OAKLAND – California Attorney General Rob Bonta today announced the sentencing of four individuals for their roles in perpetrating a student loan assistance scam and related computer crimes through their now-defunct company, Student Loan Relief Department. The defendants’ company masqueraded itself as a legitimate source of help and feigned association with the U.S. Department of Education (ED) in order to gain the trust of distressed student loan borrowers and access their personal information. To execute the scam, the company’s employees were directed to access and disrupt student loan borrower account data, as well as create new student borrower accounts while posing as the borrowers, in violation of California’s computer crime laws.
“Too many Californians are already living paycheck to paycheck, wondering how they are going to pay off their student loans while also paying for rent, utilities, and other everyday expenses,” said Attorney General Rob Bonta. “The last thing they should have to worry about is predatory actors looking to turn a profit at their expense. Student Loan Relief Department's scam operation was deliberate and damaging, but thanks to the efforts of our team and our federal partners, those involved are being held accountable.”
“These individuals knowingly and willfully preyed on student loan borrowers in a deliberate and methodical way and will now be held accountable for their criminal actions,” said Thomas Harper, Special Agent in Charge of ED Office of Inspector General (OIG) Technology Crimes Division, the OIG unit that works to protect ED programs and network infrastructure by investigating technology crimes. “I’m proud of the work of the Office of Inspector General and our law enforcement partners in this matter and continuing our work to protect student borrowers from this type of calculated plunder.”
Student Loan Relief Department preyed on student borrowers struggling to repay their student loans. The scam involved convincing borrowers to pay a fee of up to $1,300 to participate in the company’s loan payment reduction programs including loan deferment and income-driven repayment. Borrowers paid the $1,300 fee through $39 monthly payments. However, many of the borrowers were unaware that the company’s payment reduction programs were already available through ED without charge and that the $39 monthly payments were neither a subscription service nor payments applied towards their federal student loans, but instead only payments on a high interest loan. The borrowers were purportedly obligated to continue making these high interest loan payments even if they attempted to cancel the company’s services. In order to facilitate the scam, the defendants used the Federal Student Aid website to illegally access student borrower records housed in computer systems belonging to ED.
In March 2020, the defendants were charged with a variety of crimes, including grand theft, unauthorized computer access, and altering computer information. Two of the defendants were sentenced on November 15, 2021, in Los Angeles County Superior Court. Christopher Lyell was sentenced to serve 120 days in custody, complete 100 hours of community service, pay $150,000 in victim restitution, and serve 2 years of felony probation. Bradley Hansen was sentenced to serve 180 days in custody, complete 100 hours of community service, pay $150,000 in victim restitution, and serve one year of probation. Defendant Paul Rehmar was sentenced on November 29, 2021, to serve 60 days of custody, two years of felony probation, and pay victim restitution. Defendant Kevin Rathburn was sentenced today, December 6, 2021, and will pay victim restitution. A final defendant, Hoke Nagahori, will complete a six-month diversion program, requiring 50 hours of community service, and payment of $30,000 in victim restitution.
The convictions and sentences are the result of an investigation by the California Department of Justice’s Consumer Protection Section and Division of Law Enforcement, Special Investigations Team with assistance from the Office of the Inspector General for the U.S. Department of Education and the U.S. Postal Inspection Service.