<p><strong>HONOLULU, HI</strong> – The owner of a Honolulu massage therapy school has pleaded guilty to federal charges, admitting his role in a complex scheme that defrauded the U.S. Department of Veterans Affairs (VA) of over $9.1 million intended for veteran education benefits, primarily targeting the Post-9/11 GI Bill program. Brian Matsudo, 58, entered a guilty plea to conspiracy to commit wire fraud, while two alleged co-conspirators, Marshall Scott, 39, and Raheem Wells, 37, face indictment on multiple felony charges related to the same scheme.</p>



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<p>The case casts a harsh light on the vulnerabilities of programs designed to support America&#8217;s veterans in their transition to civilian life. The Post-9/11 GI Bill represents a significant investment in the future of those who served, offering crucial <a class="wpil_keyword_link" href="https://www.fraudswatch.com/tag/financial-fraud/amp/" title="financial" data-wpil-keyword-link="linked" data-wpil-monitor-id="1460">financial</a> assistance for education and training.<sup></sup> The alleged siphoning of over $9 million from these earned benefits underscores the substantial scale of the fraud and the potential harm inflicted not only on taxpayers but also on the veterans whose opportunities were compromised.  ;</p>



<p>This article examines the intricate details of the alleged conspiracy, the laws and regulations governing VA education benefits, the roles of the federal agencies investigating the case, the broader context of fraud targeting veterans, and the profound impact such schemes have on the veteran community and public trust. The allegations paint a picture of deliberate deception aimed at exploiting a system built on the promise of supporting those who have sacrificed for the nation.</p>



<h2 class="wp-block-heading">The Alleged Scheme: Exploiting Veteran Benefits Through Deception (Nov 2016 – Nov 2022)</h2>



<h3 class="wp-block-heading">The Core Conspiracy</h3>



<p>According to court documents and the indictment, Brian Matsudo, Marshall Scott, and Raheem Wells engaged in a conspiracy spanning approximately six years, from November 2016 to November 2022. The central aim of this alleged conspiracy was to defraud the VA by submitting falsified information to secure millions in tuition assistance payments under the Post-9/11 GI Bill program. Federal prosecutors allege a coordinated effort involving the school&#8217;s owner, an employee responsible for VA certifications, and a former student turned recruiter, all working together to exploit the system for financial gain.</p>



<h3 class="wp-block-heading">Matsudo&#8217;s Role and School Non-Compliance</h3>



<p>At the heart of the scheme, prosecutors allege, was Brian Matsudo, the owner of the unnamed massage therapy training school in Honolulu. The indictment asserts that Matsudo knowingly and intentionally concealed the fact that his school failed to meet the VA&#8217;s stringent rules and regulations necessary for participation in the GI Bill program. This alleged concealment was critical, as compliance is a prerequisite for schools to receive VA tuition payments.</p>



<p>The specific nature of the school&#8217;s non-compliance was not detailed in the initial announcement, but the focus on this element suggests the scheme may have exploited regulations particularly relevant to vocational or non-accredited institutions, such as the massage therapy school Matsudo owned. The VA, through State Approving Agencies (SAAs), imposes specific requirements on schools seeking GI Bill eligibility.<sup></sup> While all schools must submit applications, catalogs detailing policies, and proof of providing credit for prior training, non-accredited institutions often undergo more rigorous scrutiny.<sup></sup> SAAs are tasked with verifying the financial soundness of these schools and their capacity to deliver the promised training.<sup></sup> Furthermore, a critical regulation known as the &#8220;2-year rule&#8221; generally requires private and non-profit educational institutions that do not offer a standard college degree to have been continuously operational and licensed for at least two years prior to receiving VA approval.<sup></sup> This rule is designed to prevent unstable or fraudulent &#8220;fly-by-night&#8221; operations from accessing VA funds. Matsudo&#8217;s alleged failure to disclose non-compliance could potentially relate to violations of these fundamental eligibility requirements, meaning the school may not have been qualified to receive <em>any</em> VA funds, regardless of student enrollment status.  ;</p>



