A U.S. Army veteran is going to prison after causing $48 million in federal student loans to get wiped out for hundreds of borrowers he claimed were permanently disabled military veterans — but they weren’t, federal prosecutors say.
The man scammed more than 500 people into paying him fees for what they thought was true student debt relief help and stole nearly $900,000 from them in total, according to the U.S. Attorney’s Office for the Northern District of Georgia.
Now De’reek Banks, 41, of Lithonia, Georgia will serve six years in federal prison after previously pleading guilty to theft of government property, an Aug. 23 news release from the attorney’s office says.
He must also pay back $910,416 as a result of his scheme, according to prosecutors.
McClatchy News contacted Banks’ attorney for comment on Aug. 24 and was awaiting a response.
Court documents show Banks and his attorney had sought a lesser sentence so he could return to his family faster, continue caring for his eight children and “resume his medical care outside of a prison facility.”
Beginning in 2019, Banks, a veteran who was injured during his Army service and continues to suffer medical issues as a result, began exploiting a federal student loan program meant for disabled veterans, according to court documents.
He did so by misleading hundreds of student loan borrowers about purported “special government programs” that could erase their loans, the release says.
In reality, Banks’ scam “relied” on lying to the U.S. Department of Education’s Federal Student Aid office by faking hundreds of Department of Veterans Affairs letters he submitted to the office, according to prosecutors.
Banks used these fake letters to claim each borrower, who paid him a fee for his help, was a total or permanently disabled military veteran, the release says. The false claims qualified the borrowers for student loan discharges.
As a result, millions in student debt was erased for the borrowers even though they were ineligible, according to prosecutors.
“He tricked borrowers into believing that he could legitimately obtain federal student loan discharges for them while attempting to defraud the U.S. government of almost 50 million dollars,” U.S. Attorney Ryan K. Buchanan said in a statement.
In a sentencing court document submitted by Banks attorney on behalf of him, the attorney argued that “the government has not suffered any actual loss from Mr. Banks’s activities” because the loan discharges his client caused were reversed.
In seeking a lesser sentence, Banks’ attorney asked prosecutors to take this into consideration, as well as the fact that his scam was a “nonviolent crime” and how he provides for his children, according to the sentencing court document which included letters from his family and friends describing his character.
“De’Reek’s big heart is ultimately what lead to the situation that we are in now,” a letter from Banks’ wife stated. “I realize that the charges brought against De’Reek are very serious and troubling. The bad he did was meant to help people and not harm them in anyway.”
Banks’ prison sentence will be followed by three years of supervised release, according to the attorney’s office.
Lithonia is roughly 20 miles east of Atlanta.
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