Woman accused of stealing $1.3 million from state tuition assistance program

Credit: Henri Hollis

Credit: Henri Hollis

A former state employee has been accused of forging educational records to create fake students with non-existent disabilities in an elaborate scheme to steal more than $1.3 million over the course of four years, according to the U.S. Department of Justice.

Karen C. Lyke, 37, worked as a counselor at the Georgia Vocational Rehabilitation Agency in its Norcross office between 2015 and 2019, the same agency that employed another woman who pleaded guilty in April to faking two pregnancies that awarded her more than 200 hours of paid leave.

Lyke’s job was to assist clients in navigating the state’s Vocational Rehabilitation Services Program, which is aimed at helping people with disabilities find and maintain employment and provide funding for college education.

The program is federally funded, and those seeking assistance must provide medical records, proper identification, proof of registration for classes and financial aid information to show they are eligible. A counselor then reviews the documents, and if the request is approved, a check is mailed to the applicant.

By May 2016, nearly a year after Lyke began her job as a counselor, she and a relative allegedly conspired to collect more than 230 checks by creating approximately 13 fake students seeking tuition assistance, prosecutors said. They used the names of actual friends and relatives, none of whom attended any colleges or universities, according to investigators.

The stolen $1.3 million — the largest theft ever investigated by the state’s Office of Inspector General — was used by Lyke and her co-conspirator to pay for various personal expenses, including cars, jewelry, high-end guitars and a down payment on a new home, the release said.

“Not only is theft of government money a serious crime that will be vigorously investigated, but all too often it also deprives our most vulnerable citizens of vital assistance,” state Inspector General Scott McAfee said in a statement. “(The) OIG will continue to uphold the integrity of state programs and ensure taxpayer dollars are used for their intended purpose.”

To get the money, Lyke and the family member allegedly fabricated medical records to claim the fake students suffered from disabilities or illnesses such as AIDS, cancer, psychosocial impairments or muscular dystrophy. As proof of identification, the pair manufactured images of fake driver’s licenses, according to the release.

For educational records, Lyke and her family member used photo editing software to alter authentic college transcripts and registrations, as well as financial aid reports, from actual GVRA clients to claim that the fake students attended Georgia universities, investigators allege.

The GVRA then mailed checks to post office boxes that Lyke and the family member opened in their own names, according to investigators. Lyke and her relative then allegedly either deposited the checks into their own bank accounts or had friends and family do it and then funnel the money back to them.

Lyke left her job in 2019 and eventually relocated to Ohio, but McAfee said she and the family member continued submitting forged documents until about November 2020.

McAfee told The Atlanta Journal-Constitution his office launched its investigation about a year ago after the GVRA alerted them to a missing laptop. A little over a year later, Lyke was charged with one count of conspiring to commit federal program theft. She has said she intends to plead guilty, according to the DOJ’s news release.

Due to the findings of the investigation, McAfee said his office began a proactive review of the entire tuition assistance program. While the review found a number of erroneous payments totaling $26,000, there was no indication of internal fraudulent activity, according to a report. The OIG is working to recoup those funds.