<p>The VA relies on a decentralized system where SAAs in each state handle initial program approvals.<sup></sup> While these agencies act as gatekeepers, ongoing oversight and ensuring continued compliance across thousands of diverse institutions nationwide present significant challenges. Schools are often required to self-certify their adherence to regulations when submitting enrollment information.<sup></sup> This reliance on self-reporting and the fragmented nature of oversight, involving over 50 SAAs <sup></sup>, can create opportunities for fraudulent actors to conceal non-compliance, as alleged in Matsudo&#8217;s case. Past government reports have highlighted inconsistencies and weaknesses in this oversight structure.<sup></sup>  ;</p>



<h3 class="wp-block-heading">Scott&#8217;s Alleged Role: Falsifying Records</h3>



<p>Marshall Scott, who began working for Matsudo&#8217;s school around November 2016, allegedly played a crucial role in executing the fraud by handling the administrative interface with the VA. Prosecutors claim Scott submitted enrollment certification forms to the VA for at least 40 <a class="wpil_keyword_link" href="https://www.fraudswatch.com/category/military-scammer/amp/" title="military" data-wpil-keyword-link="linked" data-wpil-monitor-id="1461">military</a> veterans purportedly attending the massage school. The indictment explicitly states that Scott <em>knew</em> these forms contained false information about student enrollment.</p>



<p>Critically, Scott is also accused of falsely certifying that the school was in compliance with all applicable VA rules and regulations. This act of false certification strikes at the core of the VA&#8217;s administrative controls. The VA system heavily relies on the designated School Certifying Officials (SCOs) at each institution to accurately report enrollment data and attest that the school meets all program requirements.<sup></sup> By allegedly submitting certifications known to be false, Scott is accused of directly subverting the mechanism designed to ensure program integrity, exploiting the trust placed in SCOs and potentially capitalizing on the VA&#8217;s practical limitations in independently verifying every detail submitted by thousands of participating schools nationwide.  ;</p>



<h3 class="wp-block-heading">Wells&#8217; Alleged Role: Recruiting &#8220;Paper Students&#8221;</h3>



<p>Raheem Wells, initially a student at the school in 2020 and 2021, allegedly transitioned into a recruitment role alongside Scott from approximately May 2020 until the scheme&#8217;s end in November 2022. According to the indictment, Wells and Scott actively recruited individuals, referred to as &#8220;students,&#8221; who agreed to allow the school to falsely represent them to the VA as being genuinely enrolled and attending courses. Prosecutors contend these individuals were essentially &#8220;paper students,&#8221; enabling the school to claim tuition and potentially other benefits like housing allowances without providing legitimate education.</p>



<p>This alleged tactic of creating &#8220;nonexistent students on paper&#8221; aligns directly with known fraud indicators identified by the VA Office of Inspector General (OIG) in its public fraud alerts concerning education benefit scams.<sup></sup> The VA OIG specifically warns about schemes where students only need to sign in but not attend classes, where payment is offered for registration without attendance, where no actual coursework or exams are required, and where reported student numbers do not match actual attendance.<sup></sup> The alleged actions of Wells and Scott fit squarely within this documented pattern of abuse, suggesting the Hawaii case employs methods seen in other GI Bill fraud attempts across the country. This underscores the persistent challenge the VA faces in detecting and preventing schools from collecting benefits for students who are not receiving genuine training.  ;</p>



<h3 class="wp-block-heading">Alleged Profiteering</h3>



<p>The indictment alleges a clear financial motive driving the conspiracy. Matsudo allegedly used the tuition payments received from the VA, funds obtained through the fraudulent certifications, to pay Scott for each &#8220;paper student&#8221; he and Wells recruited. Wells, in turn, allegedly received monthly payments directly from the individuals he recruited to participate in the scheme. This alleged flow of funds illustrates how the scheme purportedly benefited all three defendants at the expense of the VA education programs.</p>



<h2 class="wp-block-heading">The Post-9/11 GI Bill: An Earned Benefit, A Sacred Trust</h2>



<p>The Post-9/11 GI Bill, officially known as Chapter 33, stands as a landmark piece of legislation, representing a solemn promise to those who have served in the U.S. military following the events of September 10, 2001.<sup></sup> It is crucial to understand that this is not an entitlement program but an <em>earned benefit</em>, awarded in recognition of service and sacrifice. Its primary purpose is to provide veterans and eligible service members with the financial resources needed to pursue higher education, vocational training, or other approved programs, thereby facilitating their successful transition into civilian careers and lives.<sup></sup>  ;</p>



