A US military veteran’s scam wiped out $48 million in federal student loans meant for disabled military veterans, according to the federal government. The Georgia man was sentenced to prison.
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A US Army veteran is going to jail after clearing $48 million in federal student loans for hundreds of borrowers he says were lifelong disabled military veterans — but they weren’t, according to federal prosecutors.
The man scammed more than 500 people into paying him a fee for what they thought was genuine student debt relief assistance and stole nearly $900,000 from them in total, according to the bureau of the United States Attorney for the Northern District of Georgia.
Now De’reek Banks, 41, of Lithonia, Georgia, will serve six years in federal prison after he previously pleaded guilty to theft of government property, according to an Aug. 23 press release from the district attorney’s office.
He must also repay $910,416 as a result of his scheme, according to prosecutors.
McClatchy News reached out to Banks’ attorney for comment Aug. 24 and was awaiting a response.
Court documents show that Banks and his lawyer had asked for a lesser sentence so that he could return to his family more quickly, continue to care for his eight children and “resume his medical care outside of a correctional facility”.
Beginning in 2019, Banks, a veteran injured during his military service and who continues to suffer from medical issues, began operating a federal student loan program for disabled veterans, according to court documents.
He did this by misleading hundreds of student borrowers about alleged “special government programs” that could wipe out their loans, the statement said.
In reality, Banks’ scam “relyed” on lying to the US Department of Education’s federal student aid office by falsifying hundreds of letters from the Department of Veterans Affairs that he had submitted to the office, according to prosecutors.
The banks used the forged letters to claim that each borrower, who paid him a fee for his help, was a totally or permanently disabled military veteran, the statement said. Misrepresentations qualified borrowers for student loan discharges.
As a result, millions of student debts were erased for borrowers even though they were ineligible, prosecutors say.
“He tricked borrowers into believing he could legitimately obtain federal student loan discharges for them while attempting to defraud the U.S. government of nearly $50 million,” said U.S. attorney Ryan K. Buchanan in a statement.
In a sentencing court document submitted by Banks’ attorney on his behalf, the attorney argued that “the government suffered no actual loss from Mr. Banks’ business” because the loan discharges caused by his client were cancelled.
In asking for a lesser sentence, Banks’ attorney asked prosecutors to consider that, along with the fact that his scam was a “non-violent crime” and how he supports his children, according to the court document. of sentencing which included letters from his family and friends describing his character.
“De’Reek’s big heart is ultimately what led to the situation we find ourselves in now,” said a letter from Banks’ wife. “I realize that the charges against De’Reek are very serious and troubling. The harm he did was meant to help people, not hurt them.
Banks’ prison sentence will be followed by three years of supervised release, according to the prosecutor’s office.
Lithonia is about 20 miles east of Atlanta.
