FORT WAYNE, Ind. (WANE) The former head of Masters of Cosmetology who ran a student loan scheme at the beauty school that secured nearly $3 million in bad student loans will avoid prison, a judge determined this week.
Kaydean Geist was sentenced Wednesday in U.S. District Court in Fort Wayne to two years probation. Judge Theresa Springmann ordered the shamed owner and president of Masters of Cosmetology to repay $300,000 to the United State Department of Education.
Geist pleaded guilty in April to failing to repay student financial aid funds in the millions of dollars she helped students secure illegitimately between April 2009 and August 2010.
Federal officials said Geist and the school “fraudulently schemed to obtain (United States Department of Education) loan funds to which (the school) and its students were not entitled, by using elaborate false statements to conceal from ED, and the students themselves, the fact that Defendant College and its students were receiving loan funds far in excess of their eligibility.” According to the charges, Geist would code the receipt of the federal loan proceeds as cash rather than as federal financial aid funds, then not report them to the college’s third-party student aid processing contractor.
Federal law prohibits students enrolled in programs like those as Masters of Cosmetology from obtaining more than $30,000 in student loans, or obtaining Federal Family Education loans and direct loans concurrently.
Geist’s scheme allowed the school to apply for both Federal Family Education loans and direct loans for the same students for the same academic period. From there, Geist would have the students sign promissory notes for the loans without showing them the details of their debts, the charges alleged. She also told students they were being awarded with false loans, according to the federal charges.
Investigators said Geist and the school told students that the loans were under a new government program that required only minimal payments and did not need to be repaid in full. She also granted students sham loans from the school for their personal expenses that were actually federal loans, and forged more than 150 Family Education loan checks for more than $500,000 that was deposited into the school’s account, the charges said.
All told, more than 50 Masters of Cosmetology students received between $30,000 and $98,000 in loans, and Geist and the school helped secure some $2.9 million in bad student loans, the charges alleged.
Geist had faced up to five years in federal prison for the scheme. She was sentenced, though, for a single charge of embezzlement, stealing, fraud, or false statements, according to court documents.