<p>The benefits provided under the Post-9/11 GI Bill are substantial and comprehensive, reflecting the nation&#8217;s commitment to its veterans:</p>



<ul class="wp-block-list">
<li><strong>Tuition and Fees:</strong> For veterans qualifying for the maximum benefit (typically based on length of service), the program covers the full cost of public, in-state tuition and fees. For private or foreign institutions, the VA pays up to a national maximum amount, which is adjusted annually. </li>



<li><strong>Monthly Housing Allowance (MHA):</strong> Eligible students attending school more than half-time receive a monthly housing stipend, generally based on the Basic Allowance for Housing (BAH) for an E-5 service member with dependents, calculated according to the school&#8217;s zip code. This recognizes the significant cost of living expenses students face. </li>



<li><strong>Books and Supplies Stipend:</strong> An annual stipend is provided to help cover the costs of textbooks and other necessary educational materials, paid proportionally each term. </li>



<li><strong>Yellow Ribbon Program:</strong> For veterans attending more expensive private institutions or facing out-of-state tuition at public schools that exceed the standard VA caps, the Yellow Ribbon Program allows participating institutions to voluntarily contribute additional funds, which the VA matches, further reducing the student&#8217;s out-of-pocket costs. </li>



<li><strong>Transfer of Entitlement (TOE):</strong> Qualifying service members with sufficient time in service may transfer their unused GI Bill benefits to their spouse or dependent children, extending the educational opportunity to military families. </li>



<li><strong>Diverse Program Coverage:</strong> The GI Bill supports a wide array of educational and training pathways, including undergraduate and graduate degrees, vocational and technical training (like massage therapy), non-college degree programs, on-the-job training (OJT) and apprenticeships, flight training, entrepreneurship training, licensing and certification exams, and even correspondence or distance learning programs. </li>
</ul>



<p>Eligibility for the Post-9/11 GI Bill generally requires a minimum period of active duty service after September 10, 2001, typically 90 days, with benefit levels tiered based on cumulative service length.<sup></sup> Those serving at least 36 months or those discharged with a service-connected disability after 30 continuous days usually qualify for the 100% benefit level.<sup></sup> Importantly, the &#8220;Forever GI Bill&#8221; (Harry W. Colmery Veterans Educational Assistance Act) removed the 15-year time limit to use benefits for individuals whose last discharge occurred on or after January 1, 2013.<sup></sup>  ;</p>



<p>While the generosity and flexibility of the Post-9/11 GI Bill are vital for supporting veterans, the significant monetary value involved—often tens of thousands of dollars per student annually covering tuition, housing, and stipends—unfortunately creates a substantial target for fraud.<sup></sup> The sheer scale of the program, having disbursed over $94 billion by 2019 <sup></sup>, and the complexity of its various benefit calculations and program rules, present numerous potential avenues for exploitation through misrepresentation, falsification, and manipulation, as alleged in the $9.1 million Hawaii scheme. The very features designed to make the program accessible and beneficial for veterans can inadvertently increase its vulnerability to those seeking illicit gain.  ;</p>



<h2 class="wp-block-heading">Guarding the Funds: VA School Approval and Compliance</h2>



<p>Ensuring that the billions of dollars allocated to the GI Bill reach legitimate educational programs and deserving veterans requires a multi-layered system of approval and oversight, though one that faces inherent challenges.</p>



<h3 class="wp-block-heading">The Gatekeepers: State Approving Agencies (SAAs)</h3>



<p>The primary responsibility for approving education and training programs for GI Bill eligibility generally rests with State Approving Agencies (SAAs) in each state and territory.<sup></sup> These state-level bodies serve as the initial point of contact and evaluation for institutions wishing to participate in VA education programs. They review applications and determine if programs meet the criteria set forth in federal law and VA regulations.<sup></sup>  ;</p>



