized. Those are the accredited 
institutions by all sorts of accreditors that are recognized by 
the Department of Education.
    It would be wonderful for regional accreditation if the 
state licensing requirements were strengthened. We do require 
that an institution must be operating legally, but that covers 
a wide range of states, some of whom have very low requirements 
of what it takes to operate legally.
    Existing laws on the books could be enforced, not only 
federally, but also state, local. And the new laws could be 
passed. Oregon has passed a law making the use of fake degrees 
illegal.
    There could be a list of degree mills. I would think that 
the people who are doing the finger pointing would want to have 
some sort of protection against being sued for libel by degree 
mills with deep pockets.
    And finally, the FTC has the ability to regulate the term 
``accredited.'' Thank you again for the opportunity to testify.
    [The prepared statement of Ms. Morse follows:]

   Statement of Jean Avnet Morse, Executive Director, Middle States 
  Commission on Higher Education on behalf of the Council of Regional 
                     Accrediting Commissions (CRAC)

    Mr. Chairman and Members of the Committee, I appreciate the 
opportunity to be here today to discuss the role of regional 
institutional accreditation in protecting the public against ``diploma 
mills.''

THE ROLE OF REGIONAL AND OTHER ACCREDITORS
    I head the Middle States Commission on Higher Education of the 
Middle States Association. The Commission has a membership of 
approximately 500 colleges and universities located in Delaware, 
Maryland, New Jersey, New York, Pennsylvania, the District of Columbia, 
Puerto Rico, and the U.S. Virgin Islands.
    I am testifying on behalf of the Council of Regional Accrediting 
Commissions, known as CRAC. It includes the seven U.S. regional 
accreditors that accredit over 3,000 institutions enrolling over 
16,000,000 students. Regional accrediting agencies have assured the 
quality of higher education in the United States for over 100 years, 
providing self-regulation and shared assistance for improving 
education. For the past 50 years, these agencies have also served a 
unique role: when an agency is ``recognized'' by the U.S. Department of 
Education, the students of institutions accredited by that agency are 
eligible for federal grants and loans under Title IV of the Higher 
Education Act.
    There are other types of accreditors. Regional accreditors accredit 
entire institutions of all types, from community colleges through large 
research universities that are in their region. Specialized accreditors 
accredit specific programs, such as law or medicine. National 
accreditors usually accredit institutions of certain types. All three 
can be ``recognized'' by the U.S. Department of Education as Title IV 
``gatekeepers'' and by the Council on Higher Education Accreditation, a 
private organization. There are also accreditors that are not 
recognized, either because they do not apply or do not meet the 
applicable requirements.
    Regional accreditors are concerned about this issue and would 
support the efforts of the Congress, the U.S. Department of Education, 
state and federal enforcement agencies and others in addressing the 
problem.

DIPLOMA MILLS: WHAT ARE THEY AND WHOM DO THEY AFFECT?
    Diploma mills are a growing problem. They affect students and 
employers in the U.S. and abroad. Setting up attractive websites is an 
easy lure. A 2002 study by the GAO documented that the federal 
government had hired applicants from degree mills and had paid for 
courses at degree mills for its employees.
    According to some estimates, there are over 300 unaccredited 
universities operating, selling degrees for thousands of dollars, 
awarding as many as 500 Ph.D.s every month, and earning in the 
aggregate $200,000,000 per year. [John Bear, ``Diploma Mills'' 
University Business, March 2000]
    Holders of fake degrees most frequently serve as teachers, police 
officers, counselors, medical administrators, expert witnesses and 
business managers. [Alan Contreras, testimony to Senate Committee on 
Governmental Affairs, May 2004]
    It is helpful to consider the different types of diploma mills, 
because they can be dealt with differently. The term has been applied 
to:
    -  Diplomas granted with no work by the student
    -  Diplomas granted without sufficient college-level course work 
that is normally required for a degree
    -  Good quality diplomas granted by institutions that are not 
accredited by a legitimate accreditor, so that it is difficult for the 
public to determine their quality. They may or may not be diploma 
mills.
    -  All on-line or other non-traditional degrees, regardless of 
whether they are granted by institutions accredited by legitimate 
accreditors, are sometimes labeled ``diploma mills.'' As discussed 
later, this is unfair to excellent institutions that deliver quality 
education through non-traditional means.

REGIONAL ACCREDITORS HAVE ASSURED THE QUALITY OF ACCREDITED 
        INSTITUTIONS OF ALL TYPES
    Regional accreditors can bring to the problem over 100 years'' 
experience in defining quality education, applying standards by using 
qualified peer reviewers, and changing as higher education has changed.
    Regional accreditors have succeeded in assuring quality:
    -   We are experienced in applying standards to distance education, 
accelerated learning, proprietary institutions, and other ``non-
traditional'' types of higher education. This is important because a 
few ``bad apple'' distance learning and other non-traditional providers 
may create the impression that none are good. In fact, many of the most 
innovative, practical, accessible, and effective providers are non-
traditional, and it is important to use a quality control system that 
recognizes them. For example, Middle States accredits an institution 
that offers distance education to our troops here and abroad.
    -   I think it is fair to say that no diploma mills are accredited 
by one of the seven U.S. regional accreditors because of our high 
standards and careful processes. This is recognized by employers such 
as the federal government and others that require a degree from an 
accredited institution as a condition of employment. It is safe to say 
that diploma mills arise from that subset of institutions that are not 
accredited by a U.S. Department of Education-recognized accrediting 
agency, but it is not accurate to say that all unaccredited 
institutions are diploma mills. To identify which institutions are 
diploma mills, each unaccredited institution would need to be examined 
individually.

HOW REGIONAL ACCREDITORS HAVE ADDRESSED DIPLOMA MILLS
    Some of the ways that regional accreditation helps to prevent 
diploma mills include:
    -  Requiring all institutions to meet the high standards described 
later that would not be satisfied by a degree mill. This applies 
whether an institution is a community college or a large research 
university, whether its students are adults in continuing education 
programs or eighteen year-olds living on campus, and whether it 
delivers courses on-line or in accelerated format.
    -  Granting initial accreditation only to institutions that have 
been reviewed and visited multiple times by staff, by peers such as 
professors and presidents, and by consultants. Eligibility requirements 
include a legal charter to operate and grant degrees; approval of 
profiles and academic qualifications of all full-time, part-time and 
adjunct instructional staff; and review of all educational programs.
    -  Monitoring already accredited institutions regularly and 
following up on any problem areas.
    -  Publicizing the list of which institutions are accredited by 
regional accreditors, including on-line listings that are linked to 
other sources.
    -  Providing information to the general public about each 
accredited institution, including its history of accreditation actions. 
These actions may have required it to submit special reports or take 
other actions in specified areas such as finances or assessment of 
student learning.
    -  Considering all complaints about accredited institutions 
received from students, faculty, or others.
    -  Answering inquiries (which are frequent) about whether a 
specific institution is accredited, and by whom.
    -  Writing articles and giving presentations.
    General ``warning signs'' of possible diploma mills have been 
published by the Council of Higher Education Accreditation. CHEA has 
also suggested general warning signs to identify the fake accreditors 
(``accreditation mills'') which allow an institution to say that it is 
accredited, even though its accreditor may not be reputable.

STANDARDS THAT ACCREDITED INSTITUTIONS MUST MEET
    All regionally accredited institutions must prove that they meet 
all of an accreditor's standards. These standards include:
    -  integrity: this is a separate and very important accreditation 
standard; any violation can lead to disciplinary action
    -  education for all students in oral and written communication, 
scientific and quantitative reasoning, critical analysis and reasoning, 
technological competency, and information literacy
    -  assessment of the institution's effectiveness and efficiency in 
light of its own mission
    -  assessment of student learning
    -  student support services
    -  admissions policies with full disclosure and appropriate 
standards
    -  a curriculum with appropriate levels and coordination
    -  long term planning linked to budgeting
    -  financial data showing capacity to continue operations at an 
appropriate level
    -  resources for learning appropriate to that institution, such as 
information technology, library, and buildings
    -  appropriate governance structure
    -  qualified faculty and administrators, and
    -  evidence of long term strategic planning linked to assessment 
and budgeting.

