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Oct. 29, 2009

CHURCH LEADERS PLEAD GUILTY TO STUDENT LOAN AND FEMA FRAUD

(HOUSTON) – Two pastors and a deacon from a former church in southwest Houston called “Fishers of Men Worship Center” have pleaded guilty to federal fraud charges, United States Attorney Tim Johnson announced today. 
           
At the hearing this morning before United States District Judge David Hittner, Pastor Sheila Diana Washington, 49, and deacon/church treasurer Tony Overstreet, 44, pleaded guilty to bank fraud arising out of a student loan fraud scheme. They each face up to 30 years in prison and a fine of up to $1,000,000 at their sentencing hearing scheduled for Jan. 26, 2010, at 9:15 a.m. At the same hearing this morning, Pastor Eric Washington, 56, pleaded guilty to conspiring to defraud the United States by having Fishers of Men submit grossly inflated claims for reimbursement to Harris County for a FEMA-funded program that reimbursed groups sheltering Hurricane Katrina evacuees during fall 2005. Eric Washington will also be sentenced on Jan. 26, 2010, at 9:15 a.m. and faces up to five years in prison and a fine of up to $250,000. The three defendants were allowed to remain free on bond pending sentencing.

According to the factual basis in Sheila Washington’s and Overstreet’s plea agreements, the student loan fraud scheme began in 2003. Sheila Washington, Overstreet and other church leaders recruited church members who were college students to allow Fishers of Men to use their names in applying for student loans with private lenders. The students were told the $30,000 loan checks would be turned over to Sheila Washington and Overstreet to fund the church and that the church would repay the loans in full within six months. Students provided their identifying information which Sheila Washington, Overstreet and church employees used to submit more than 100 student loan applications online with Bank One (now JP Morgan Chase). The loan applications also listed church members who supposedly had good credit as co-signors on the loans. Fraudulent paystubs were created to falsely show that the co-signors had stable employment and substantial salaries. After internal investigators discovered the fraud with the Bank One loans, Sheila Washington and Overstreet continued the scheme by submitting more than 50 student loan applications through Wells Fargo. By the end of the scheme, when they had run out of church members who were actually enrolled in college, they began filing applications in the names of church members who were not enrolled in college. In total, the scheme sought to defraud the banks of more than $4 million in student loans. Fishers of Men nor anyone else made very few, if any, payments on the loans which were disbursed. Bank records confirmed the student loan proceeds were diverted to accounts controlled by Sheila Washington or Overstreet and not used for educational expenses.

Eric Washington’s guilty plea arose out of Fishers of Men’s participation in a FEMA-funded program that Harris County administered to reimburse groups providing shelter to Hurricane Katrina evacuees at $30/day per evacuee. Eric Washington and Felicha Williams, the church corporate secretary, signed a contract with Harris County to have Fishers of Men participate in the program and The Harris County Commissioner’s Court approved the Fishers’ contract on Oct. 26, 2005. The next day, Fishers of Men submitted an invoice stating that 250 evacuees stayed at Fishers of Men every single day in September and 118 evacuees staying every single day in October. According to Fishers of Men’s documents, 132 evacuees left on one day and no evacuees left at any other time. After Harris County questioned the accuracy of these numbers, Eric Washington sent a reply vouching for the accuracy of the numbers. This resulted in $320,580 in FEMA funds being paid to Fishers of Men. Eric Washington persuaded another individual to open bank accounts into which the FEMA funds were deposited. Washington either directly or through this person withdrew more than $100,000 during the month following receipt of the funds. Investigators located and interviewed a number of evacuees listed on the Fishers of Men reimbursement form. These evacuees consistently stated they stayed at Fishers for a far shorter period of time than claimed by Fishers (some only stayed a day or two but Fishers claimed they stayed at the shelter for 60 days); that the number of people listed for their family was inflated (e.g., a family of four stated that three other names listed with their last name and addresses were fictitious); and that the Fishers facility only had about 100 evacuees at the beginning and less than 50 evacuees by October. 

Williams is currently pending trial, set for Nov. 9, 2009. The indictment against her is a formal accusation of criminal conduct, not evidence. She is presumed innocent unless convicted through due process of law.

After investigators with First Marblehead Education Resources and Wells Fargo detected the student loan fraud, the case was investigated by the United States Secret Service and the Texas Department of Public Safety. The case is being prosecuted by Assistant United States Attorneys Gregg Costa and Jason Varnado.

 

 

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