Thursday, October 27, 2005

printer-friendly  |  e-mail this story

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 )

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.

Advertisement
At a court hearing Wednesday, Assistant U.S. Attorney George Jacobs asked U.S. Magistrate Judge Cynthia Imbrogno to set a corporate surety bond for the Randocks, who were indicted Oct. 5 on charges of conspiracy to commit wire and mail fraud and money laundering.

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.


back to top

Advertisement

S-R.com 2005 Voters Guide

Information on candidates, races and ballot measures for the Nov. 8 general election.

Latest news from AP
 Bush Abandons Push for Miers Nomination
 U.N.: 2,200 Cos. Gave Iraq Illicit Funds
 Israelis Kill 7 Palestinian Militants
 Floridians Again Find Gas in Short Supply
 Sunni Ambush Kills 14 Al-Sadr Militiamen
 House Easily Votes to Allow Base Closings
 Internet Use Up, but So Is User Concern
 Jolie Said Wants to Adopt Another Child
Last updated at 1:41 p.m.
Cougar football

Get the latest news, rosters and more. And read what Coug reporter Glenn Kasses says in All Cougs All the Time.

EWU Homecoming

See photos from the pre-game festivities at EWU's Homecoming game on Saturday.

High school sports

Schedules, scores and stats for high school football, cross country, volleyball, girls soccer, and boys soccer.

Ongoing coverage

Morning Star investigation
Met Mortgage bankruptcy
Groene slayings

Rosa Parks: The spark of a movement

Rosa Parks, whose refusal to give up her bus seat to a white man, helped spark the civil rights movement, died Monday at age 92.

Recent video stories

Wilma
Manito Park in the fall
I had to see it for myself...

More:  Colin's Video Journal

Thursday weather

Lo-Band  |  Hi-Band

Archive:  KHQ video

Streaming concerts

Freetime Synthetic
Brother Reade
Cryptic One

Archive:  More live shows

17-year-old meth addict

A difficult childhood, an abusive father. Now "Tone" is 17 and is in rehab for meth addiction. An excerpt from Embracing the Whirlwind.

The Transparent Newsroom

News is a Conversation: Eight readers discuss our news coverage. Latest posts:

Thank you
Harriet Miers is out...
Oh, dear...

Daily Briefing: Notes from our daily news meetings.

Ask The Editors: We answer your questions about our editorial decisions and operations.

Editor chats:
Transcript from June 23
Transcript from May 17
Transcript from May 9

See our new HOME, your guide to better living in the Inland Northwest.
Huckleberries Online

Spokesman-Review associate editor D.F. Oliveria shares his view of politics and life in North Idaho. For more online columns, visit Blog Central.

Spokane River dialogues

In this yearlong series, the editorial board talks monthly with experts from a spectrum of river issues.

Killed in Iraq

We're documenting the deaths of coalition personnel (including more than 2,000 Americans) in Iraq. See biographies and photos.
And you can go here to see the latest Iraq war photos.

Multimedia 'Tributes'

Watch a slide show, with audio from a family member. Also see profiles.
 Walt Schillinger; Multimedia | Story
 William Roberts; Multimedia | Story

Gas prices

Readers report local prices here.

Business central: Ask a Pro

Here's where to look for the latest news, product reviews and advice from our online business columnists:
  BIZStreet
  Embracing the Whirlwind
  Knowledge is Power

Blog central

Here's where to look for the latest news and views from our online columnists:
  All Cougs All the Time
  All We Never Knew
  Art Beat
  Ask the Editors
  Auto Racing 2005
  Called Home by Katrina
  Campus Commons
  Conflict in Iraq
  Daily Briefing
  EWU football
  Eye on Boise
  Eye on Olympia
  Hard 7
  Health Beat
  Home Planet
  Huckleberries Online
  Journey to Vatican III
  Mount St. Helens watch
  Movies & More
  News is a Conversation
  Prep report
  Sound Wave
  Spin Control
  Treasure Hunting
  Wheel Life

Local bloggers

See our list of Inland Northwest bloggers. If you live in the Inland Northwest and are a regular blogger, we might link to your blog.

 
WSDOT Traffic info

PROMOTION

Better Health & Living

Top 10 Cancer Fighting Foods. Quick, easy ways to take a big, delicious bite out of your risk! Better Health & Living

Coupon Savings

Save money by using coupons from local retailers and grocery coupons from major brands. Visit S-R.com/coupons where great savings are waiting for you.

Lil' Ones Annual

A keepsake special section that parents and grandparents can treasure for a lifetime. The Lil' Ones Annual provides a perfect opportunity to cherish and share your precious little one.

Home Services

Thinking about remodeling your house, building a deck, or finishing your basement? See our Home Services Directory to find a professional.

Auto Review Online

View the new and used inventory of the areas biggest car dealers.