CONTINUOUS MONITORING OF INSTITUTIONS
    These standards are applied at many times. Accreditation is not 
just periodic reporting for compliance. It is a continuous process that 
emphasizes the institution's capacity and plans for growth and 
improvement. This allows each institution to develop its own areas of 
expertise with help from the expert academics who consult with the 
institution about its processes and plans.
            APPLICANT/CANDIDATE
    It is extremely difficult to become accredited. This is one reason 
why institutions that are finally accredited do not lose accreditation 
immediately--they are already excellent institutions.
    In order for a new institution to be accredited, it usually spends 
five years in pre-accreditation status. During this time, it is visited 
by consultants, staff, and teams of professional educators. The 
Commission must vote first to allow the institution to become a 
candidate, and then to grant it accreditation.
    It is common for institutions to decide not to apply for 
accreditation once they understand the standards, or to withdraw from 
the process in order to avoid what they expect will be a negative 
decision. Even after it is accredited, the institution must submit its 
first full self-study within a shorter time period than accredited 
institutions.
            SUBSTANTIVE CHANGES
    The Commission reviews in advance certain ``substantive changes'' 
introduced by an institution, such as the introduction of a new degree 
level, offering new programs in distance learning, or opening branch 
campuses. Institutions are required to have prior approval before 
implementing these changes. Changes that are implemented but are not 
approved may endanger the accreditation of the entire institution.
            FOLLOW-UP REPORTING AND VISITS
    The accreditors monitor quality on an ongoing basis, using annual 
reports, news accounts, information provided by other accreditors or 
the U.S. Department of Education, complaints from students or other 
information to assure that an institution continues to meet 
accreditation standards. At any time, the Commission may impose on an 
institution requirements that it submit reports, have teams visit the 
institution, or even show cause why its accreditation should not be 
removed.
    In Middle States, approximately 50% of institutions reviewed are 
asked for some type of follow-up. This means that institutions with 
problems are continuously monitored until the problem is solved.
            ANNUAL REPORTING
    All accredited institutions submit information annually. Such 
information includes financial data, as well as information on 
enrollment, graduation rates, faculty, and other areas.
            FIVE YEAR COMPREHENSIVE REVIEW
    In Middle States, an extensive report is submitted every five 
years. It must cover deficiencies noted during the previous 
comprehensive team evaluation, student learning, planning, and other 
areas. It is reviewed by the Commission, and the Commission votes on 
whether to continue accreditation, with or without conditions. Other 
regional accreditors require a similar review at the midterm of the 
comprehensive accreditation cycle.
            COMPREHENSIVE REVIEW AND TEAM VISIT
    Every 10 years in the Middle States Commission's region 
(commissions vary in the periodicity of their comprehensive review from 
six to 10 years), an accredited institution spends two years gathering 
together all of its constituents to review itself in light of the 
Commission's accreditation standards, and to determine what it should 
do to grow and improve, in addition to simply complying or minimally 
meeting accreditation standards. This process of self-review is called 
``self study.''
    A team of peers such as professors and college presidents visits 
the campus to review the self-study, to comment on the institution's 
plans, and to determine compliance with accreditation standards.
            DISCIPLINARY ACTIONS
    Institutions with serious problems may be placed on warning, 
probation, or ``show cause.'' Failure to cure the problems can result 
in removal of accreditation. Most commonly, problems are caught early 
and are corrected before this is necessary.
FEDERAL REGULATION OF REGIONAL ACCREDITORS
    Under the Higher Education Act and regulations promulgated by the 
U.S. Department of Education to implement the Act, accrediting agencies 
must be recognized by the U.S. Secretary of Education of the Department 
after review by the National Advisory Committee on Institutional 
Quality and Integrity (NACIQI) in order to qualify as ``gatekeepers'' 
for funding under Title IV. Such recognition enables the students of 
institutions accredited by the gatekeeping accreditor to receive 
certain federal loans and grants.
    The Department reviews regional accreditors at least every five 
years. The accreditor submits a petition that is reviewed by an 
assigned member of the U.S. Department of Education. The accreditor has 
an opportunity to respond to the Department's analysis, and also to 
present its case at a NACIQI hearing. The NACIQI recommendation to the 
Secretary is based on the agency's petition, its interview, the staff 
analysis, and any third party comments and agency rebuttals.
    In order to be recognized, the regional accreditor must demonstrate 
compliance with federal regulations, a few of which are that the 
accreditor:
    -  has standards that are widely accepted in the U.S. by educators, 
licensing bodies, employers, practitioners, and others
    -  has accreditation as its principal purpose
    -  has voluntary members
    -  is not controlled by another body
    -  has the administrative and fiscal capability to carry out its 
activities
    -  uses qualified persons, including public members
    -  has controls against conflicts of interest
    -  maintains records
    -  has standards for accreditation that address the areas described 
earlier, including ``success with respect to student achievement''
    -  has effective mechanisms to evaluate whether an institution 
complies with its standards, including requiring the institution to 
undergo the ``self-study'' process described earlier
    -  conducts on-site reviews
    -  demonstrates consistency in its decisions
    -  reviews its standards periodically
    -  maintains appropriate operating procedures
    -  monitors substantive changes such as branch campuses, changes in 
ownership, and teach-out agreements
    -  gives appropriate notification of its decisions, and
    -  does not accredit institutions that lack legal authority or is 
in disciplinary proceedings by a state or another accreditor.

POSSIBLE APPROACHES TO CONTROLLING DIPLOMA MILLS
    Past attempts to prevent diploma mills, additional suggestions made 
to the Senate Committee on Governmental Affairs in May 2004, and 
suggestions from C-RAC offer possible approaches:
    A national listing of all institutions that have been approved by 
an accrediting agency recognized by the U.S. Department of Education on 
a public website would provide a simple, straightforward way for the 
public to determine whether or not an institution has been the subject 
of a comprehensive outside review of its academic programs. Usually 
only serious legitimate institutions will go through the trouble of 
being accredited by an agency approved by the U.S. Secretary of 
Education.
    As noted earlier, each regional accreditor publishes on-line a list 
of all of the institutions that it accredits, together with information 
about the institution and its accreditation history. These sites are 
linked to each other, and through the Council of Higher Education 
Accreditation's listings. The websites of the regional accreditors 
receive frequent ``hits'' on the directory listings.
    A national list of all of the 6,200 schools that are accredited by 
one of the approximately 40 regional, specialized, and national 
accrediting agencies that the Secretary recognizes was recently given 
by The American Council on Education to the Department of Education to 
enable federal agencies to identify legitimate colleges, universities 
and trade schools when federal employees seek to enroll in taxpayer 
funded education and training.
    Such a national list might have a much broader use if it were 
publicized widely and accessibly. It might link to the websites of 
regional accreditors for additional information on the accreditation 
history of the institution. Congress and the Department might look into 
ways to make such a list widely available.
    The FBI initiative of the 1980s by agent Allen Ezell in closing 
down several degree mills could be renewed. Evidence from the IRS and 
postal service was often useful.
    States can prosecute fraud and can pass special legislation. 
According to Alan Contreras, Oregon law requires users of fake or 
substandard degrees to cease using them. The law applies to any 
employment within the state, regardless of the location of the 
employer. Both the institution and students who knowingly use a fake 
degree may be liable.
    State licensing requirements could be raised and coordinated. They 
vary enormously, and states with more lax requirements are used by 
diploma mills to obtain their charters to grant diplomas.
    The FTC is authorized to regulate the use of the word 
``accredited.''
    Protection against litigation by diploma mills is needed. This is a 
serious problem for those who have identified specific institutions as 
diploma mills or have refused to accept their degrees as qualifications 
for employment, and have been forced to defend themselves in expensive 
litigation.
    Advertising boycotts by legitimate institutions against media that 
advertise degree mills has been suggested by John Bear.
    Mr. Contreras has suggested that the U.S. Department of Education 
establish standards for use of degrees as credentials for employment 
that require degrees to be from: a U.S. institution accredited by a 
federally recognized accreditor; a U.S. institution approved by USDE; 
or a foreign institution found by USDE to use similar standards. The 
Oregon standards address faculty qualifications, program length, 
content of curriculum, requirements for the award of credit, and 
admissions standards. Additional standards would apply to foreign 
providers.
    One suggestion discussed has been to require the U.S. Department of 
Education to maintain a list of diploma mills.
    There are also private websites that list degree mills, but these 
are voluntary and informal.
    The above suggestions would assist in determining the quality of 
alleged diploma mills. Thank you for the opportunity to discuss these 
issues. I would be happy to answer any questions you have.
                                 ______
                                 
    Chairman McKeon. Thank you very much. Mr. Cramer?

   STATEMENT OF ROBERT CRAMER, MANAGING DIRECTOR, OFFICE OF 
SPECIAL INVESTIGATIONS, U.S. GOVERNMENT ACCOUNTABILITY OFFICE, 
                         WASHINGTON, DC

    Mr. Cramer. Mr. Chairman and members of the Subcommittee, I 
am pleased to be here today to discuss work that the office of 
special investigations at GAO has performed related to issues 
from--related to degrees from diploma mills.
    For purposes of this overview, we define diploma mills as 
non-traditional, unaccredited post-secondary schools that offer 
degrees for a relatively low flat fee, promote the award of 
academic credits based on life experience, and do not require 
any classroom instruction.
    Over the past 3 years, OSI has purchased degrees from a 
diploma mill, through the Internet, created a diploma mill in 
the form of a fictitious foreign school, investigated whether 
the Federal Government has paid for degrees from diploma mills 
for Federal employees, and determined whether high-level 
Federal employees at certain agencies have degrees from diploma 
mills. My testimony will summarize this work.
    First, we purchased two degrees from a diploma mill through 
the Internet. After identifying ``Degrees-R-Us'' as a diploma 
mill, our investigator held numerous discussions with its 
owner.
    Posing as a prospective student, the investigator bought a 
bachelor of science degree in biology and a master of science 
degree in medical technology. The degrees were awarded by 
Lexington University, an institution purportedly located in 
Middletown, New York, that doesn't exist. We paid Degrees-R-Us 
$1,515 for a premium package. The package included two degrees 
with honors, and a telephone verification service that could be 
used by potential employers verifying the award of the degrees.
    We also created a diploma mill. We created a fictitious 
graduate-level foreign school purportedly located in London, 
England. We created a website and set up a telephone number and 
a post office box address for our school. We created a catalog, 
and on your right are a couple of pages from the catalog that 
we created.
    Using counterfeit documents, we obtained certification from 
the Department of Education for the school to participate in 
the Federal Student Financial Assistance Program. The 
Department of Education has since taken steps --it has reported 
to us to guard against the vulnerabilities that our 
investigation revealed.
    We also conducted an investigation to determine whether the 
Federal Government has paid for degrees from diploma mills for 
Federal employees. Initially purporting to be a prospective 
student who works for a Federal agency, our investigator placed 
calls to three schools that award academic credits based on 
life experience, and required no classroom instruction.
    These schools charge, again, a flat fee. For example, one 
school charges $2,295 for a bachelor's, $2,395 for a master's, 
and $2,595 for a Ph.D.
    Representatives of the three schools emphasize that they 
are not in the business of providing individual courses or 
training, and do not permit students to enroll for individual 
courses. Instead, these schools market and require payment for 
degrees on a flat fee basis.
    However, the representatives of each of these schools told 
our investigator that they would structure their charges to 
facilitate payment for the degrees by the Federal Government. 
Each agreed to divide the degree fee by the required--the 
number of required courses, thereby creating a series of 
payments, as if a per course fee were being charged.
    All of the representatives we spoke to stated that students 
at their respective schools had received reimbursement or 
payment by the Federal Government.
    We requested that four such schools provide information on 
the number of students identified in their records as Federal 
employees, and we asked three Federal agencies to examine their 
records to determine if they had made payments to diploma 
mills.
    Only two schools gave us the records that we asked for. 
Those records, with the records we obtained from just two 
Federal agencies, showed total Federal payments of nearly 
$170,000 to two unaccredited schools by two Federal agencies. 
And a comparison of the data from the schools and the agencies 
indicates that that understates the amount of money that the 
Federal Government has paid.
    For example, one of the schools, Kennedy Western, reported 
total payments of $13,500 from the Energy Department for three 
students. Energy reported, however, total payments of $14,500 
to Kennedy Western for three students, but for three different 
students. So, Energy made payments, we know, of at least 
$28,000 to Kennedy Western.
    I will quickly finish up. We looked into the question of 
whether senior level Federal employees have degrees from 
diploma mills. The answer is that some do. And we conducted 
interviews of some Federal employees who reported receiving 
degrees from unaccredited schools. These included three 
management level Department of Energy employees who have two-
level security clearances, and emergency operations 
responsibilities at the National Nuclear Security 
Administration.
    In conclusion, diploma mills are easy to create, and the 
records we obtained from schools and the agencies likely 
understate both the extent to which the Federal Government has 
paid for degrees from diploma mills, and the true extent to 
which senior Federal level employees have diploma mill degrees.
    I will be happy to answer any questions that any of you may 
have.
    [The prepared statement of Mr. Cramer follows:]

  Statement of Robert J. Cramer, Managing Director, Office of Special 
  Investigations, U.S. Government Accountability Office, Washington, 
            DCMr. Chairman and Members of the Subcommittee:

