Thursday, October 27, 2005

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Fraud suspects buried cash, prosecutor says

Colbert couple accused of selling fabricated online college degrees

Steve and Dixie Randock made their initial court appearance Wednesday at the U.S. Courthouse in Spokane on federal conspiracy, money laundering and wire fraud charges. (Jed Conklin/The Spokesman-Review )

Bill Morlin
Staff writer
October 27, 2005

A federal task force investigating a diploma mill operation was told that a Colbert couple dug up $200,000 in cash buried in the back yard of their Colbert home after a search warrant was served this summer.

That revelation came Wednesday at the initial court appearance of Steve and Dixie Randock, who are accused of selling phony high school and college degrees around the world from offices in Mead, Hillyard and Post Falls.

Half the bogus online degrees sold by Saint Regis University, Robertstown University and James Monroe University went to overseas purchasers, many of whom were "students" from Saudi Arabia, federal investigators say.

The buyers, in turn, used their fraudulent college degrees to enhance their ability to legally gain entry into the United States – raising issues related to potential terrorism and homeland security, the investigators said.

The couple had no comment as they entered court with their attorneys, Dutch Wetzel and Pete Schweda.

In court, the defense attorneys disputed the prosecutor's contention that the Randocks are hiding additional cash.

The magistrate agreed to release the Randocks pending trial if they sign over the deed to their $700,000 Colbert home and adjoining acreage, and if each signs a $100,000 personal signature bond. The judge also banned the Randocks from using the Internet for anything except a real estate licensing business operated by Dixie Randock.

It wasn't immediately known if they would be able to meet conditions of release prior to their federal trial – one that's probably a year away.

After a task force of federal agents searched the Randock home at 3127 E. River Glen Drive on Aug. 11, Steve Randock dug up $200,000 in cash he had hidden in the back yard, the federal prosecutor told the court.

The information came from one of five other co-defendants indicted in the case, Jacobs said, without identifying that person.

Co-defendants Heidi Kae Lorhan, Blake Alan Carlson, Amy Leann Hensley, Roberta Lynn Markishtum and Kenneth Wade Pearson are scheduled to have their initial court appearances today.

An eighth defendant, Richard John Novak of Peoria, Ariz., is scheduled to make his initial court appearance in Spokane next month.

Court documents suggest some of the defendants are cooperating with federal investigators and have given formal statements implicating the Randocks.

One co-defendant, who isn't identified, described Dixie Randock as the "big cheese" in the diploma mill fraud that's attracting national attention.

In describing why the Randocks "pose a danger to the community" through their fraudulent activities, Jacobs told the court they not only sold bogus degrees, but also set up another business to provide "accreditation" to other online diploma mills.

The Randocks also operated a companion business, the "Official Transcript Verification Center," where employees would confirm the validity of the degrees if employers questioned their authenticity in hiring or promoting one of the purchasers.

"They were involved in the sale of false and fraudulent academic products throughout the world," Jacobs said of the Randocks, identified as the kingpins of the diploma mill operation. The federal investigation, formally begun earlier this year, turned up evidence suggesting the Randocks may have sold 12,000 to 15,000 degrees and created more than 300 fictional online colleges. "There are now people out in the community who have purchased these fraudulent products," Jacobs told the court. "They've gotten their jobs or promotions with these degrees, so there is a lingering effect here."

Investivestigators say the Randocks' diploma mill operation lasted from at least August 1999 until Aug. 11 of this year, when the task force served search warrants at various locations in the Spokane area, Post Falls and Arizona.

The locations searched included Northwest Business Stamp, a Hillyard business operated by Carlson, who is co-founder of World Chapel Ministries. He is accused of providing gold seals and embossed diplomas for the fraud scheme.

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