<h3 class="wp-block-heading">Approval Requirements</h3>



<p>To gain approval, schools must typically submit a formal application along with a comprehensive catalog or bulletin. This documentation must detail the school&#8217;s policies regarding graduation requirements, attendance, academic progress standards, tuition and fees, and program outlines.<sup></sup> Schools are also required to maintain written records demonstrating they appropriately evaluate and grant credit for prior education and training veterans may have received.<sup></sup>  ;</p>



<h3 class="wp-block-heading">Stricter Scrutiny for Certain Schools</h3>



<p>The approval process often involves heightened scrutiny for specific types of institutions, particularly non-accredited schools like the massage therapy school allegedly operated by Matsudo.<sup></sup> Because these schools lack the external validation provided by recognized accrediting bodies, SAAs bear a greater responsibility for verifying their legitimacy and quality. This includes conducting a more thorough review of the institution&#8217;s financial soundness to ensure it has the resources to operate and fulfill its training commitments, as well as potentially examining enrollment limitations.<sup></sup>  ;</p>



<h3 class="wp-block-heading">Key Compliance Rules and Prohibitions</h3>



<p>Beyond initial approval, schools must adhere to ongoing compliance rules to remain eligible for GI Bill funds. Several key regulations appear potentially relevant to the allegations in the Hawaii case:</p>



<ul class="wp-block-list">
<li><strong>The &#8220;2-Year Rule&#8221;:</strong> As previously mentioned, private or non-profit vocational schools typically must have been legally operating and approved by relevant state authorities for at least two years before they can be approved for GI Bill funding. This rule is a safeguard against fraudulent startups. A failure to meet this requirement, if applicable and concealed, would represent significant non-compliance. </li>



<li><strong>The &#8220;85-15 Rule&#8221;:</strong> Generally, VA regulations prohibit paying benefits if more than 85 percent of the students enrolled in a specific program are having their tuition, fees, or other charges paid by the VA or the institution itself. This rule aims to ensure that programs have value in the open market and are not solely dependent on or predatory towards veteran students. While not explicitly mentioned in the indictment summary, violations of this rule are a common compliance issue. </li>



<li><strong>Accurate Certification:</strong> Schools, through their SCOs, have a fundamental obligation to submit truthful and accurate enrollment certifications to the VA. Submitting forms with false enrollment data or falsely attesting to compliance, as alleged against Scott, is a direct violation of this requirement. </li>



<li><strong>Program Integrity:</strong> VA regulations also prohibit funding for programs deemed purely avocational (hobby-related) rather than vocational. Additionally, if a school contracts with a third party to provide training, that third party must generally obtain its own separate VA approval. </li>
</ul>



<p>The reliance on SAAs for approvals and the critical role of SCOs in certifying enrollment and compliance create a system where integrity and vigilance are paramount. However, the decentralized nature of SAA oversight and the sheer volume of certifications processed by the VA present ongoing challenges in ensuring nationwide consistency and proactively detecting fraud across thousands of institutions.<sup></sup> The Hawaii case serves as a stark example of how these systems can allegedly be manipulated when individuals are determined to defraud the program.  ;</p>



<h2 class="wp-block-heading">The Legal Gauntlet: Charges, Pleas, and Potential Penalties</h2>



<p>The federal government has brought serious charges against the three individuals implicated in the Hawaii GI Bill fraud scheme, carrying the potential for substantial prison time.</p>



<h3 class="wp-block-heading">Specific Charges Explained</h3>



<ul class="wp-block-list">
<li><strong>Conspiracy to Commit Wire Fraud (18 U.S.C. § 371):</strong> This charge, to which Brian Matsudo pleaded guilty, alleges an agreement between two or more persons to commit the crime of wire fraud. Federal conspiracy law requires not just the agreement but also that at least one conspirator took a concrete step (an &#8220;overt act&#8221;) in furtherance of the plot. The crime is the agreement itself, aimed at achieving an unlawful goal using interstate wires. Generally, conviction under this statute carries a maximum penalty of five years in prison. </li>



<li><strong>Wire Fraud (18 U.S.C. § 1343):</strong> Marshall Scott and Raheem Wells each face three counts of this charge. Wire fraud involves devising or intending to devise a scheme to defraud someone of money, property, or honest services, and using interstate or international wire communications (such as the internet, email, or phone systems) to execute that scheme. Key elements prosecutors must prove include the existence of a fraudulent scheme involving material misrepresentations or omissions, the use of wire communications in furtherance of the scheme, and the defendant&#8217;s intent to defraud. Each count of wire fraud carries a maximum penalty of 20 years in prison. </li>