    I am pleased to be here today to discuss work performed by GAO's 
Office of Special Investigations (OSI) related to degrees from 
``diploma mills.'' For purposes of this overview, we defined ``diploma 
mills'' as nontraditional, unaccredited, postsecondary schools that 
offer degrees for a relatively low flat fee, promote the award of 
academic credits based on life experience, and do not require any 
classroom instruction. Over the past 3 years, OSI has purchased degrees 
from a diploma mill through the Internet, created a diploma mill in the 
form of a fictitious foreign school, investigated whether the federal 
government has paid for degrees from diploma mills for federal 
employees, and determined whether high-level federal employees at 
certain agencies have degrees from diploma mills. My testimony today 
summarizes our investigative findings.
Purchasing Degrees from a Diploma Mill
    In response to a request from the Senate Permanent Subcommittee on 
Investigations of the Committee on Governmental Affairs, OSI purchased 
two degrees from a diploma mill through the Internet. After identifying 
``Degrees-R-Us'' as a diploma mill, our investigator held numerous 
discussions in an undercover capacity with its owner. Posing as a 
prospective student, the investigator first contacted Degrees-R-Us to 
obtain information regarding the steps to follow in purchasing degrees. 
Following those instructions, we purchased a Bachelor of Science degree 
in Biology and a Master of Science degree in Medical Technology. The 
degrees were awarded by Lexington University, a nonexistent institution 
purportedly located in Middletown, New York. We provided Degrees-R-Us 
with references that were never contacted and paid a $1,515 fee for a 
``premium package.'' The package included the two degrees with honors 
and a telephone verification service that could be used by potential 
employers verifying the award of the degrees.
Creating a Diploma Mill
    OSI also created a diploma mill to test vulnerabilities in the 
Federal Family Education Loan Program (FFEL). We created Y Hica 
Institute for the Visual Arts, a fictitious graduate-level foreign 
school purportedly located in London, England. We first created a bogus 
consulting firm that posed as Y Hica's U.S. representative and the 
principal point of contact with the Department of Education 
(Education). In addition, we created a Web site and set up a telephone 
number and a post office box address for Y Hica. Using counterfeit 
documents, we obtained certification from Education for the school to 
participate in the FFEL program. Education has since reported that it 
has taken steps to guard against the vulnerabilities that were revealed 
by our investigation.

Investigating Whether the Federal Government Has Paid for Degrees from 
        Diploma Mills
    The Homeland Security Act amended section 4107 of title 5, U.S. 
Code, by allowing federal reimbursement only for degrees from 
accredited institutions. Specifically, section 4107 states that an 
agency may ``pay or reimburse the costs of academic degree training--if 
such training--is accredited and is provided by a college or university 
that is accredited by a nationally recognized body.'' (Emphasis 
supplied.) For purposes of this provision, a ``nationally recognized 
body'' is a regional, national, or international accrediting 
organization recognized by Education.\1\ Because the law governs only 
academic degree training, it does not preclude an agency from paying 
for the costs of individual training courses offered by unaccredited 
institutions. Prior to the enactment of the Homeland Security Act, 
federal agencies were not authorized to pay for employee academic 
degree training unless the head of the agency determined that it was 
necessary to assist in recruitment or retention of employees in 
occupations in which the government had a shortage of qualified 
personnel.
---------------------------------------------------------------------------
    \1\ 5 C.F.R. Sec. 410.308(b).
---------------------------------------------------------------------------
    To investigate whether the federal government has paid for degrees 
from diploma mills, we requested that four such schools provide 
information concerning (1) the number of current and former students 
identified in their records as federal employees and (2) the payment of 
fees for such employees by the federal government. In addition, posing 
as a prospective student who was employed by a federal agency, our 
investigator contacted three diploma mills to obtain information on how 
he might have a federal agency pay for a degree. We also requested that 
eight federal agencies--the Departments of Education, Energy (DOE), 
Health and Human Services (HHS), Homeland Security (DHS), 
Transportation (DOT), and Veterans Affairs (VA); the Small Business 
Administration (SBA), and the Office of Personnel Management (OPM) 
provide us with a list of senior employees, level GS-15 (or equivalent) 
or higher, and the names of any postsecondary institutions from which 
such employees had reported receiving degrees. We compared the names of 
the schools on the lists provided by these agencies with those that are 
accredited by accrediting bodies recognized by Education. We also 
requested that the agencies examine their financial records to 
determine if they had paid for degrees from unaccredited schools.
    Several factors make it extremely difficult, if not impossible, to 
determine the extent of unauthorized federal payments for degrees 
issued by diploma mills. First, the data we received from both schools 
and federal agencies understate the extent to which the federal 
government has made such payments. Additionally, the way some agencies 
maintain records of payments for employee education makes such 
information inaccessible. For example, HHS responded to our request for 
records of employee education payments by informing us that it could 
not produce them because it maintains a large volume of such records in 
five different accounting systems, has no way to differentiate academic 
degree training from other training, and does not know whether payments 
for training made through credit cards are captured in its training 
payment records.
    Moreover, diploma mills and other unaccredited schools modify their 
billing practices so students can obtain payments for degrees by the 
federal government. Purporting to be a prospective student, our 
investigator placed telephone calls to three schools that award 
academic credits based on life experience and require no classroom 
instruction: Barrington University (Mobile, Alabama); Lacrosse 
University (Bay St. Louis, Mississippi); and Pacific Western University 
(Los Angeles, California). These schools each charge a flat fee for a 
degree. For example, fees for degrees for domestic students at Pacific 
Western University are as follows: Bachelor of Science ($2,295); 
Master's Degree in Business Administration ($2,395); and PhD ($2,595). 
School representatives emphasized to our undercover investigator that 
they are not in the business of providing, and do not permit students 
to enroll for, individual courses or training. Instead, the schools 
market and require payment for degrees on a flat-fee basis.
    However, representatives of each school told our undercover 
investigator that they would structure their charges in order to 
facilitate payment by the federal government. Each agreed to divide the 
degree fee by the number of courses a student was required to take, 
thereby creating a series of payments as if a per course fee were 
charged. All of the school representatives stated that students at 
their respective schools had secured payment for their degrees by the 
federal government.
    Information we obtained from two unaccredited schools confirms that 
the federal government has paid for degrees at those schools. We asked 
four such schools that charge a flat fee for degrees to provide records 
of federal payments for student fees: California Coast University 
(Santa Ana, California); Hamilton University (Evanston, Wyoming); 
Pacific Western University (Los Angeles, California); and Kennedy-
Western University (Thousand Oaks, California).
    Pacific Western University, California Coast University, and 
Kennedy-Western University provided data indicating that 463 of their 
students were federal employees. Pacific Western University reported 
that it could not locate any records indicating that federal payments 
were made, although this claim directly contradicts representations 
made to our undercover investigator by a school representative that 
federal agencies had paid for degrees obtained by Pacific Western 
University students. California Coast University and Kennedy-Western 
University provided records indicating that they had received 
$150,387.80 from federal agencies for 14 California Coast University 
students and 50 Kennedy-Western University students. Hamilton 
University failed to respond to our request for information.
    After identifying from school records the federal agencies that 
made payments to California Coast and Kennedy-Western, we requested 
that DOE, HHS, and DOT provide records of their education-related 
payments to schools for employees during the last 5 years. As 
previously discussed, HHS advised us that it could not provide the 
data. DOE and DOT provided data that identified additional payments of 
$19,082.94 for expenses associated with Kennedy-Western, which Kennedy-
Western had not previously identified for us. Thus, we found a total of 
$169,470.74 in federal payments to these two unaccredited schools.
    However, a comparison of the data received from the schools with 
the information provided by DOE and DOT shows that the schools and the 
agencies have likely understated federal payments. For example, 
Kennedy-Western reported total payments of $13,505 from DOE for three 
students, while DOE reported total payments of $14,532 to Kennedy-
Western for three different students. Thus, DOE made payments of at 
least $28,037 to Kennedy-Western. Additionally, DOT reported payments 
of $4,550 to Kennedy-Western for one student, but Kennedy-Western did 
not report receiving any money from DOT for that student.\2\
---------------------------------------------------------------------------
    \2\ Our investigation was limited to direct federal payments to 
schools and did not include federal reimbursements of school fees to 
employees.
---------------------------------------------------------------------------
Determining Whether High-Level Federal Employees Have Degrees from 
        Diploma Mills
    On the basis of the information we obtained from eight agencies, we 
determined that some senior-level employees obtained degrees from 
diploma mills. Specifically, we requested that the agencies review the 
personnel folders of GS-15 (or equivalent) and above employees and 
provide us with the names of the postsecondary institutions from which 
such employees reported receiving academic degrees. The eight agencies 
were Education, DOE, HHS, DHS, DOT, VA, SBA, and OPM. The agencies 
informed us that their examination of personnel records revealed that 
28 employees listed degrees from unaccredited schools, and 1 employee 
received tuition reimbursement of $1,787.44 in connection with a degree 
from such a school.
    We interviewed several federal employees who had reported receiving 
degrees from unaccredited schools. These employees included three 
management-level DOE employees who have emergency operations 
responsibilities at the National Nuclear Security Administration and 
security clearances. We also found one employee in the Senior Executive 
Service at DOT and another at DHS who received degrees from 
unaccredited schools for negligible work.
    Moreover, we believe that the agencies are not able to accurately 
determine the number of their employees who have diploma mill degrees. 
The agencies'' ability to identify degrees from unaccredited schools is 
limited by a number of factors. First, diploma mills frequently use 
names similar to those used by accredited schools, which often allows 
the diploma mills to be mistaken for accredited schools. For example, 
Hamilton University of Evanston, Wyoming, which is not accredited by an 
accrediting body recognized by Education, has a name similar to 
Hamilton College, a fully accredited school in Clinton, New York. 
Moreover, federal agencies told us that employee records may contain 
incomplete or misspelled school names without addresses. Thus, an 
employee's records may reflect a bachelor's degree from Hamilton, but 
the records do not indicate whether the degree is from Hamilton 
University, the unaccredited school, or Hamilton College, the 
accredited institution. Further, we learned that there are no uniform 
verification practices throughout the government whereby agencies can 
obtain information and conduct effective queries on schools and their 
accreditation status. Additionally, some agencies provided information 
about only the most recent degrees that employees reported receiving.

