Beauty college fraud grows

January 12, 2017 GMT

Another person has been charged in the fraud case involving the now-closed Masters of Cosmetology Beauty College.

Rachel Crawford, 38, from Fort Wayne, the school’s financial aid director, will plead guilty to the charge of obtaining federal financial funds through the U.S. Department of Education by fraud and materially false statements, according to a news release Wednesday from the U.S. attorney’s office.

Crawford will appear in court for her change of plea hearing before Magistrate Judge Susan Collins at a future date.

If convicted in court, any specific sentence will be determined by the judge.

Crawford was preceded by Kaydean Geist, who ran the beauty school in Quim­by Village on Bluffton Road.

In October, Geist was given two years probation and ordered to pay $300,000 restitution and a $100 special assessment for her role in the fraud.

Geist failed to refund student financial aid money, instead depositing it in her personal investment account.

She required students to sign checks over to the school without allowing them to see the amount borrowed, telling them the loans were part of a government program that would require little, if any, repayment.

The revenue of the school increased, but neither the number of students nor the tuition did, the U.S. attorney’s office found.

Geist filed a guilty plea through her attorney, admitting to violating federal student aid laws. Geist and the school had been named in a civil lawsuit demanding a combined $11.6 million in repayment.

Last April, David Capp, the U.S. attorney for the Northern District of Indiana, announced that the vast majority of the loans hanging around the necks of former students would be declared unenforceable and uncollected.

As part of Geist’s plea agreement with federal prosecutors, Geist conceded to a lifetime ban from all U.S. Department of Education programs.