In a recent federal indictment, three men have been charged with running a multi-million-dollar scheme to defraud the U.S. Department of Veterans Affairs (VA) by abusing the Post-9/11 GI Bill and other education benefits.
Federal prosecutors claim that the trio falsely enrolled veterans in a massage therapy school in Hawaii that had failed to meet VA compliance standards, defrauding taxpayers of more than $9.1 million over six years, per the Department of Justice.
The men named in the indictment are Brian Matsudo, 58, of Honolulu; Marshall Scott, 39, of Kapolei, Hawaii; and Raheem Wells, 37, of Indianapolis, Indiana.
Matsudo, who owned the massage school at the center of the scandal, pleaded guilty last month to conspiracy to commit wire fraud and now faces up to five years in federal prison.
The DOJ’s report states that Matsudo partnered with Scott, who began working at the sketchy massage school in 2016. Together, they submitted false enrollment certifications for at least 40 separate military veterans. These certifications misrepresented the students’ attendance and the school’s compliance with VA regulations, allowing them to “siphon off” large sums of money hidden as tuition payments.
Wells, a former student of the school, allegedly joined the conspiracy in 2020. Prosecutors say he helped recruit others to pose as students throughout the community, some of whom never even attended a single class while receiving kickbacks for his role.
Scott and Wells now face four felony counts, including conspiracy to commit wire fraud and three counts of wire fraud. If convicted, both men could each receive up to 20 years in prison for each charge.
In addition, Wells faces a separate obstruction of justice charge after allegedly telling a witness to lie to detectives during the investigation, a charge that also carries a 20-year maximum sentence.
A federal judge will now determine Matsudo’s sentencing. The judge will have to weigh different factors in the complicated federal money scheme before deciding the VA fraudster’s fate.