Concluding Remarks
    Our investigations revealed the relative ease with which a diploma 
mill can be created and bogus degrees obtained. Furthermore, the 
records that we obtained from schools and agencies likely understate 
the extent to which the federal government has paid for degrees from 
diploma mills and other unaccredited schools. Many agencies have 
difficulty in providing reliable data because they do not have systems 
in place to properly verify academic degrees or to detect fees for 
degrees that are masked as fees for training courses. Additionally, the 
agency data we obtained likely do not reflect the true extent to which 
senior-level federal employees have diploma mill degrees. This is 
because the agencies do not sufficiently verify the degrees that 
employees claim to have or the schools that issued the degrees, which 
is necessary to avoid confusion caused by the similarity between the 
names of accredited schools and the names assumed by diploma mills. 
Finally, we found that there are no uniform verification practices 
throughout the government whereby agencies can obtain information and 
conduct effective queries on schools and their accreditation status.
    Mr. Chairman, this concludes my prepared statement. I would be 
happy to respond to any questions that you or Members of the 
Subcommittee may have.
                                 ______
                                 
    Chairman McKeon. Well, I am certainly glad we are holding 
this hearing. I realized we had a problem, I didn't realize the 
extent and the severity of the problem.
    Mr. Ezell, you said that you, in your time with the FBI, 
you investigated and prosecuted and put several people in jail. 
Do you think we have sufficient laws on the books now to handle 
this problem, or do you see other laws that should be passed?
    Mr. Ezell. Mr. Chairman, I think the laws that we have now 
will work fine if they are applied. We predominantly use, as 
you have said earlier, the fraud by wire, mail fraud, 
conspiracy, aiding abetting, money laundering, and on one 
instance, obstruction of justice. The laws are there, if 
somebody will take time to work it and do the job. It can be 
done with what's out there now.
    Chairman McKeon. This would be the diploma mills.
    Mr. Ezell. Yes, sir.
    Chairman McKeon. Is there also law against Federal 
employees or other employees using these false degrees for 
employment?
    Mr. Ezell. Yes, and no. There is not a specific law. We did 
not have judicial venue in the western district of North 
Carolina against the Federal employees using our diploma mill 
paper all over the country. No. 1, we would have to look at the 
state law in that area where they were using it.
    No. 2, whether they violated title 18 section 1001, the 
false statement statute, we would have to look at each of the 
forms that they filled out when getting reimbursement for the 
degree. Each case stood on its own with the facts in that area.
    Chairman McKeon. Now--
    Mr. Ezell. Now, every state has different laws, also, so 
you have to look at where, what, what are the laws right there.
    Chairman McKeon. So it is not a Federal law, it is a 
state--
    Mr. Ezell. No, sir, it is not, unless you are talking about 
the false statement to any agency of the United States 
government, except for the 1001 statute. There is not a 
specific law, is what I am saying.
    Chairman McKeon. But you indicated that the FBI is no 
longer working on these?
    Mr. Ezell. No, sir. And I will be candid, and it is in my 
written statement. The FBI office in Charlotte took some heat 
from what we were doing.
    We had an individual that came to us and said there is a 
college in South Carolina selling degrees and transcripts. We 
met with the assistant U.S. attorney, he saw harm to society, 
we instituted an investigation, and that led us from school to 
school to school for many years. We spent about $25,000 or so 
on various degrees. FBI headquarters did not look at that as an 
investigative priority, in their mind, nationally. But it was a 
priority where we were.
    The FBI wanted to do it, the U.S. attorneys office gave us 
all the support we needed. And at that time we had Judge Robert 
Potter as our chief district judge in the western district, 
better known as ``Maximum Bob'' to the defense bar. A graduate 
of Duke.
    So, when the opportunity presented itself, and one of our 
crooks offered us any degree we wanted, we bought Duke, just to 
ring the bells when it went through the system.
    Chairman McKeon. How can we set this as a priority? Do we 
have that ability in Congress?
    Mr. Ezell. Use the muscle that you have, request that the 
FBI dedicate one person to do nothing--one agent--to do nothing 
but education fraud. That will have quite an effect on this.
    At the same time, have the FTC do what they can on the 
civil side. Have the postal inspectors--these people need the 
mail, they need the interstate delivery services, so if you 
attack them from a mailing standpoint, getting the documents to 
you, from using the telephone standpoint and the computer fraud 
statutes at the same time you're using the FTC, you've come at 
them like an octopus.
    Sooner or later--and at the same time, prosecuting the 
egregious use of these degrees if one buys it knowing that it 
is a fraud, uses it to obtain a job or to obtain a promotion in 
the Federal Government that has an educational requirement, or 
uses Federal funds to buy it with, and do all of that 
simultaneously, it can be stopped.
    This is a very big, lucrative business, and no one is doing 
anything about it. I mean, I got a spam while I am typing my 
testimony from today. I mean, I had responded to them a couple 
of days ago. That is the only way you will know what is being 
sold today, is to respond. These are extremely sophisticated 
people.
    I mean, we had a deep throat in the boiler room in Romania, 
and we--initially he wanted $20,000, we got it down to $1,000, 
and a bunch of us civilians chipped in $100. We sent him 
$1,000. He sent us all their boiler plates that they read, the 
list of all their schools, everything, which we gave Senator 
Collins staff later.
    I mean, if I am grossing $435 million and no one in law 
enforcement in the United States is doing anything about it, 
telling me to stop isn't going to be enough. And I am an 
American running it from abroad.
    Chairman McKeon. So the current laws that we have would 
apply in that instance, even though you are doing it from 
abroad?
    Mr. Ezell. They can be, with a little massaging, yes sir.
    Chairman McKeon. Thank you very much.
    Mr. Ezell. Thank you, sir.
    Chairman McKeon. Mr. Kildee?
    Mr. Kildee. Thank you, Mr. Chairman. We talked about the 
question of need for new Federal laws or enforcement of the 
present law. How about greater penalties? There should be 
criminal penalties for awarding these phony degrees. How about 
increasing, or looking at the question of criminal penalties 
for receiving and using these degrees?
    In other words, both the buyer and the seller would be 
guilty of some type of chargeable crime. Could you--
    Mr. Ezell. I agree with what you are saying. When the FBI 
worked the case on LaSalle University in Metairie, Louisiana, 
there for the first time we saw them seize bank accounts. And 
they got somewhere between $85 million and $11 million out of 8 
bank accounts of the school. So that was the first time we had 
seen the application of seizure of assets from the college.
    And of course, in the Pellar case, he agreed to pay a fine 
to give up his $1.5 million yacht that he had been sitting on 
there in Mexico as a Federal fugitive running this scam.
    If we apply the seizure aspects of the laws that are 
already on the books, that is one way to go after the 
pocketbook. I do not know if increasing the penalties on the 
existing statutes will do it. I don't think it will, because 
they don't really think they are going to get caught.
    I believe that the prosecution and publicizing the 
prosecution of the egregious use of diploma mill paper will 
also work. I don't know if attaching monetary damages--for 
example, all the school teachers in the state of Georgia--there 
were about 11 of them that were exposed 2 months ago as having 
degrees from St. Regis University.
    Now, those 11 school teachers, number 1, have agreed to pay 
the $30,000-some back to the Georgia school system. They have 
all had their educational credentials retracted by the state, 
and resigned. Now the state is deciding, ``Are we going to 
prosecute?'' And there has been a good bit of publicity on 
that. That's the thing that will get the message out, that you 
can't use it, there is a penalty, you will lose your teaching 
certificate.
    And then you have to wonder how many graduates of that same 
school exist in the other 49 states. I don't know that answer. 
But there have been laws that you all have passed up here in 
the last couple of years increasing the pressure on school 
teachers to become more certified, to obtain graduate-level 
degrees. And that may be sending them the easy route to diploma 
mills.
    Mr. Kildee. As a matter of fact, the bill which the other 
Subcommittee--No Child Left Behind--
    Mr. Ezell. That is the one, yes sir.
    Mr. Kildee. OK--
    Mr. Ezell. And that may be the impetus for them getting the 
graduate level degrees the easy way.
    Mr. Kildee. Because we looked at the number of teachers who 
needed to increase their certification or the degrees, and this 
may have provided the incentive for some to seek out the--
    Mr. Ezell. Yes, sir.
    Mr. Kildee. That is why, apparently, these teachers in 
Georgia only received, so far, some civil penalties. Do you 
think it would be prudent to have some Federal penalties for 
the--at least for the egregious abuse of this? Any of you on 
that.
    Because to my mind, the civil penalty kind of restores 
things to where they were, but it takes two to commit a crime 
in this type of thing, it seems to me. There has got to be the 
buyer and the seller.
    Ms. Morse. Well, that is what the--did you say any of us?
    Mr. Kildee. Yes.
    Ms. Morse. That is what they tried to do in Oregon. And 
that law, as I understand from Mr. Ezell, is being contested. 
But the law was the use of the degree would also be prohibited, 
and also the use of the degree--any use of the degree in the 
state, even if the employer, for example, was outside the 
state.
    Mr. Kildee. Well, you know, if someone buys the status of a 
Kentucky colonel, that is one thing. But he tries to get in 
someone's army with the idea that he really is a colonel, then 
there is really the use of that degree, right, or the use of 
that title.
    And it seems to me that there should at least be the threat 
of some criminal penalties for using a fraudulent degree.
    Mr. Ezell. I agree. Like the state of Oregon, you can get 
arrested for using an educational credential on a school that 
is not approved by the Office of the Reauthorization to be used 
as such in the state of Oregon. I don't know whether it is 
enforced, but it is on the books and you can get locked up for 
it. And it is that type of law that if every state had it, then 
that is the hammer that you could use.
    Mr. Kildee. Thank you very much.
    Mr. Ezell. Thank you, sir.
    Mr. Kildee. I see I have exhausted my time. Thank you, Mr. 
Chairman.
    Chairman McKeon. Thank you. Mr. Ehlers?
    Mr. Ehlers. Thank you, Mr. Chairman, and I thank my 
colleagues to my right, who are letting me go ahead of--or out 
of order, because I have a 12 commitment.
    But I wanted to say this has become somewhat personal to me 
for two reasons. First of all, I worked 80 hours a week with no 
vacations for 4 years to get my Ph.D., and I kind of resent 
people getting a Ph.D. in 20 minutes for a much smaller sum 
than I paid.
    But what really made it personal, I received a phone call 
last Saturday by coincidence, from a sister-in-law who had 
received this e-mail which I will have distributed in a few 
moments.
    It says, ``A genuine college degree in 2 weeks. Have you 
ever thought that the only thing stopping you from a great job 
and better pay was a few letters behind your name? Well, now 
you can get them. BA, BS, BSE, MA, MSE, MBA, Ph.D. Within 2 
weeks, no studying required, 100 percent verifiable. These are 
real, genuine degrees that include bachelor's, master's, and 
doctorate degrees. They are verifiable, and student records and 
transcripts are also available. This little known secret has 
been kept quiet for years. The opportunity exists due to a 
legal loophole allowing some established colleges to award 
degrees at their discretion.''
    With all the attention that this news has been generating, 
I would not be surprised to see this loophole closed very soon.
    [Laughter.]
    Mr. Ehlers. ``Order yours today. Just call the number 
below. You will thank me later.'' We will hand these out now, 
and be sure to give them to members of the media, too.
    [The information referred to follows:]

------ Original Message -----
From: 11234201 
Sent: Saturday, September 18, 2004 11:46 AM
Subject: A Genuine College Degree Within 2 Weeks! 100% Verifiable!

