PAKISTAN Authorities reopen Axact fake degrees investigation after US arrest

After a United States court charged Umair Hamid, an executive of Axact, a Pakistan-based IT company that allegedly defrauded tens of thousands of people in many countries including the US by selling fake diplomas and degrees, Pakistani authorities decided this month to revisit the case.

When it was first unearthed in 2015, the alleged scam was thought to be one of the world’s largest fake degree mills in terms of the number of fake universities and fake certificates issued.

Hamid, who was an assistant vice-president of international relations for Axact, was arrested in the US on 19 December. The US Attorney’s Office for the Southern District of New York said in a statement released 21 December, Hamid had been charged with wire fraud, conspiracy to commit wire fraud, and aggravated identity theft “in connection with a worldwide ‘diploma mill’ scheme that collected at least approximately US$140 million from tens of thousands of consumers”.

Manhattan US attorney Preet Bharara said: “Hamid allegedly took hefty upfront fees from young men and women seeking an education, leaving them with little more than useless pieces of paper.”

The re-investigation into Axact was ordered by Pakistan's Interior Minister Chaudhry Nisar Ali Khan on 30 December and the country’s Federal Investigation Agency, or FIA, formed a special committee on 4 January 2017 to probe the fake degrees scam anew.

However, experts say it is not clear how the FIA would collect new and prosecutable evidence against Karachi-based Axact after a Pakistan court dismissed the case in November 2016. Axact’s CEO Shoaib Shaikh and others were subsequently released on account of "lack of enough evidence". 

‘Resumed selling’

Axact said in an announcement on 19 September 2016 on its official website that it had restarted operations – just a year after its operations were shut down by Pakistani authorities over its alleged involvement in the fake degrees scandal. 

The US Justice Department alleges that after Pakistani law enforcement shut Axact down and prosecuted certain individuals associated with the company, Hamid resumed selling fake diplomas to American customers.

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“As alleged, Hamid and his co-conspirators made false and fraudulent representations to consumers on websites and over the phone to trick them into enrolling in purported colleges and high schools, and issued fake diplomas upon receipt of upfront fees from consumers,” the US Attorney’s Office statement said. 

“Most recently, Hamid travelled to the United States in order to open a bank account that he has used to collect money from consumers he defrauded,” the statement said.

Declan Walsh, the New York Times journalist who broke the story and handed evidence to the authorities in the US, claimed in a tweet that Hamid, who uses several aliases, had travelled to the US in September 2016 to open the accounts. 

Hamid’s lawyer in the US could not be reached for comment. Axact has consistently denied all the allegations against it and has said the reports in the New York Times were baseless. 

In Pakistan, a case was registered against Shaikh and a dozen other Axact employees following the May 2015 New York Times report claiming the firm had sold tens of thousands of fake degrees and diplomas online through fictitious schools and universities which existed only in its computers, and used fake identities to allure aspiring graduates into fraudulently selling fake certifications. 

Offices of the firm in Karachi and Islamabad were raided and its CEO and other officials were charged with cyber crimes (electronic fraud); the accused were arrested, handcuffed and appeared in court. 

Counsel for the accused, Rizwan Abbasi, contended before the court in Pakistan that the case was a ‘conspiracy’ by some rival media houses and ‘Indian agents’ against his client. Citing lack of evidence, Judge Pervaizul Qadir Memon dismissed the fake degrees case against the company and its officials. 

The accused were imprisoned for some 15 months on judicial remand. In October last year, the court granted bail to Shaikh and others and on 31 October they were acquitted by the District Court. Hamid was not imprisoned in Pakistan after volunteering to appear as a prosecution witness. 

Embarrassing

The US arrest is seen by some as an embarrassment for Pakistan. Naveed Zaman, rector of Islamabad's National University of Sciences and Technology, told University World News: "Our authorities first moved on the report of a US newspaper and they have again become active [after action in the US] despite the fact a local court has already acquitted Axact's management in the degrees fraud case." 

But he said "the case must be taken to a logical end to discourage such practices in future. The authorities must collect prosecutable evidence and fight the case with able lawyers. It would be sad if proofs presented in the US court are declared as non-admissible in our local courts."

While the new investigation puts pressure on the Pakistan authorities to act more forcefully in the case – the authorities were accused of dragging their heels in the case last year – academics in the country believe the new investigation could eventually meet the same fate as the first investigation unless Pakistan's FIA liaises closely with the US investigation agencies to collect solid evidence, and presents the case to a higher court with lawyers specialised in electronic fraud and money laundering. 

In the US the prosecution is being handled by the Complex Frauds and Cybercrime Unit of the US Attorney’s Office.

Javed Ashraf, vice-chancellor of Islamabad's Quaid-e-Azam University, said: "I don't think the FIA has found something new against Axact and for a new investigation they would rely on evidence presented in the US court.