Cedar Rapids man pleads guilty to student loan scheme

A 21-year-0ld Cedar Rapids man pleaded guilty today in U.S. District Court to a student loan scheme involving the recruitment of fake students to enroll at Kirkwood Community College.

Cory Bailey pleaded guilty to one count of mail fraud. He faces up to 20 years in prison and a fine up to twice the gross gain of the defendant; twice the gross loss to the victim or $250,000.

According to the sentencing guidelines, based on criminal history and other factors, he will likely face more than a year to three years. A sentencing date hasn't been set.

In 2007, Bailey recruited potential fake students to sign up for classes at Kirkwood Community College, so he and two others involved in the scheme could access their information to apply for financial aid, according to the plea agreement information.

The other two men listed only by their initials in the criminal information haven't been indicted or charged at this time, Assistant U.S. Attorney Bob Teig said.

Bailey also created e-mail accounts for the students he recruited and gave them to the other two men who applied for federal financial aid and enrolled the students in classes, according to the information.

One of the other men even completed homework assignments online for the students to create the appearance they were actually completing class work, according to the information.

Bailey and the others arranged for the loan checks to be mailed to post office boxes under their control, according to the criminal information. When checks would arrive, the men would contact the students and go with them to cash the checks. The men kept a substantial portion of the checks and gave some to the students.

On Oct. 11, 2007, Bailey and the other two received at least one federal loan check issued to one of the students for $3,323 and it was delivered to the post office box under their control.