Brazilian Police Arrest Private University Owners for R$500 Million Fraud Scheme

RIO DE JANEIRO, BRAZIL – The Federal Police (PF) launched Tuesday morning, September 3rd, Operation ‘Vagatomia’, which investigates a fraud scheme in the concession of student loans from the Federal Government (FIES) and in the sale of places and transfers of students from abroad to the course in Medicine offered by Universidade Brasil, in Fernandópolis, in the interior of São Paulo State.

The PF is further investigating fraud in the University for All Program (ProUni) scholarships and in courses to prepare for the Revalida exam, for diploma revalidation.

Initial estimates suggest that, in the past five years, approximately R$500 (US$125) million from FIES and PROUNI have been granted fraudulently.

Approximately 250 federal police officers served 77 court warrants in the morning – 11 for pre-trial detention, 11 for temporary detention, 45 for search and seizure and ten for precautionary measures, as alternatives to imprisonment.

The orders were issued by the Federal District Court of Jales (São Paulo). The ‘Vagatomia’ operation actions are carried out in the cities of Fernandópolis, São José do Rio Preto, Santos, Presidente Prudente, São Bernardo do Campo, Porto Feliz, Meridiano, Murutinga do Sul and São João das Duas Pontes, all in São Paulo and the municipality of Água Boa, in Mato Grosso.

Among the targets of the arrest orders are the owner of the private university and his son, as well as directors and employees of facilities where the frauds were detected – São Paulo, São José do Rio Preto and Fernandópolis.

Consulting board members, who sold places in the medical school, FIES loans and PROUNI scholarships, are also among the operation’s targets.

The federal court also determined the freeze of up to R$250 million in assets and funds of those under investigation.

The PF pointed out that, at the beginning of the year, they were provided with information reporting crimes and irregularities occurring on the campus of a medical school in Fernandópolis. Places for admission, transfer and FIES funding for the medical school were said to have been negotiated for up to R$120,000 per student, says the police report.

Investigations took approximately eight months and identified that the leader of the scheme was the university’s owner, who also holds the position of rector.

The businessman, a 63-year-old engineer, and his son, who is also a partner in the educational group, knew about the scheme and were involved in the crimes under investigation, according to the Federal Police.

According to the Federal Police, “educational consultants”, backed by the owners and the administrative structure of the university, negotiated hundreds of places for students.

Among the students who bought their places and funding are the children of farmers, civil servants, politicians, businessmen and friends of the university owners – “all with high purchasing power, who even without a FIES beneficiary profile, through fraud, had access to federal government resources”.

The PF estimates that thousands of students throughout Brazil may have been prejudiced by these frauds. The frauds were reported to the Federal Prosecutor’s Office by students who entered the institution on a regular basis, after the quality of the course decreased due to the increase in medical students on campus.

Throughout the investigations, the PF identified threats made by the university owner to students who made the denunciations, in addition to attempts to influence and intimidate authorities, destruction and concealment of evidence.

The Federal Police charges further state that the businessmen had been investing the proceeds of fraud in urban and rural properties in Brazil and abroad. In addition, they bought helicopters, jets, airplanes and dozens of luxury vehicles, says the corporation.

The students and parents, who agreed to pay for the places and/or public funding, will also answer for the crimes under investigation to the extent of their culpability, says PF. According to the corporation, a new investigation will be initiated to pinpoint all those who have agreed to pay for the frauds.

According to the Federal Police, the name of the operation, “Vagatomia”, refers to the terms “vaga”meaning enrolment places, and “tomia” meaning “cut”. “As the accused reduced places in the medical school and FIES, as they sold them, candidates who would be entitled to federal government funding suffered from the cut in openings,” says the corporation.

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