<li><strong>Obstruction of Justice (e.g., 18 U.S.C. § 1512):</strong> Raheem Wells faces an additional charge of obstruction of justice. Broadly, this involves corruptly influencing, obstructing, or impeding government proceedings, such as investigations or court cases. The specific allegation against Wells is that he instructed a witness to lie to federal law enforcement agents investigating the scheme. Federal law prohibits tampering with witnesses, victims, or informants, including attempting to hinder their communication with law enforcement. Like wire fraud, conviction for this offense carries a maximum penalty of 20 years in prison. </li>
</ul>



<h3 class="wp-block-heading">Indictment vs. Guilty Plea/Conviction</h3>



<p>It is essential to distinguish between the legal statuses of the defendants. An indictment, secured by prosecutors presenting evidence to a grand jury, is a formal accusation indicating probable cause exists to believe a crime was committed.<sup></sup> It is not a determination of guilt.<sup></sup> Both Marshall Scott and Raheem Wells are currently under indictment and, under the U.S. legal system, are presumed innocent until proven guilty beyond a reasonable doubt in a court of law.<sup></sup>  ;</p>



<p>Brian Matsudo, however, has pleaded guilty to one count of conspiracy to commit wire fraud. A guilty plea is a formal admission of guilt to the specific charge. While it resolves the charge against him without a trial, it constitutes a conviction upon acceptance by the court.</p>



<h3 class="wp-block-heading">Sentencing Factors</h3>



<p>Brian Matsudo now awaits sentencing, and should Scott and Wells be convicted, they too will face a sentencing hearing. A federal district court judge will determine the appropriate sentence, guided by several factors:</p>



<ul class="wp-block-list">
<li><strong>The U.S. Sentencing Guidelines:</strong> Created by the U.S. Sentencing Commission, these guidelines provide a framework for federal judges, although they are advisory rather than mandatory. The guidelines calculate a recommended sentencing range based on the seriousness of the offense (determined by a base offense level, adjusted for specific characteristics like the amount of financial loss involved in fraud) and the defendant&#8217;s criminal history category. For fraud cases involving significant loss like the $9.1 million alleged here, the offense level can increase substantially. </li>



<li><strong>Adjustments:</strong> The guideline calculation also incorporates adjustments for various factors, such as the defendant&#8217;s role in the offense (leader, minimal participant, etc.) and whether they obstructed justice. Wells&#8217; alleged instruction to a witness to lie could potentially trigger an upward adjustment for obstruction of justice in his sentencing calculation. </li>



<li><strong>Acceptance of Responsibility:</strong> Defendants who plead guilty and demonstrate genuine remorse, like Matsudo, may receive a downward adjustment (reduction) in their offense level calculation for accepting responsibility. </li>



<li><strong>Other Statutory Factors (18 U.S.C. § 3553(a)):</strong> Beyond the guidelines, the judge must consider broader statutory factors, including the nature and circumstances of the offense, the history and characteristics of the defendant, the need for the sentence to reflect the crime&#8217;s seriousness, promote respect for the law, provide just punishment, deter future crime, protect the public, and provide the defendant with needed training or treatment.</li>
</ul>



<p>The potential for decades-long sentences, particularly for the wire fraud and obstruction charges faced by Scott and Wells, reflects the federal government&#8217;s serious stance against large-scale fraud targeting taxpayer-funded programs and any efforts to impede the course of justice.<sup></sup> The higher maximum penalties for these substantive offenses compared to the general conspiracy charge Matsudo pleaded to underscore the perceived severity of the underlying fraudulent acts and the alleged attempt to cover them up.<sup></sup>  ;</p>



<h2 class="wp-block-heading">A Pattern of Predation: VA Education Benefit Fraud</h2>



