An Army veteran in Georgia was sentenced to six years in prison Monday for running a scheme that exploited a program for disabled veterans to get approximately $48 million in outstanding federal student loans fraudulently discharged.
De’Reek Banks, 41, told more than 500 borrowers that he could get their student loans discharged — canceled, essentially — in return for a fee.
“Many of these borrowers” believed that Banks would do so legitimately, according to a Justice Department news release. Banks collected around $891,202 in fees from the borrowers.
What Banks really did was send letters on fake Department of Veterans Affairs letterhead to Federal Student Aid, the government office responsible for student loans, claiming that the borrowers were veterans with total or permanent disabilities. Thanks to these supposed disabilities, the borrowers received more than $48 million in loan discharges, which have since been reversed, according to court documents.
Banks once worked at the VA himself, according to court documents filed by family members.
“This defendant brazenly stole funds from innocent student loan borrowers by exploiting a financial aid program intended to assist military vets who sacrificed their health for the security of our country,” U.S. Attorney Ryan K. Buchanan, with the Northern District of Georgia, said in a statement. “He tricked borrowers into believing that he could legitimately obtain federal student loan discharges for them while attempting to defraud the U.S. government of almost 50 million dollars.”
Banks pleaded guilty in March to theft of government property. He faced a maximum sentence of 10 years.
In the lead-up to sentencing, family members and friends filed letters attesting to his character and asking for a lighter sentence. According to the letters, Banks and his wife have eight children, some of whom are adopted.
“De’Reek’s big heart is ultimately what lead to the situation that we are in now,” his wife wrote in a letter to the judge. “I realize that the charges brought against De’Reek are very serious and troubling. The bad he did was meant to help people and not harm them.”
After serving his sentence in a prison near Atlanta, Banks will be on supervised release for three years. He has also been ordered to pay $910,416.69 in restitution — even though the court set his fine and cost of incarceration at $0 because of his inability to pay.
A lawyer for Banks did not respond by late afternoon Thursday to a request for comment sent that morning by Military Times.
Irene Loewenson is a staff reporter for Marine Corps Times. She joined Military Times as an editorial fellow in August 2022. She is a graduate of Williams College, where she was the editor-in-chief of the student newspaper.