Fayetteville Woman Sentenced to Prison in a $3.5 Million in Federal Student Aid Scheme

WILMINGTON, N.C. – A Fayetteville woman was sentenced Tuesday to five years in prison followed by three years of supervised release for conspiracy to commit wire fraud in connection with the theft of millions from the federal student aid program.  Cynthia Denise Melvin, age 60, pled guilty to the charge on February 26, 2025.  The court also ordered Melvin to pay $3,641,473 in restitution to the U.S. Department of Education.

“This case represents one of the most significant federal student aid fraud schemes ever prosecuted in North Carolina,” said Acting U.S. Attorney Daniel P. Bubar. “We will continue to investigate and prosecute those who seek to steal from programs that help students who need it, as they pursue an education.”

“I’m proud of the work of OIG special agents and our law enforcement colleagues for shutting down yet another student aid fraud ring and holding Ms. Melvin accountable for her criminal actions,” said Andrew Balceniuk, Acting Special Agent in Charge of the U.S. Department of Education Office of Inspector General’s Eastern Regional Office. “The Office of Inspector General is committed to stopping student aid fraud rings, and we will continue to aggressively pursue anyone who participates in them.”

According to court documents and other information presented in court, between approximately 2016 and 2023, the defendant organized, led, and conspired with approximately 80 “straw students” and others to fraudulently apply for federal student aid at multiple community colleges in North Carolina, including Wake Technical Community College, Cape Fear Community College, and Fayetteville Technical Community College.  Federal investigators from the U.S. Department of Education, Office of Inspector General (OIG), estimate that the scheme resulted in more than $4.7 million in financial aid awards, of which more than $3.5 million was disbursed.  Based on the fraud losses, OIG indicates the scheme is the largest of its kind prosecuted in the State of North Carolina.

Federal Student Aid (FSA), an office within the U.S. Department of Education, is responsible for administering financial aid programs to assist qualified students in their pursuit of post-secondary education, including grants, loans, work study funds, and other disbursements.  FSA also develops, distributes, and processes the Free Application for Federal Student Aid or “FAFSA”.  After a school applies a financial award to a student’s tuition and fees, any remaining balance is refunded to the student for education-related expenses.

According to the investigation, Melvin collected personal identifying information (PII) of straw students in North Carolina and used that information to submit fraudulent applications for admission at the targeted schools. Thereafter, Melvin attempted to make it appear that the straw students were attending classes, completing coursework, and communicating with the targeted schools when, in fact, Melvin impersonated the straw students for these and other purposes.  To obtain financial aid, Melvin submitted FAFSA forms for the straw students through FSA’s website and concealed her identity as the preparer.

During the execution of a federal search warrant at Melvin’s residence, OIG investigators recovered evidence establishing the operation and mechanics of the scheme, including PII and coursework for straw students, FSA account usernames and passwords, and bank account and routing numbers.

Daniel P. Bubar, Acting United States Attorney for the Eastern District of North Carolina, made the announcement after sentencing by Chief Judge Richard E. Myers, II. The U.S. Department of Education, Office of Inspector General, investigated the case.  Assistant U.S. Attorney Adam F. Hulbig prosecuted the case.

Related court documents and information can be found on the website of the U.S. District Court for the Eastern District of North Carolina or on PACER by searching for Case No. 5:25-CR-14-M.