<p>The alleged $9.1 million scheme in Hawaii, while significant, is unfortunately not an isolated phenomenon. Fraud targeting VA education benefits represents a persistent challenge, costing taxpayers billions and harming the veterans these programs are meant to serve.<sup></sup> Government watchdogs like the VA OIG and the Government Accountability Office (GAO) have repeatedly raised concerns about improper payments, program vulnerabilities, and oversight weaknesses within the GI Bill system.<sup></sup>  ;</p>



<h3 class="wp-block-heading">Common Schemes and Tactics</h3>



<p>Fraudsters employ a variety of tactics to exploit VA education benefits, often exhibiting patterns seen across different cases, including elements alleged in the Hawaii investigation:</p>



<ul class="wp-block-list">
<li><strong>Fake or Ineligible Students:</strong> A common method involves enrolling individuals who have no intention of attending classes or completing coursework, simply to collect tuition and housing payments. This includes creating &#8220;paper students&#8221; or paying individuals small sums to lend their identities to the scheme. </li>



<li><strong>School Compliance Violations:</strong> Schools may operate without proper state licenses or VA approval, fail to meet accreditation standards, violate rules like the 85/15 or 2-year regulations, or simply falsify compliance documentation submitted to the VA. </li>



<li><strong>Diploma Mills and Low-Quality Programs:</strong> Some institutions, particularly predatory for-profit schools, aggressively recruit veterans into programs offering worthless degrees or certifications, lacking proper accreditation or failing to provide meaningful job skills. They misrepresent job placement rates, potential earnings, or the transferability of credits. </li>



<li><strong>Aggressive and Deceptive Recruiting:</strong> High-pressure sales tactics, false promises of guaranteed jobs or quick degrees, and specific targeting of veterans and their benefits are hallmarks of predatory schools. </li>



<li><strong>Financial Schemes:</strong> Beyond tuition fraud, scams can involve charging veterans exorbitant or hidden fees, offering predatory loans, engaging in &#8220;pension poaching&#8221; (manipulating assets to feign eligibility for benefits), benefits buyouts (offering a lump sum for future benefits), or using phishing tactics to steal financial information or VA login credentials. </li>
</ul>



<h3 class="wp-block-heading">VA OIG Red Flags</h3>



<p>The VA OIG actively investigates education fraud and provides resources to help veterans and the public identify potential scams. Based on their investigations, they have highlighted several warning signs that should raise concerns.<sup></sup> The table below summarizes key indicators, some of which mirror the allegations in the Hawaii case:  ;</p>



<figure class="wp-block-table"><table class="has-fixed-layout"><tbody><tr><th>Warning Sign / Indicator</th><th>Description / Example</th></tr><tr><td><strong>Non-Attendance Enrollment</strong></td><td>Students report they only need to sign in or register but are not required to attend classes or participate meaningfully. <sup></sup></td></tr><tr><td><strong>Payment for Non-Attendance</strong></td><td>Students are offered payments or incentives simply for enrolling or allowing their name to be used, without attending classes. <sup></sup></td></tr><tr><td><strong>Lack of Academic Rigor</strong></td><td>No books, supplies, or exams are required for the course; instructors differ from those advertised. <sup></sup></td></tr><tr><td><strong>School Compliance Warnings</strong></td><td>The official VA GI Bill Comparison Tool shows warnings about the school; regulators find repeated non-compliance issues. <sup></sup></td></tr><tr><td><strong>Misleading Job/Skill Promises</strong></td><td>School promises guaranteed job placement or specific skills/certifications, but graduates find they lack qualifications. <sup></sup></td></tr><tr><td><strong>Tuition Discrepancies</strong></td><td>School bills VA a higher rate than advertised to non-veteran students or offers discounts only to non-veterans. <sup></sup></td></tr><tr><td><strong>Unaccredited/Recently Established</strong></td><td>School lacks proper accreditation or has been operating for less than two years (potential 2-year rule violation). <sup></sup></td></tr><tr><td><strong>High-Pressure Tactics</strong></td><td>Recruiters use aggressive tactics, pressure veterans to enroll quickly, or discourage research. <sup></sup></td></tr><tr><td><strong>Discrepancies in Student Numbers</strong></td><td>The number of students reported to VA does not align with actual attendance; creation of &#8220;nonexistent students on paper.&#8221; <sup></sup></td></tr><tr><td><strong>Lack of Transparency/Record Keeping</strong></td><td>School is evasive about costs or outcomes, lacks written policies, or cannot produce requested records. <sup></sup></td></tr></tbody></table></figure>



