Lifetime Citizen Portal Access — AI Briefings, Alerts & Unlimited Follows
Legislative audit finds FAFSA/transcript fraud at East Arkansas Community College; UA System report referred to prosecutors
Loading...
Summary
Audit staff reported three findings in the University of Arkansas System report, including a fraud scheme at East Arkansas Community College involving falsified transcripts and FAFSA applications (39 suspect records; seven students received federal aid), unauthorized purchases at UAPB ($37,000), and unallowable Veterans Upward Bound charges at Fayetteville ($8,500, $6,700 recovered).
The Arkansas Legislative Audit Committee reviewed an internal audit of the University of Arkansas System that identified three findings, including a fraud scheme at East Arkansas Community College (EACC) involving falsified transcripts and Free Application for Federal Student Aid (FAFSA) submissions.
Audit staff told the committee the system’s internal-audit division certified the UA System report to the governmental bonding board and referred the matters to the applicable prosecuting attorney and the Arkansas Attorney General for potential criminal review. Legislative audit staff summarized three primary findings: unauthorized purchases at the University of Arkansas at Pine Bluff (UAPB), a fraud scheme at EACC tied to falsified transcripts and FAFSA submissions, and unallowable charges to the Veterans Upward Bound program at the University of Arkansas, Fayetteville (UAF).
Kathy Klein, chancellor of East Arkansas Community College, described how campus staff identified irregular admissions records and, with system auditors, found 39 students who had submitted falsified transcripts. “We stopped them by saying no. We’re kicking you out from admittance to the college based on falsified records,” Klein told the committee, saying the college removed suspected records before most federal aid disbursements. Klein said the campus and system teams created a cross‑department student‑validity team and a 4½‑page list of red flags and protocols to detect and investigate suspicious applications, including ID checks, outreach to high schools and remote identity verifications.
Audit staff reported that of the instances identified, seven students had federal aid disbursed before the college could remove them; the university reported reimbursing $2,500 tied to aid already paid. Staff said the fraud scheme accounted for a reported $66,000 in questioned transactions. Auditors also described an unrelated UAPB finding that identified about $37,000 in unauthorized purchases and said the employee responsible was terminated. The UAF finding concerned $8,500 in unallowable charges to the Veterans Upward Bound program; the university recovered $6,700 and reported $1,800 outstanding at the time of the audit.
Committee members asked how the scheme was detected and whether national FAFSA changes in 2024 contributed. Klein and system staff said campuses were already under pressure to adapt to FAFSA changes and greater online activity, and that those factors may have coincided with an increase in identity‑based fraud, but they stopped short of attributing causation to a single federal change. “It’s a nationwide problem,” Klein said, and described sharing red‑flag protocols across system campuses.
Legislative audit staff told the committee that campuses must follow statutory reporting timelines when losses occur and that, depending on the case, campus police or prosecutors may be involved early in investigations. Staff recommended the committee file the report; without objection the committee agreed to file and accepted staff’s recommendation that the audit be refiled and that the UA System findings be referred to prosecutors for further action.
Next steps include any prosecutorial decisions, and campus and system officials told the committee they would cooperate with further investigations. University management provided responses to each audit finding and attended the meeting to answer members’ questions.