                        A Genuine College Degree
                              in 2 weeks!

Have you ever thought that the only thing stopping you from a great job 
and better pay was a few letters behind your name? Well now you can get 
them!
                         BA BSc MA MSc MBA PhD
          Within 2 weeks! No study required! 100% Verifiable!

These are real, genuine degrees that include Bachelors, Masters, and 
Doctorate degrees. They are verifiable and student records and 
transcripts are also available.

This little known secret has been kept quiet for years. The opportunity 
exists due to a legal loophole allowing some established colleges to 
award degrees at their discretion.

With all of the attention that this news has been generating, I 
wouldn't be surprised to see this loophole closed very soon. Order 
yours today. Just call the number below. You'll thank me later.
                              206-309-0904
                                 ______
                                 
    That, to me, was incredible. I spent 22 years in higher 
education, and to see this going on is just deplorable. What 
especially disturbs me is your comments, Mr. Ezell, basically 
we are not--the FBI is no longer pursuing this crime. And I can 
understand they have a lot to do with anti-terrorism and 
organized crime, and so forth. But someone has to take care of 
this.
    I am not that keen on going after the victims of this, 
although they--the people who do buy the degrees, they 
obviously should be punished. But that doesn't stop the 
operation. The only way you stop the operation is going to the 
source.
    That leads me to two questions. And we will start with Mr. 
Ezell on this, and go down. The Internet, it seems to me, has 
really aided them, has aided the people in propagating this 
information. The first question is do we need special 
legislation to strengthen the prohibition against the use of 
the Internet?
    Secondly, how do we stop foreign operations? Do we have 
enough agreements with foreign countries that we can, through 
our laws, stop the foreign operations? Because with the 
Internet, it doesn't matter where you are, you can still run 
the scam. So I would appreciate comments on that.
    Mr. Ezell. Sir, I honestly do not know how you would stop 
the foreign operations. Two years ago I found a new Internet 
college that had the skyline of Jacksonville, Florida and 
Tampa, Florida on it, and they were using a mailbox address 
near Tampa.
    When I went to see where they were, they were in Hong Kong, 
China. So I do not know how you stop it. I don't know what 
legislation, what agreements with other countries would work. I 
am not that computer literate.
    I do know that when the FTC came down with their temporary 
restraining order and their restraining order later against the 
university degree program folks, they were able to stop the 
host computers, the ISPs, that held the websites for those 
schools. So, what did they do? The bad guys set it up in 
Israel. I mean, they learned real quick where they were going 
with the U.S. law enforcement, and then moved shop.
    That is an excellent idea. I think that that would probably 
work. I don't know what the mechanics would be. But I would 
love to see something that could stop that.
    Mr. Ehlers. All right. I do happen to be computer literate, 
and I think working through the ISPs would be the best way. 
Each time one of these is reported, simply getting the ISP to 
take them down, remove their e-mail privileges, their websites.
    And again, it is going to take diligent effort on the part 
of Federal personnel to accomplish that, because it is not 
going to happen just because we totally agree. Any other 
comments?
    Ms. Morse. With respect to accredited institutions, we 
certainly require that their advertising be honest. And I have 
traveled abroad and seen advertising on cable TV and so forth 
that I felt was not fully disclosing for our institutions, and 
they stopped that immediately. So that is one of our 
accreditation requirements.
    With respect to foreign institutions, there are some which 
are accredited. But there is also an initiative to have a 
network, an international network of quality assurance 
agencies, so that they can publish who it is that they 
accredit, and you can at least click through to their websites 
and find out is this a reputable agency. Because there are also 
accreditation mills, and you can say you're accredited and 
you're accredited by an accreditor that is not really an 
accreditor.
    And finally, I would just raise the point that there is a 
gray area that--I think that we might plug one loophole and 
then have the problem that you are going to have institutions 
saying, ``Well, take a course,'' or, ``We're giving you credit 
for life experience,'' and then you are going to really need an 
in-depth review of each institution. Is it really certifying 
actual knowledge, or is it simply saying that that is what it 
is doing?
    Mr. Ehlers. Mr. Cramer, do you have anything to add?
    Mr. Cramer. I have nothing to add to the comments made by 
my colleagues.
    Mr. Ehlers. OK. Well, thank you very much. And thank you, 
again, to my colleagues for yielding to me.
    Chairman McKeon. Thank you, Mr. Ehlers. Ms. McCarthy is 
recognized for 5 minutes.
    Ms. McCarthy. Thank you, and thank you for holding this 
hearing. I am just curious. There is no studying, there is 
nothing? No books are sent for the amount of money that you 
send in for the course? You know, when you sign up for one of 
these courses to get your degree. To anybody, there is no books 
sent? The consumer, then, is basically buying their degree? 
They are just getting a certificate without doing anything?
    Mr. Ezell. In 11 years, I have received books after my 
degrees from only one school. Some of the university degree 
programs, in your graduate kit--that is, your diploma, two 
certified transcripts, your letters of recommendation from 
professors you have never met or ever interacted with, along 
with a sheet dealing with how you can get your degree verified.
    They will then include about a 14-page exam, that if you 
care to take it now that you're a graduate, there is a fee for 
them to grade it. So they are all strictly a smash and grab. 
Certain of these.
    Others that are watered down may run you through a couple 
of hoops, you may have to do some papers with some Internet 
course work so you have--it's a scale, a continuum, from the 
totally fraud over here, where you do nothing and you know you 
did nothing--I mean, this week, when I talked to this fellow 
from this university, it took him less than 40 seconds to 
qualify me for an MBA. That is strictly a fraud.
    But there are others where it is a gray area, where it may 
take a period of time, a couple of courses, some papers. I may 
not know that it is just a storefront, that they accredit 
themselves. So there is a range of this operation.
    Ms. McCarthy. All right, so that is how some consumers or 
some students would actually believe they are actually earning 
a degree?
    Mr. Ezell. Exactly.
    Ms. McCarthy. I have been trying to figure this out.
    Mr. Ezell. Exactly. And some of them even offer--up until 
three or 4 years ago, they were offering a free video. Others, 
you can take a virtual tour of the campus. You don't know that 
it is all a fraud, because it's 2,000 miles away. You have 
never driven to the address. You don't know that it's just a 
mail referral service.
    Ms. McCarthy. How are we going to--many of us here on this 
Committee, we have had hearings, and many of us agree that 
because of the technology that is out there, we believe in 
distant learning, which is, you know, something coming of the 
future. And how are we going to be able to pass laws that we're 
going to try and do to clean this up and still not penalize the 
legitimate ones out there?
    Mr. Ezell. And I agree that distance learning is here to 
stay, with the advent of the Internet. If the Department of 
Education does, in fact, come out with this web-based list that 
they have talked about when they held their summit in January, 
then that would be an easy place for both our citizens and 
citizens abroad to go look for the school, if they knew this 
list was out there, and see is it on one of the approved--and I 
may be using the wrong word--is it on one of the good lists put 
out by an agency of our government.
    But then they would have to know that that list was there 
in order to go look at it. Just like the state of Oregon, if 
you want to know if a school is bad, go look at Oregon right 
now. It's the only state that actually posts a list of the 
schools you can get locked up for. No one is willing to go out 
on the plank and call a school bad. That's one of the problems. 
They're afraid of being sued.
    Ms. McCarthy. Thank you. Just to follow through--and again, 
I guess because so many of us are concentrating on the 9/11 
Commission and Homeland Security--to be able to get these 
degrees I think is a little nerve-racking, when you think about 
possibly a terrorist that is sleeping in this country, getting 
one of these degrees to prove that they have been here for a 
while.
    Mr. Ezell. You brought up a good point. We have previously 
seen--20 years ago--diploma mills being used as a way of 
getting foreign students into the country, and that is also 
available today. So we should not--and especially with some of 
the mills that can be tracked back to some of the Middle 
Eastern countries, who is to say that they are not using this 
as a vehicle to get people over here.
    Plus, where did this American that set up his shop in 
Romania and Jerusalem, what has he done with the $435 million? 
Who has he sponsored in what area? And I don't know the answer. 
But it is in the universe of possibilities.
    Ms. McCarthy. Thank you very much.
    Mr. Castle. Thank you, Ms. McCarthy. I will yield to myself 
for 5 minutes. And I would just like to say a couple of things 
up front.
    I helped trigger this hearing. After reading about it, I do 
not know what concerned me the most. One of the things that 
concerned me was reading about something you mentioned, Mr. 
Ezell, was the degrees from Hamilton University. I have a 
degree from Hamilton College, thank you, for which I spent 4 
years working pretty hard to get, and it bothers me to see that 
happening.
    But reading what happened over in the Senate, and then 
realizing there has not been a lot of follow-up, and realizing 
that I am not sure that we, as Members of Congress, understand 
the extent or breadth of this problem at all. And I hope this 
hearing wakes us up. And frankly, I hope--if this hearing is 
the end of it, then I will be vastly disappointed, because I 
think a lot of changes have to be made, and I think you have 
touched on a few of them.
    And quite frankly, I think we have to be more innovative 
than ever before, because we are dealing with the Internet, we 
are dealing with online legitimate schools at this point. There 
are a lot of changes that have gone into place.
    And obviously, as you all pointed out with the Internet, 
there is all kinds of machinations, and ways of turning this 
around to spread the illegality that goes on.
    Let me just also say that I don't think there is any 
innocence in this. I will be very candid about that. I think 
anybody who receives something like Vern Ehlers' daughter 
received here, and getting her college degree in 2 weeks, and 
just sending away for it, anybody--anybody--who would do that 
would absolutely know what they are doing. If they do that, and 
they are being--receiving remuneration at a much higher level 
because of that, to me they are implicated as much.
    And let me also just say that I am a total believer in what 
you have said, which is the fact that we need to enforce this. 
I have always believed that enforcement and publication is of 
tremendous value in cutting these things out. People start 
reading about it, be it a few students who are also brought 
into the picture here, as well as the names of the colleges or 
whatever, it's going to change things dramatically.
    Although I must say that with all the rapid changes and use 
of the Internet, it may not change as dramatically as I would 
like to see it happen. But I think this is outrageous, what has 
happened, and I frankly think we need to do a heck of a lot 
about it in terms of what we're doing in this country. And it 
does need to be addressed.
    And I know we can say, ``Well, gee, we have to have all our 
