Carla Ann Brennan Accused of Using Stolen Student Loan Funds to Repay Tax Fraud Restitution
Owing $88,000 in court-ordered restitution from a 2008 tax-fraud case, the 63-year-old Laguna Hills divorcee is accused of paying it back with some of the $262,000 she stole from five students who thought she was helping them obtain college loans.
Back in 2006, Brennan and her then-husband were charged with filing false tax returns and making false financial statements. While the case was still being investigated, the couple paid $100,000 to the California Franchise Tax Board of the $188,000 they owed in unpaid taxes and penalties. They also divorced. On July 31, 2008, they pleaded guilty to the charges against them and were given probation and ordered to perform community service and repay the remaining restitution.
But, before the guilty pleas, Brennan is accused of beginning the scam that led to her arrest Tuesday. Between August and December 2007, she is alleged to have "helped" five students, ages 17 to 23, that she met through her children obtain college loans.
|Courtesy of Orange County District Attorney's Office|
|Would you hand your personal information over to this woman?|
The students got checks in the mail ranging from between $19,000 and $30,000, claims the Orange County District Attorney's office (OCDA), which informs some bore the names of the students and others of the co-signers. Brennan is accused of meeting each student at a Mission Viejo bank, having them sign checks in the teller's presence and then having the teller cash the checks or issue a cashiers check. Brennan allegedly gave each student $1,000 to $2,000 and kept the rest--$262,000 in all.
Months later, the OCDA says, the students began receiving notices to repay their loans. When they contacted Brennan, she is alleged to have told them not to worry, that she was taking care of it. She didn't, according to prosecutors, who report all the loans ultimately went into default under the names of the students and co-signers.
The investigation into Brennan began when one student stopped calling her and contacted the Orange County Sheriff's Department instead. She was charged Tuesday with five felony counts of grand theft, five felony counts of money laundering, two felony counts of identity theft, and sentencing enhancements and allegations for aggravated white collar crime over $100,000, loss over $100,000, property loss over $150,000, money laundering in excess of $150,000, and crime-bail-crime. The enhancement for crime-bail-crime indicates that the defendant was out of custody on bail in another criminal case (the tax fraud) at the time of the crime.
If convicted, Brennan could get up to 16 years and four months in state prison.
Her bail was set at the amount she was alleged to have stolen--$262,000--but to make it she must prove the money came from a "legal and legitimate source." Raising money obviously isn't a problem for Brennan but, if the charges are true, ensuring the money's legal and legitimate? Not so much.