Fake degrees scandal: Axact pleads guilty in US court

ISLAMABAD: He escaped justice in Pakistan not knowing he will be brought to justice in the United States.

Umair Hamid, 31, of Karachi and one of the top executives of Axact Company, has pleaded guilty in a US court in connection with $140 million fake degree scandal. The offence carries a maximum sentence of 20 years imprisonment.

He had fled Pakistan with the alleged connivance of FIA. While Umair successfully manipulated the flawed criminal justice system in Pakistan where the corrupt go scot-free, he was left with no option but to plead guilty in the US.

Shoaib Sheikh, Viqas Atiq and several other officials of Axact who are facing similar allegations in Pakistan have in contrast succeeded in securing bails as the FIA didn’t pursue the case properly and instead cooperated with the accused through concealing the evidence in possession of investigators.

Umair pleaded guilty “before US District Judge Ronnie Abrams to conspiracy to commit wire fraud in connection with an international diploma mill scheme that collected tens of millions of dollars from thousands of customers,” according to an official handout from US attorney’s office put on Department of Justice website.

The maximum potential sentence is prescribed by Congress and is provided for informational purposes only, as any sentencing of the defendant will be determined by the judge.

Hamid is scheduled to be sentenced by Judge Abrams on July 21, 2017, at 3:00 pm.

He was arrested on Dec 19, 2016, according to a statement by former Manhattan US Attorney Preet Bharara. He was produced in a federal court in Fort Mitchell, Kentucky, the following day.

As alleged in the charge sheet to which Umair pleaded guilty and the related criminal complaint, he and his co-conspirators made false and fraudulent representations to consumers on websites and over the phone to trick them into enrolling in purported colleges and high schools, and issued fake diplomas upon receipt of upfront fees from consumers, the handout further explained.

Acting US Attorney Joon H. Kim said: “Operating from Pakistan, Umair Hamid helped fraudulently rake in millions of dollars from unwitting American consumers who paid to enroll in, and get degrees from, high schools and colleges that did not exist.

"As a result of his fraud, people who thought they were investing in an education received nothing more than worthless diplomas and a harsh lesson in the worldwide reach of deceit.

"Together with our partners at the FBI and the Postal Service, we will continue to work to protect consumers from scams that victimise our citizens.”

Kim praised the outstanding investigative work of the FBI and the US Postal Inspection Service.

Hamid served as Axact “Assistant Vice President of International Relations.” Among other things, he made various false and fraudulent representations to consumers in order to sell fake diplomas.

He controlled websites of purported “schools” that (1) falsely represented that consumers who “enrolled” with the schools by paying tuition fees would receive online instruction and coursework, (2) sold bogus academic “accreditations” in exchange for additional fees, (3) falsely represented that the schools had been certified or accredited by various educational organisations, and (4) falsely represented that the schools’ degrees were valid and accepted by employers, including in the United States.

As a further part of the scheme, Hamid and a co-conspirator (1) opened bank accounts in the United States in the names of shell entities, effectively controlled by Hamid, that received funds transferred by consumers in exchange for fake diplomas, (2) transferred funds from those bank accounts to bank accounts associated with other entities located elsewhere in the United States and abroad, at the direction of Hamid, and (3) opened and operated an account to collect and distribute consumer funds obtained in connection with their fraudulent scheme.

In May 2015, Axact was shut down by Pakistani law enforcement, and certain individuals associated with the company were prosecuted in Pakistan.

Nevertheless, after May 2015, Hamid resumed his fraudulent business of selling fake diplomas to consumers in the US for upfront fees based upon false and fraudulent representations.

Most recently, Hamid travelled to the United States in 2016 in order to open a bank account used to collect money from defrauded consumers.

Hamid, using the aliases “Shah Khan” and “Shah,” and others operated a massive education “diploma mill” through the Pakistani company “Axact,” which has described itself as one of the world’s leading information technology providers.

Axact promoted and claimed to have an affiliation with approximately 350 fictitious high schools and universities, which it advertised online to consumers as genuine schools.

During certain time periods since 2014, Axact received approximately 5,000 phone calls per day from individuals seeking to purchase the company products or enroll in educational institutions supposedly affiliated with it.

At least some of those consumers appeared to believe that they were calling phone numbers associated with the respective schools. When consumers asked where the schools were located, sales representatives were instructed to give fictitious addresses.

Once a consumer paid for a school certificate or diploma that falsely reflected a completed course of study,

Axact sales agents were trained to use sales techniques to persuade the consumer to purchase additional “accreditation” or “certifications” for such certificates or diplomas in order to make them appear more legitimate.

Axact, through Hamid and his co-conspirators, falsely “accredited” purported colleges and other educational institutions by arranging to have diplomas from these phony educational institutions affixed with fake stamps supposedly bearing the seal and signature of the US secretary of state, as well as various state agencies and federal and state officials.

The fate of Axact scandal in Pakistan and America has brought to sharp comparison the criminal justice system of the two countries.

Umair had confessed before a magistrate in Karachi what he has now pleaded guilty before an American judge. However, he made the confessional statement before magistrate as a prosecution witness and then fled abroad.

Later, he retracted, saying he was coerced into confession, a tactic about which FIA’s first prosecutor in the Axact case, Barrister Zahid Jamil, has forewarned.

Zahid thought he would make confession to extract concession in the form of his release only to retract later, therefore, he should not be made a prosecution witness.

However, FIA’s then director Karachi insisted Umair must be taken as prosecution witness. One of the two hard disks recovered from Axact was in possession of Umair who was a close confidante of Shoaib Sheikh.

The Axact case has largely been compromised notwithstanding the fact there are incriminating evidences to establish it. That four prosecutors have quit the case under threat is a clear indication of how a weak presentation is made before the court in order to extend favor to the accused.

Barrister Zahid Jameel, who was a pro bono counsel for the FIA in this case, was the first to quit.

Top accused failed to secure even bail from the court so long as he was putting up a strong defence against them, telling courts why keeping them in custody was important for a thorough and independent investigation.

The Axact building was also in the custody of the FIA by that time. The properties attached were not returned either.

Then one day, he mysteriously resigned after telling the judge that he couldn’t continue the case and follow his conscious at the same time due to some pressure.

His house was attacked later when anonymous attackers hurled a grenade there. 

His successors also kept the momentum as long as they were also not forced to quit.

The reason they cited was the “security situation in Karachi.” Investigation has virtually been halted now.

The evidence acquired from the FBI wherein the online universities being run by Axact were declared fraud, have also not been submitted to the court. Half of the bank accounts have not been frozen by FIA despite the court order.

The FIA prosecutors don’t appear quite often on the date of hearing of the case. Resultantly, the trial has not been started even after a passage of one and a half years when the scandal broke out.  Axact has resumed its work without any interruption from the FIA.