Fayetteville woman pleads guilty to defrauding Department of Education in $5M student loan scam

FAYETTEVILLE, N.C. (WTVD) -- A Fayetteville woman has pleaded guilty after she was accused of defrauding the US Department of Education of $5 million in a student loan scam.

According to the Department of Justice, 59-year-old Cynthia Denise Melvin pled guilty to conspiracy to commit wire fraud in connection with the theft of millions from the federal student aid program.

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.

Court documents and other information presented in court stated that between 2016 and 2023 Melvin organized, led, and conspired with a ring of more than 70 "straw students" to fraudulently apply for financial aid at multiple community colleges in the Middle and Eastern districts of North Carolina. According to investigators, the estimated amount resulted in more than $5 million in fraudulent financial aid disbursements.

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Investigators said Melvin collected personal identifying information of straw students in NC and used the information to submit applications for admission at the targeted schools. She then attempted to make it appear that the students were attending classes, completing coursework, and communicating with the schools. To obtain financial aid, Melvin submitted FAFSA forms for the straw students through FSA's website, concealing her identity as the preparer of the documents. As a result of the scheme, the students were awarded tuition, which was wired from the United States Treasury to the targeted schools. The straw students also received student loan refunds, which the schools disbursed after collecting the tuition cost.

Authorities said that as the ringleader of the scheme, Melvin received a substantial portion of the refunds.

During the execution of a federal search warrant, investigators said documents and other evidence establishing the operation and mechanics of the scheme, including PII and coursework for the straw students, FSA account usernames and passwords, and bank account and routing numbers were recovered.

Melvin faces a statutory maximum sentence of 20 years, a $250,000 fine, and three years of supervised release. She will also be required to pay restitution.

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