Markets Wired

At the Federal Trade Commission’s request, a U.S. district court in Florida has temporarily halted a diploma mill that allegedly grossed more than $11 million from marketing and selling fake high school diplomas online to consumers nationwide.

The court imposed a temporary restraining order to halt the business operations of Diversified Educational Resources, LLC (DER), and Motivational Management & Development Services, Ltd. (MMDS), and freeze their assets. The FTC’s lawsuit seeks a permanent injunction to stop the deceptive practices and to return ill-gotten gains to consumers.

According to the FTC’s complaint, DER and MMDS have sold online high school diplomas since 2006 using multiple names, including “Jefferson High School Online” and “Enterprise High School Online.” Their websites claimed that by enrolling in the defendants’ programs, consumers could obtain “official” and accredited high school diplomas and use them to enroll in college, join the military, and apply for jobs. The defendants charged students between $200 and $300 for a diploma, and a preliminary review of bank records suggests that defendants have taken in more than $11,117,800 since January 2009.

“A high school diploma is necessary for entry into college, the military, and many jobs,” said Jessica Rich, director of the FTC’s Bureau of Consumer Protection. “These defendants took students’ money but only provided a worthless credential that won’t help their future plans.” 

The complaint alleges that the defendants violated the FTC Act by misrepresenting that the diplomas were valid high school equivalency credentials and that the online schools were accredited. The FTC says the defendants actually fabricated an accrediting body to give legitimacy to the diploma mill operation.

Defendants in the case are DER, MMDS, and IDM Services LLC. Also named as defendants are Maria T. Garcia, principal owner and manager of DER and MMDS; Alexander Wolfram, principal owner of DER, MMDS, and IDM Services. Steinbock Holdings LLC, Zwillinge, LLC, Sylvia Gads, co-owner of Zwillinge, and Tiffany Chambers are named as relief defendants.

Students can learn more about diploma mills in the FTC’s blog post: These online high schools didn’t make the grade.

The Commission vote authorizing the staff to file the complaint was 5-0. It was filed under seal in the U.S. District Court for the Southern District of Florida, on Sept. 16, 2014, and the seal was lifted on Sept. 18, 2014.

NOTE: The Commission files a complaint when it has “reason to believe” that the law has been or is being violated and it appears to the Commission that a proceeding is in the public interest. The case will be decided by the court.

The Federal Trade Commission works for consumers to prevent fraudulent, deceptive, and unfair business practices and to provide information to help spot, stop, and avoid them. To file a complaint in English or Spanish, visit the FTC’s online Complaint Assistant or call 1-877-FTC-HELP (1-877-382-4357). The FTC enters complaints into Consumer Sentinel, a secure, online database available to more than 2,000 civil and criminal law enforcement agencies in the U.S. and abroad. The FTC’s website provides free information on a variety of consumer topics. Like the FTC on Facebook, follow us on Twitter, and subscribe to press releases for the latest FTC news and resources.