<p>The recurrence of these tactics across numerous investigations suggests that the vulnerabilities exploited in the Hawaii case are not unique. Persistent issues with verifying student attendance, ensuring school compliance (especially for the diverse landscape of vocational and for-profit schools), and relying on self-certification create ongoing risks. Bad actors appear adept at identifying and exploiting these gaps in oversight mechanisms, leading to repeated instances of fraud that harm both veterans and taxpayers.<sup></sup>  ;</p>



<h2 class="wp-block-heading">The Watchdogs: Agencies Combating VA Fraud</h2>



<p>Combating sophisticated fraud schemes like the one alleged in Hawaii requires a coordinated effort from multiple federal agencies, each bringing specialized expertise to the table.</p>



<h3 class="wp-block-heading">Collaborative Investigation</h3>



<p>The investigation leading to the charges against Matsudo, Scott, and Wells was a collaborative effort involving several key players:</p>



<ul class="wp-block-list">
<li><strong>Department of Justice (DOJ) Criminal Division, Fraud Section:</strong> This specialized section within the DOJ headquarters focuses on investigating and prosecuting complex white-collar crimes nationwide, including large-scale financial fraud, healthcare fraud, and foreign corruption. They possess deep expertise in handling intricate cases and play a significant role in developing the DOJ&#8217;s corporate enforcement policies. The lead prosecutors in the Hawaii case, Trial Attorneys Ariel Glasner and Jennifer Bilinkas (for Matsudo) and Trial Attorney Glasner (for Scott and Wells), hail from this section. </li>



<li><strong>U.S. Attorney&#8217;s Office (USAO) for the District of Hawaii:</strong> As the chief federal law enforcement office for the district, the USAO is responsible for prosecuting federal crimes occurring within Hawaii and representing the U.S. government in federal court there. They provide local expertise and handle the court proceedings.</li>



<li><strong>VA Office of Inspector General (VA OIG):</strong> This independent office within the VA is specifically mandated to conduct audits and investigations into all VA programs and operations to detect and prevent fraud, waste, abuse, and mismanagement. Their investigators possess specialized knowledge of VA regulations and benefit programs, making them crucial in identifying schemes targeting veterans. </li>



<li><strong>Federal Bureau of Investigation (FBI), Honolulu Field Office:</strong> The FBI serves as the nation&#8217;s principal federal law enforcement agency, with broad jurisdiction over federal crimes, including white-collar offenses like corporate and financial institution fraud, money laundering, and public corruption. They bring significant investigative resources and expertise in complex criminal probes. </li>
</ul>



<p>The involvement of these distinct agencies underscores the multifaceted nature of the alleged crime. Successfully unraveling a $9.1 million scheme requires expertise in VA program rules (VA OIG), complex financial analysis and prosecution strategies for white-collar crime (DOJ Fraud Section, FBI), and navigating the local federal court system (USAO Hawaii). Such collaboration is essential to pool the necessary resources and skills to tackle sophisticated government benefit fraud effectively.</p>



<h2 class="wp-block-heading">The Human Toll: Impact on Veterans and Taxpayers</h2>



<p>The consequences of VA education benefit fraud ripple far beyond the balance sheets, inflicting tangible harm on individual veterans and imposing significant costs on the American public.</p>



<h3 class="wp-block-heading">Harm to Veterans</h3>



<p>When funds designated for veteran education are stolen or misused, the primary victims are the veterans themselves:</p>



<ul class="wp-block-list">
<li><strong>Theft of Opportunity:</strong> Fraud directly depletes resources intended to help veterans build skills and careers after service. Every dollar diverted is a dollar not available for legitimate educational pursuits. </li>



<li><strong>Wasted Benefits:</strong> Veterans enrolled in fraudulent schools or programs, like those allegedly run by Matsudo, waste precious months of their hard-earned GI Bill eligibility. These benefits are finite, and time spent at a sham institution often yields worthless credits that don&#8217;t transfer, potentially preventing the veteran from ever completing a meaningful degree or certification program. </li>