FBI agents for terrorists,'' or whatever. Well, that's not 
completely true. As we all know, the FBI does a lot of other 
things, as well. And one--in this day and age it's always more 
than one, probably--but whatever it would take to do it is 
something that should happen.
    So, my goal is, frankly, to find different ways of doing 
this and preventing it from happening, one way or another, 
particularly at the Federal Government level. That whole 
business of the 2 percent who were looked at and all the false 
degrees they had, to think what's happening to the other 98 
percent, I think, is completely outrageous and should be gotten 
to the bottom to as soon as possible.
    Let me start, though, on my questioning, now that I have 
gone through my tirade here, with Ms. Morse on the 
accreditation end of it. Because you mentioned the gray area--
funny, I had written it down before anybody said it--but you 
have mentioned the gray area two or three times yourself, I 
think somebody else has mentioned it here.
    But I mean, not all schools which are legitimate schools as 
I understand it, are accredited. In fact, you have made it--and 
I know colleges are very concerned about accreditation, 
colleges and universities, and I know it is sometimes 
difficult.
    And you have indicated that--in fact, I wrote it down--but 
good schools sometimes stop in the process and don't bother 
getting accredited. So we're not talking about black and white 
here, we have got a gray area where there are some schools 
which are legitimate, degree-granting good schools which are 
not under either your accreditation or any of the other 
specialized accreditations which exist out there.
    So, if we get a list of all the accredited schools, all 
6,000 by all the different entities that you mentioned, in 
addition to Middle States and those like it, if we get all 
those, we still may have a grouping of schools which are 
legitimately granting degrees and are not part of these diploma 
mills, and then we can't get a whole list where we could just 
absolutely look at it and say, ``These are legitimate schools, 
and these are not legitimate schools.'' How do we overcome that 
problem?
    Ms. Morse. Well, I said that in the interest of full 
disclosure. But those schools are not eligible for Federal 
funding. So there would be, as a practical matter, very few of 
them.
    There is another gray area which I think raises a really 
interesting philosophical practical problem, which is we are 
going, in higher education, to outcomes-based measures. We want 
to know what you have learned, as opposed to how many courses 
you took.
    And therefore, we have institutions such as the Western 
Governor's University, which are simply certifying knowledge. 
And at what point do we get to an institution where we have to 
judge it, is this really a legitimate degree? Did they certify 
your knowledge properly?
    But the gray area that I was referring to was more the in-
between case, where you are taking a couple of courses online, 
but it's not really legitimate, and it's really not that hard 
for an accreditor to tell that. We visit, we look at the--you 
know, we meet with students, we meet with faculty, we go 
online.
    One of the benefits of online, by the way, is that we get a 
lot of hits on our website of our listed institutions. So 
apparently, people from around the world do know that.
    Mr. Castle. Well, let me ask you a hypothetical. An this is 
hypothetical, and do not be afraid to answer it. And that is do 
you believe, with the knowledge that you have, that if you were 
assigned by whomever, the Department of Education, or 
yourselves, or whatever it may be, the responsibility of not 
just accrediting, but of determining those schools which are 
indeed falsely holding themselves out to be degree-granting 
institutions?
    Do you think you have the capability of doing that, setting 
aside all the legal objections, and all that kind of thing?
    Ms. Morse. We certainly have the expertise. We don't have 
the resources.
    Mr. Castle. Right. But you think you have the expertise, 
and you feel that, given the resources, that that is a doable 
objective?
    Ms. Morse. If you spend 5 years visiting a school, getting 
reports from them, sending them consultants, you have a pretty 
good idea of whether they are legitimate, yes.
    Mr. Castle. My time is sort of up, but I am going to go on 
here for a little bit. And let me ask you, Mr. Cramer, why--I 
do not know what the Office of Special Investigations at GAO 
has done or not done here. I mean, I have read your testimony, 
I listened to what you said here today, but is there more that 
you could be doing?
    I mean, we obviously have a problem right here at the 
Federal Government level, you know, with people using diploma 
mill degrees to probably receive more--to maybe even get a job, 
and to receive higher income, and that kind of thing. Is there 
more that we should be doing? Should we be helping the GAO 
more? Is there more that should be happening there?
    My impression is that we have let a problem just go along, 
and we ought to be doing a heck of a lot more about it, is 
where I am coming from.
    Mr. Cramer. Well, I think that the work we have done to 
date is really just the tip of the iceberg. It is a small 
snapshot of what is out there.
    As I mentioned before, records that we got from just two of 
these diploma mills and two agencies indicated $150,000 in 
payments to just those two schools by those agencies. So this 
is just a very small part of a much larger--
    Mr. Castle. So do you think, with greater resources, that 
you all could be doing more? And I have a lot of respect for 
what you and your group does. I mean, if we gave you greater 
resources, could you--to me, there is a whole world out there 
that we have not been into sufficiently.
    Mr. Cramer. We would be happy to talk to you about doing 
additional work in this area. We are certainly open to that 
possibility, and we would be happy to talk about projects. We 
have some ideas for things that we could do, and we would be 
happy to talk to your staff about that.
    Mr. Castle. OK. Mr. Ezell--and this will be my final 
question--the counterfeit--and you mentioned something else 
that I think was also in your written testimony--but you 
mentioned the counterfeit degrees from legitimate universities, 
which is very different. That is just a forgery, as I would 
understand it.
    And I guess it relates somewhat. Have you had a--much 
experience with that, in that area, when you were in the FBI or 
since then in the work you are doing now?
    Mr. Ezell. Yes, sir, I have. When I visited one place in 
Grants Pass, Oregon, I seized 32,000 diplomas on 320 
universities. Once you design the printing plates, you print 
100. You don't print anything less.
    Today, on the Internet, you can buy just about anything you 
want on any school. I can buy a degree, a transcript, envelopes 
with the return address of the registrar's office. I can buy 
rubber stamp seals. If their transcripts are on security paper, 
then that's what the bad guys have. It's all out there today.
    It should not be this easy. And if in today's society so 
many employers don't take the time to check out someone, and to 
verify their educational credentials--my daughters have 
graduated from the University of North Carolina and the 
University of Florida. I have bought counterfeit degrees on 
both of those schools for a lot less than what I sent them to 
college on.
    [Laughter.]
    Mr. Ezell. The signatures were wrong for the year of my 
graduation. But otherwise, it was a look alike. They are good, 
quality work.
    Mr. Castle. These are different people than the diploma 
mill people, or are they--
    Mr. Ezell. Yes, sir.
    Mr. Castle.--in some instances the same?
    Mr. Ezell. Yes, sir. It is a different operation, totally. 
And some of these have transcript verification, sort of like 
buying a triple combo at McDonald's, you know. ``I will take 
this, this, and this, and hold the honors,'' you know. Whatever 
you want. Whatever GPA you want, it's all available.
    I brought some items today, just as examples of some of the 
quality that is out there. Anything is for sale, sir.
    Mr. Castle. I said it would be my final question, but I can 
sort of imagine this, but how are they used? I mean, you can 
put them on the wall, but you can also present the transcript, 
and then show the whole record of it, and say, ``I went to 
Harvard, and here is my record. I was tenth in my class,'' or 
whatever it may be?
    Mr. Ezell. Yes, sir. And I have brought several Harvards 
with me today. Yes, sir.
    Mr. Castle. Very good.
    Mr. Ezell. Wherever my stack is. But there are some 
Harvards in it.
    Mr. Castle. I should have met you sooner. I could have 
saved 7 years of my life.
    Mr. Ezell. You can be all you want to be, or be who you 
want to be. Think of identity fraud. Think of all of this that 
we are talking about today in line with identity fraud, or in 
line with terrorism. I mean, just look at it as your back-up 
documentation.
    Mr. Kildee. Exactly.
    Mr. Castle. These are--I am going to distribute these 
amongst the members so they can look at them, but these are the 
diplomas--
    Mr. Ezell. Those are all counterfeits. And to answer a 
question that you did not ask me, the state of Oregon, on their 
website, even has non-accredited schools--they have come up 
with criteria where they have found some non-accredited schools 
legitimate to use as educational credentials in the state of 
Oregon. When we're talking about accredited versus non-
accredited. So they have come up with criteria and post certain 
non-accredited schools that you can use their credentials for 
education in Oregon.
    Mr. Castle. Thank you. Mr. Tierney is recognized for 5 
minutes.
    Mr. Tierney. Thank you. Just a couple of questions, because 
I have to go. But Mr. Cramer, what do you know about any 
efforts on the Department of Education to take action to make 
sure that people aren't using the Federal Family Education Loan 
Program for places like your institution where you apparently 
got them to send some money?
    Mr. Cramer. Well, as a result of the investigation that we 
did, we know that they revamped their process of verifying 
foreign schools.
    Our--the school that we set up was--exploited a 
vulnerability with respect to the verification of foreign 
schools.
    Mr. Tierney. What, specifically, did they do? Do you know?
    Mr. Cramer. Well, prior to our work, there was, in fact, no 
process in place for the Department of Education to actually 
check with the foreign government, or the foreign government 
educational authority to determine whether the school which 
sought to be a part of the student assistance program here was, 
in fact, licensed to operate and was fully accredited according 
to the foreign government standards.
    So, that is a significant piece of--that is a significant 
change that has occurred. They now do that. They make sure that 
they consult with the foreign authorities and determine whether 
or not it is a licensed school within that country.
    Mr. Tierney. What if one of the foreign countries contacted 
our Department of Education and asked about one of these mills 
that you're talking about? What would the answer be, that they 
just don't know because they don't keep track of them all, or--
    Mr. Cramer. See, the Department of Education here doesn't 
do accreditation itself.
    Mr. Tierney. Right.
    Mr. Cramer. It recognizes accrediting bodies, such as 
Middle States.
    Mr. Tierney. But I guess that is my point is, you know, if 
I were another government and I say, ``Look, we want to know 
whether or not this institution, Lexington College,'' for 
instance, or whatever it is, you know, is a legitimate school 
or whatever, ``What can you tell me?'' Our Department of 
Education would not be able to give them an answer, right?
    Mr. Cramer. By the end of the year, the Department of 
Education has told us that they will have available online a 
list of accredited schools.
    The problem now is if you want to do a definitive search to 
determine whether a particular school is accredited, there is 
no one, convenient online place you can go to. You need to go 
to the various accrediting--
    Mr. Tierney. Right, but is there a difference between a 
legitimate school and accredited, or can you also--can you be a 
non-accredit school but be a legitimate institution?
    Mr. Cramer. Yes, you can.
    Mr. Tierney. And would our Department be able to make that 
