Peoria woman indicted in student aid scam

PHOENIX (AP) - A Peoria woman recruited as many as 136 people to pose as college students and defraud the government out of nearly $540,000 in student aid money, federal prosecutors said on Wednesday.

Trenda Lynne Halton, 37, was arrested Wednesday on charges of conspiracy, mail fraud, financial aid fraud and making false statements.

Halton and 64 people she allegedly recruited to take out loans or grants have been charged, according to indictments unsealed on Wednesday. Arrest warrants were issued for the 64 alleged fake students, U.S. Attorney for Arizona Diane Humetewa said.

Halton is accused of creating fake documents and helping people enroll in online classes at Rio Salado Community College in Tempe over a 15 month period beginning in July 2006. It is unclear if she has an attorney.

The alleged ruse was initially discovered by an alert financial aid officer at Rio Salado, Humetewa said at a news conference.

The indictment alleges that Halton charged the fake students between $500 and $1,500 each in exchange for her help applying for Pell Grants and Stafford Loans. The students then kept most of the money that came in.

In some cases, Halton is accused of creating fake documents, including high school diplomas and tax forms. Authorities say she maintained extensive records with personal information and documents both real and fake for 136 potential fake students, but the information was only sufficient to charge 64 of them.

Four of those charged are also accused of helping recruit fake students.

Natalie Forbort, special agent in charge at the U.S. Department of Education, said after a news conference Wednesday that federal aid dollars are limited, so financial aid for fake students limits the money available to real ones.

The Department of Education trains college financial aid workers how to spot fraud schemes, but people are always looking for loopholes in the system, Forbort said.

"Even if there's strong internal controls put in place, people will still use their intellect to defraud the programs," she said. "We want to make sure the money is available to the students who actually deserve it."