<li><strong>Unexpected Debt:</strong> Veterans may find themselves unexpectedly indebted if the VA attempts to recoup improperly paid tuition or housing allowances, even if the veteran was unaware of the school&#8217;s fraudulent activity. They may also have taken out supplementary loans based on the false premise of a legitimate education. </li>



<li><strong>Erosion of Trust:</strong> Being victimized by institutions purporting to serve them can severely damage veterans&#8217; trust in the education system and potentially in the VA itself, discouraging them from pursuing further education or seeking assistance. </li>
</ul>



<h3 class="wp-block-heading">Cost to Taxpayers</h3>



<p>The financial burden of VA education fraud falls squarely on the American taxpayer:</p>



<ul class="wp-block-list">
<li><strong>Direct Financial Loss:</strong> The $9.1 million allegedly defrauded in the Hawaii case represents a direct loss of taxpayer funds. This is part of a much larger problem; GAO has estimated total annual federal fraud losses across all programs could range from $233 billion to $521 billion. VA OIG audits have projected hundreds of millions in annual improper payments and missed recoupments specifically within the GI Bill program. </li>



<li><strong>Investigation and Prosecution Costs:</strong> Significant public resources are expended investigating and prosecuting these complex fraud cases, involving hours of work by agents, analysts, and attorneys across multiple agencies. </li>



<li><strong>Benefit Restoration Costs:</strong> In cases of large-scale school closures resulting from fraud or mismanagement (like ITT Tech and Corinthian Colleges), Congress has sometimes acted to restore the GI Bill benefits of affected veterans, representing an additional cost to taxpayers necessary to rectify the harm caused by predatory institutions. </li>
</ul>



<h3 class="wp-block-heading">Broader Systemic Impact</h3>



<p>Beyond the immediate victims and financial costs, such fraud undermines the integrity and purpose of the GI Bill itself. It tarnishes the reputation of a vital program designed to honor and support veterans.<sup></sup> High-profile fraud cases can lead to increased scrutiny and potentially burdensome regulations that may inadvertently affect legitimate schools and make it harder for veterans to access their benefits smoothly.<sup></sup> It fuels a cycle of predation, investigation, and reaction that ultimately detracts from the program&#8217;s core mission. The impact is thus multi-layered: a theft of earned opportunity from veterans, a significant financial drain on taxpayers, and damage to the integrity of a program central to the nation&#8217;s promise to those who served.  ;</p>



<h2 class="wp-block-heading">Conclusion: Seeking Justice and Protecting Veteran Benefits</h2>



<p>The federal case unfolding in Hawaii represents a significant effort to address alleged large-scale fraud targeting the Post-9/11 GI Bill. Brian Matsudo&#8217;s guilty plea to conspiracy marks a step towards accountability, with his sentencing pending before a federal judge. Marshall Scott and Raheem Wells face serious allegations, including multiple counts of wire fraud and, for Wells, obstruction of justice. They remain presumed innocent, and the government bears the burden of proving the charges against them beyond a reasonable doubt should their cases proceed to trial.</p>



<p>Officials involved in announcing the charges emphasized the commitment of federal law enforcement and oversight agencies to protect the integrity of VA programs and ensure that benefits earned by veterans are used for their intended purpose – supporting education and opportunity, not enriching fraudsters. The collaborative investigation by the DOJ Criminal Division&#8217;s Fraud Section, the U.S. Attorney&#8217;s Office for the District of Hawaii, the VA Office of Inspector General, and the FBI highlights the resources being deployed to combat this type of crime.</p>



<p>The VA OIG and FBI investigations are ongoing. Vigilance remains crucial, both from oversight bodies and the public. Individuals suspecting fraud related to VA benefits are encouraged to report their concerns through official channels, such as the VA OIG Hotline (1-800-488-8244 or www.va.gov/oig/hotline).<sup></sup>  ;</p>



<p>As the legal process continues for Scott and Wells, it is imperative to remember the fundamental principle of American justice: an indictment is merely an allegation. All defendants are presumed innocent until proven guilty beyond a reasonable doubt in a court of law. The outcome of this case will be closely watched by the veteran community, policymakers, and taxpayers concerned with safeguarding the promise of the GI Bill.</p>



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