In San Diego, the vocational school Blue Star Learning defrauded taxpayers of $29 million in GI Bill funds. Over four years, 1,100 veterans enrolled, ostensibly to learn computer skills. However, many only wanted the $3,000 monthly housing allowance, as shown in court documents obtained by The Washington Post.
Classes lasted 18 hours weekly to fake full-time student status. Many students spent time in class watching YouTube or socializing. Blue Star’s instructors pretended to teach while the school received federal tuition payments. Former admissions director Justin Foose noted the school’s fraudulent nature became evident when a regulator visited unexpectedly.
“Clear as day, everybody’s on videos, and there’s one instructor up there, picking his nose,” said Foose.
Blue Star Learning was part of a larger GI Bill racket called ‘ghost’ or ‘shell’ schools. Unlike other fraudulent schools, ghost schools rely on complicit veterans. Investigations since the Trump administration found 12 ghost schools defrauded the Department of Veterans Affairs (VA) of GI Bill benefits. These unaccredited, for-profit schools had students frequently skipping class or doing minimal work.
The GI Bill, established near the end of World War II, aims to help veterans gain skills for civilian jobs. It’s an $11 billion-a-year VA program covering 36 months of college or trade school tuition and providing housing subsidies. However, ghost schools exploit this by providing benefits without real education.
Veterans alleged participation in these schemes largely goes unpunished. Michelle Wasserman, a prosecutor for Blue Star, noted some veterans were uninterested in education.
“They go to a school like this, where they don’t have to do very much,” Wasserman said. “It’s kind of a fakey education and everyone is happy. The school owner gets a bunch of money, and the veterans get to keep their benefits.”
Federal oversight is lax. VA auditors are supposed to visit schools every two years. However, a VA Office of Inspector General report found 479 schools hadn’t had compliance visits in over three years. Furthermore, few standards ensure the quality of trade school education, unlike colleges that require accreditation.
Out of 12 schools facing government action, 10 were unaccredited, and few veterans faced prosecution amid such frauds. The Justice Department historically charged operators rather than veterans with such schemes. VA Inspector General Cheryl Mason noted the complexity of discerning veterans’ intent in enrolling.
“While veterans can be colluding in these cases,” Mason said, “oftentimes the veteran is a target.”
The Washington Post investigated ghost-school frauds, seeking records through the Freedom of Information Act. After legal action, VA released specific databases, law enforcement reports, and court records on this issue. VA officials, however, didn’t directly comment on the problem.
VA Press Secretary Quinn Slaven cited a White House anti-fraud task force as addressing waste and abuse in government programs. He accused state-level authorities of years of negligence, allowing fraud in the GI Bill program. Many states, in turn, complain VA hasn’t done enough or provided resources for fraud monitoring.
The California Department of Veterans Affairs first reported Blue Star as a scam in 2016, but closure took three more years.
Meanwhile, federal agents identified issues with other schools like California Technical Academy. An analysis pinpointed discrepancies, finding many veterans living far from their campuses—some even out of state. Intentionally or unintentionally, they’d enroll just for housing benefits.
During undercover operations, investigators visited campuses, noting poor attendance and records falsification. Some, like California Technical Academy, changed something that required restitution payments of millions of dollars for their fraud.
In Virginia, a welding school also scammed the VA for $1.4 million. A pastor-operated Hampton Roads Skills Center charged veterans between $500 and $1,000 for classes barely operating, while VA got charged significantly more.
The Post was ineffectual in uncovering all scams. These operations showed how nationwide oversight fails to detect and correct these fraudulent practices before they defraud taxpayer money extensively.