distinction for any foreign government inquiry?
    Mr. Cramer. Well, I am not exactly sure how they are going 
to organize the information. But I know, for example, that OPM 
organizes its information about schools according to whether it 
is accredited, non-accredited but pending accreditation, 
whether it is another type of school, for example a foreign 
school which would not seek accreditation in the United States, 
but may be a perfectly fine school accredited in a foreign 
country.
    And then the fourth category, which are the diploma mill 
type businesses. I mean, I don't call them schools or 
institutions. They are just businesses that are set up to sell 
degrees.
    So, there are all different kinds of businesses and schools 
and institutions out there, and--
    Mr. Tierney. And you think the Department of Education has 
a good bet on just which are which?
    Mr. Cramer. I really cannot speak to that. I do not know.
    Mr. Tierney. With respect to the eight agencies, the 
Department of Education, Energy, Homeland Security, Health and 
Human Services, Transportation, Veterans, Small Business, and 
the Office of Personnel Management, where you found some 28 
employees with degrees from unaccredited schools, has any 
disciplinary action been taken against those individuals, do 
you know?
    Mr. Cramer. Well, I know that we referred the results of 
our work to the inspector generals' offices at each of the 
agencies. At this point, I do not know what, if any, 
disciplinary action has been taken with respect to those 
people.
    Mr. Tierney. OK. I mean, some of them had some fairly 
significant positions, including national security clearances.
    Mr. Cramer. Yes.
    Mr. Tierney. So it would be important to both those people 
who were duped, or if they--it gives us a question on their 
intelligence on that, or maybe not--but also whether they would 
just be devious themselves, in a position like that.
    What advise do you have for those eight agencies and others 
about what they must do to avoid that circumstance?
    Mr. Cramer. Well, what we found was a surprising lack of 
systems to verify educational credentials. What the agencies 
need are systems to verify whether someone, in fact, has a 
degree, and to verify whether the degree is from a school or a 
diploma mill, or an institution. Is this a legitimate school?
    It is hard. It is not an easy thing. For example, you 
mentioned the example of Hamilton. Hamilton College is a fully 
accredited, fine school in Clinton, New York. Hamilton 
University is a diploma mill in Wyoming.
    But when--if an employee has obtained a degree from 
Hamilton, and they simply put on their application, or whatever 
they fill out, ``Hamilton,'' without further identifying 
information, which happens, without an address or university or 
college, that's just one example. And diploma mills frequently 
will take names that sound like legitimate schools.
    Another one is LaSalle. LaSalle is used by some perfectly 
fine schools, and also by diploma mills. So it also depends 
upon the employee's own knowledge and culpability, and what 
kinds of information they are giving to the agencies.
    Mr. Tierney. Were you able to give any advise? I mean, who 
is giving these agencies advise on how to set up those systems, 
now? Is that your agency, or did you push off--somebody else 
has that responsibility now?
    Mr. Cramer. We have not been asked to do that at this 
point. Certainly we would be happy to see whether GAO could 
assist the agencies, if they are interested.
    First of all, what Congress has done, I think, is very 
helpful in just making the agencies aware of the problem, aware 
of the need for attention to the problem, and the need to 
determine what the scope of the problem is. That is the start, 
and I think that you have gone a long way toward doing that 
here.
    And now, they need to design some kind of verification 
process, and they need assistance in doing so in a way that 
works, that doesn't make the process unduly cumbersome.
    Mr. Tierney. Thank you. Mr. Chairman, thanks for bringing 
this issue to everybody's attention. But perhaps the Committee 
wants to do something about notifying these agencies and 
offering the General Accountability Office's services if they 
need that, or whatever. With that, I yield back. Thank you.
    Mr. Castle. Thank you, Mr. Tierney, very much, for your 
thoughts and time here. Mr. Petri is recognized for 5 minutes.
    Mr. Petri. Thank you. I think I would like to just sort of 
follow up on the previous line of questions and ask you 
particularly, Mr. Cramer, does it really make sense, given all 
we have heard, to focus on the ``diploma,'' whether it is from 
an accredited or non-accredited, or--I mean, they are so easy 
to get and all of this.
    Doesn't it make more sense to focus on what the diploma is 
supposed to represent, and have what you said, outcome-based--I 
mean, when--I happen to have a law degree from what is an 
accredited university. But they did not let me practice law. I 
had to take a bar exam.
    I fly on airplanes all the time, and I assume they take 
courses, but they do not get to fly the airplane just because 
they have taken the courses. They have to demonstrate, in a 
variety of ways, their competence.
    And so, we have problems of fraud all the time in our 
society. I mean, McDonald's has to deal with it, and Wal-Mart, 
and so on, and they worry not just about arresting people, or 
checking out their credentials, but setting up systems that 
protect them and minimize the fraud.
    So, shouldn't we, instead of giving people awards for a pay 
increase for a diploma and then running around trying to check 
on whether this piece of paper is valid or not, just do it 
based on demonstration of increased competence in a particular 
area? Wouldn't that be a lot simpler, and more straightforward, 
and then we don't have to worry about whether people are 
cheating or gaming the system?
    I am just asking. I mean, we can spend a lot of time and 
money putting more resources into checking into the validity of 
paper. Why don't we just look at what the paper is supposed to 
represent, and determine whether people know that. Can you 
comment on that? Is that wrong?
    Mr. Cramer. Not at all. I think it addresses one part of 
the problem. But there is still the other part, which is if, 
for example, a veteran's hospital is going to hire a doctor, 
they have to know that this individual, in fact, has a degree, 
a medical degree, from a legitimate medical school. And the 
suggestion you made, I think, is a very fine one. But I don't 
think it addresses that--
    Mr. Petri. Well, wouldn't he have to be certified and take 
an exam in order to practice in that state?
    Mr. Cramer. Well, I guess the first question is to 
determine where the medical degree comes from, and whether the 
institution or the school or the business, whatever it is that 
grants a medical degree, has had a legitimate medical education 
program.
    So, we want to make it possible for agencies, private 
employers, anyone who has a need to know that--
    Mr. Petri. But isn't it true--I mean, I went to college--
there--even though it is certified, and it is a perfectly good 
school, there are a lot of courses--kids call them guts.
    You can get--I mean, there are a whole mixture of things, 
and it just doesn't necessarily mean that--I mean, you don't 
want to--empowering people to do things because they have a 
piece of paper, rather than checking into what they actually 
know, it seems a lot simpler just to require that they 
demonstrate a level of competence for real activities.
    Or maybe it is better--if you want to empower, make 
certification of something important, make that another step. 
But that is kind of like you have to have a union card and then 
do something. I mean, if you want to do that in order to 
organize society, and restrict access, but in education a lot 
of states do that. But the private schools don't, so you have 
people who teach in parochial school who aren't certified, even 
though they both have gone to college.
    I mean, there are a lot of ways of doing this. But all I am 
asking is should we really be spending that much time on these 
systems, or wouldn't it be a lot simpler to just worry about 
the basic competence, and if people don't do that, they are 
liable, probably? If the people, their customers, are hurt by 
someone they placed in that position?
    And beyond that, I mean, there are only so many resources 
in this world. To spend all kinds of money looking into the 
integrity of various diploma mills, as opposed to whether 
people, whether they are from the diploma mill or not, know how 
to do the job--that's just my question.
    Ms. Morse. May I address?
    Mr. Petri. Go ahead.
    Ms. Morse. That is why accreditation is trying so hard now 
to go in that direction. I do not know that we can have 
licensing tests for every kind of job that there is. But what 
we can do is to preserve the diversity of the different kinds 
of colleges that we have, and hold them to the learning goals 
that they have, in terms of the students that are graduating.
    And we are putting a great deal of resources and effort 
into that, as are all of the colleges and universities right 
now.
    Mr. Ezell. I agree with what you were saying. Some of the 
diploma mills, in fact, will caution you about buying a degree 
in an area that you have no knowledge. Because as you well 
know, you're not going to last long.
    The other part of what you said, we are a credential-
conscious society. We have left the age of apprenticeship, and 
I don't know how you can go back to an apprenticeship style 
society. It's the piece of paper that opens the door, it's the 
piece of paper that gets you the interview, the raise, et 
cetera. And sometimes, we have met people in life that we said, 
``He is just so smart that he is stupid.'' Well, it could be 
that he is just stupid.
    [Laughter.]
    Mr. Ezell. But he has the paper. You know what I am saying?
    Mr. Castle. Thank you, Mr. Petri. Mr. Burns is recognized 
for 5 minutes.
    Mr. Burns. Thank you, Mr. Chairman. You know, patience is a 
virtue. I am delighted to be here. I appreciate your input, I 
appreciate your knowledge on this subject.
    After spending 20 years in higher education and doing what 
my colleagues did, which was earn it the hard way, this creates 
a real problem. We have forgery, is that correct, Mr. Ezell, a 
forgery?
    Mr. Ezell. Oh, yes, sir.
    Mr. Burns. Absolute, blatant forgery. And then we have 
fraud. You know, in Gwinnett County, Georgia, we had a few 
teachers who received degrees from St. Regis. And just to give 
you the input, they are master's degree in 24 hours. A reporter 
from the Gwinnett Daily Post applied for a degree. In 24 hours, 
submitted a request online, took an optional test--optional 
test--sample question to be used to determine that the 
applicant can earn a course credit by taking St. Regis' online 
test, ``What two-syllable term means take into custody, or to 
apprehend?''
    And of course, optional answer A was ``Arrest.'' So, in 24 
hours, the next day, the evaluation was completed and the 
qualifications for certification of degrees had been approved. 
You get a master's degree in arts and education, a master of 
education, certificate in organizational management counseling, 
educational consultation, student guidance counselor, education 
administrative consultant, documents would be prepared for your 
approval, and upon acceptance of the payment of appropriate 
fees.
    The fee was $995. Now, for a teacher in the Georgia system 
with a master's degree, that would qualify them for an annual 
salary increase of $2,500. That's a pretty good investment. If 
I wanted a Ph.D. from St. Regis, it costs me $1,500. But my pay 
would increase $4,000. It's blatant fraud.
    Mr. Ezell. Even worse, St. Regis is run by two Americans 
who--and they probably have 15 to 20 entities. You can even 
become a broker and get money for referrals. After 9/11, they 
even set up their university of homeland security, where you 
can buy everything you want in the field of homeland security. 
I have that in the attachments to my written statement.
    So, they totally take advantage of the changing winds in 
the country. Quite a very sophisticated operation.
    Mr. Burns. The frustrating thing that I have is the fact 
that they are operating with impunity. And we have, you know--
it is hard to determine how someone could be considered a 
victim if they voluntarily participate in fraud.
    In Georgia, the authorities are looking at the opportunity 
of prosecuting those individuals for theft by deception, 
whereby someone who would deceive their employer to quality for 
higher pay.
    Mr. Ezell. Agreed.
    Mr. Burns. Just a couple of quick questions. Is--Mr. 
Cramer, is our government paying for these degrees?
    Mr. Cramer. Yes, the government has paid for a number of 
degrees for a number of people, according to the work that we 
have done, yes.
    Mr. Burns. These are fraudulent universities, paper mills. 
And in some cases we are indeed paying for the degree? So if I 
wanted to get a degree from St. Regis, for example, and I could 
get my employer to reimburse me, they would pay for the degree. 
Is that a possibility? Is that happening?
    Mr. Cramer. It did happen in the work that we did. We did 
find it happening, yes.
    Mr. Burns. And certainly it is occurring where we have 
employees at both the Federal Government, and likely our state 
governments, who are using these degrees to gain additional 
remuneration for their work, as well as promotions and job 
opportunities. Is that, again, happening on a fairly routine 
basis?
    Mr. Cramer. Our look at those Federal employees--we only 
looked at high-level Federal employees--but our look at those 
situations of those 28 people who were identified as having 
diploma mill degrees indicated that those people were hired not 
based upon the degree, but based upon their other 
qualifications and their experience.
    Mr. Burns. Was their degree an entry level requirement? Was 
that a part of the requirement for the position?
    Mr. Cramer. Not in all cases. Not in all cases.
    Mr. Burns. But in some?
    Mr. Cramer. In some cases, for example, they may have had a 
bachelor's degree from a legitimate institution, but then what 
people tried to do at times, we found, is enhance their resume 
by acquiring a master's or a Ph.D. in some cases, by simply 
paying a diploma mill for a degree.
    So, they may have had the minimum educational requirements 
for the job from a legitimate institution, but then enhanced 
their resume--which, of course, helps you when you're looking 
for a job--by getting these bogus degrees.
    Mr. Burns. You know, it's amazing. We get on an airplane, 
and the first thing we do is we thumb through the local--you 
know, the magazine there in the seat in front of us in the seat 
pouch, and we see multiple advertisements for various degrees 
from questionable, at best, universities.
    One of the things I am most concerned about is protecting 
legitimate universities, and not allowing them to become 
associated--you know, like you suggested various names, LaSalle 
for example. A very fine university. If it's the right LaSalle. 
Hamilton University, a very fine university if it's the right 
Hamilton.
    And so, I think part of our challenge is protecting those 
who do a great job of helping many of us increase our expertise 
and knowledge and ability. So I appreciate your testimony, and 
I look forward to working with you as we continue through this 
process. Thank you, Mr. Chairman.
    Mr. Castle. Thank you, Mr. Burns. Hamilton College, by the 
way. It's not that damn Hamilton University we are talking 
about.
    [Laughter.]
    Mr. Ezell. But it is designed to deceive and confuse 
people.
    Mr. Castle. I understand. Yes.
    Mr. Ezell. It has for years, and it hasn't changed.
    Mr. Castle. I just wanted to ask two follow-up questions, 
and the others might, as well. I won't take much time. But what 
are the legitimate universities? And maybe I address this to 
you, Ms. Morse.
    It seems to me that our legitimate colleges and 
universities--frankly, I question how good a job they are doing 
in communicating with this Committee to begin with, on a 
variety of issues I have seen of late.
    But in this particular area, I would think they would be 
hot on the path of this. Maybe you do not run into this in the 
world of accreditation, or even the accreditors themselves, 
because I understand there are perhaps some imitation of 
accreditors out there, as well. But I would think all those who 
are legitimate would be a heck of a lot more concerned about 
this than they have been.
    I mean, I--you know, this is not something that has had a 
lot of public recognition. Are they not concerned, or is it 
just they do not have time to be concerned? Or they are 
concerned and I have not seen it, or is there some reason why 
they are not concerned?
    Ms. Morse. They are concerned, but they do not have 
jurisdiction, except--I was wondering when you were talking 
about the similar names, if there isn't some copyright lawsuit 
that they could bring.
    It is very hard for them to rule against these 
institutions. Now, someone made the comment before the hearing 
that ACRAO, which is the Association of College Registrars and 
Admissions Officers, that is also an organization that they 
might get together and do something about that.
    Accreditors are very concerned, that's why we are concerned 
about the accreditation mills. And in fact, parallel to the 
Department of Education's Secretary of Education recognizing 
certain accreditors, we also have a private organization that 
recognizes us. That's the Council of Regional Accrediting 
Associations, or whatever it's called, and they also have a 
website that publishes these things.
    Mr. Castle. It just seems to me that more publicity could 
be helpful in that area. Let me just go to one other--
    Mr. Burns. If my friend would yield for just a moment, Mr. 
Chairman?
    Mr. Castle. Absolutely, Mr. Burns.
    Mr. Burns. You know, I think that's a good point. I think 
why don't legitimate schools take more aggressive steps? And 
you know, in 20 years, I think one of the ironies of being in 
the university environment that I was in is we tended to ignore 
these things as a joke, as a laughable joke, and so we didn't 
really look at them as a credible threat to education.
    But yet now, as you have pointed out, more and more people 
use them as an enhancement to their career without the 
associated requisite input and work and development. So I think 
often times--Harvard, you know, I think forgery is going to--I 
think certainly Harvard would look at forgery and try to 
protect its position on forgery, but a Harvard is not going to 
look at a St. Regis and say, ``You're a threat to me.''
    Ms. Morse. We do have one area where we have jurisdiction, 
which is another potential area for abuse, which is that 
legitimate universities enter into contracts with providers, 
often abroad but sometimes here. And those providers may not be 
up to the standards of the university that is granting the 
degree.
    And we do have accreditation requirements about that, and 
we review those operations very carefully, because we don't 
want to get a bad name for legitimate universities operating 
abroad.
    Mr. Castle. Thank you. Let me ask one other question, I 
think of Mr. Ezell, but maybe any of you could help with this.
    Are there either state--and I'm thinking about Oregon--or 
Federal statutes which prevent the recipient of one of--not 
prevent--which would make it a crime for just the mere 
recipient, that is just the receiving of one of these degrees, 
as being a crime?
    Now, I understand if you pretend you're a doctor and you're 
not, that would be some sort of crime, I'm sure, or some other 
profession, or whatever it may be. But here you have a genuine 
college degree in 2 weeks, the thing that Mr. Ehlers had, and 
you know, there is nobody in their right mind that doesn't 
understand this is a fraud. And you send away for it, and you 
get it, or you send away and you get that degree from Harvard 
on a forgery basis.
    I realize that the people issuing these things may be 
committing some sort of a crime, but is there any kind of a 
direct statute that makes this any kind of a crime in any 
state, maybe in terms of either the issuance or the receiving 
of such degrees?
    Mr. Ezell. Different than counterfeit currency, the sheer 
possession of the degree from the institution that you would 
buy it from, that spam mail, is not a crime, per se.
    Mr. Castle. OK.
    Mr. Ezell. It is the use of it.
    Mr. Castle. So it only--
    Mr. Ezell. However, if we are talking about a counterfeit 
degree on a state college, most states have a law, a state law, 
that says the production, possession, use of a degree of one of 
their state institutions or transcripts is a violation of state 
statutes. So no on the Federal, yes on the state.
    But it is the use of it, normally. Outside of a state 
degree, like the University of North Carolina, I would be 
violating a North Carolina general statute. Or the University 
of Florida. But there is not a Federal statute. And if I bought 
one from this spam mail and hung it up behind the bar of my 
home as a joke, if you would, I have not violated the law. But 
I am not a lawyer, but that is my opinion.
    Mr. Castle. Right. Well, I have no further questions. I do 
not know if Mr. Kildee or Mr. Burns has any further. I have, 
frankly, a whole lot of questions, but I would need the rest of 
the day if I kept asking them, and you have answered a lot of 
them in your written testimony, and we appreciate that.
    Mr. Kildee. I just want to thank you, Governor Castle, for 
really initiating the idea for having this hearing. I have 
learned a lot today. I am shocked and somewhat discouraged, 
too.
    I worked hard for my MA at the University of Michigan. And 
the thought that people could fraudulently achieved that--I was 
very proud, and my parents were very proud when I got that--it 
is kind of discouraging, also, when you see this, really, 
violation of the rules of decency in society.
    But you, all three, have been very, very helpful. And I 
think we will have to try to see what we can do in the Federal 
level, maybe parallel some things that they have done in the 
state level, like in Oregon on that.
    But I would like to see a reinstatement of the DIPSCAM in 
the FBI. I mean, you have someone who is really zealous and 
recognizes this is fraudulent, and this is discouraging, I 
think that might at least limit the fraud here, both by the 
person granting--the business granting this phony degree, and 
the person receiving it.
    Thank you very much. I really appreciate it. Thank you.
    Mr. Castle. Thank you. And I would also like to thank Mr. 
Burns, who has had a deeper involvement in higher education 
than almost any of us, except perhaps Mr. Ehlers, for his 
interest in this.
    I mean, you know, it is hard to get your arms around this, 
but there is absolutely no question in my mind that there are 
some very wrong things which are happening here, and who is 
actually carrying it out. I am not 100 percent certain.
    As you could tell from my questioning, I happen to believe 
that those who are receiving these are actually part of the 
problem, maybe a smaller part of the problem, but it involves a 
substantial amount of money, not just the money they're making, 
but the fraud of, say the Federal Government, for example, and 
paying people pursuant to degrees which they have received 
which they have not properly earned, which we know now exists. 
Well, that's just one type of business. There are probably all 
other kinds of businesses that are doing this, as well.
    So, I think it is a tremendous problem out there, and 
something we have to deal with. I think you have made some 
excellent recommendations. It is my hope that this hearing will 
plant the seed of interest in this Committee and in the 
Congress to go beyond where we have been before.
    I hope the FBI is listening to what we are saying. Perhaps 
we need follow-up hearings on that. The investigative arms of 
the congress, GAO, et cetera, and the others who may need the 
resources to do something about this, perhaps the schools 
themselves, the accreditors, could do more than perhaps the 
Department of Education can.
    Knowledge can shed a lot of light on this. And as I said 
before--and I agree with Mr. Ezell on this--a little bit of law 
enforcement, a little bit of publicity on it, can go a long 
ways to shutting down some of this, as well.
    But I think it has been a good hearing today, and I very 
much would like to thank all of you for taking the time to be 
here, your interest in it. Hopefully you are going to hear more 
from us in the future.
    Unless anybody has anything further, we stand adjourned. 
Thank you.
    Ms. Morse. Thank you.
    [Whereupon, at 12:35 p.m., the Subcommittee was adjourned.]