Axact, which has its
headquarters in Karachi, Pakistan, ostensibly operates as a software company.
Credit Sara Farid for The New York Times
Seen from the Internet, it is a vast education
empire: hundreds of universities and high schools, with elegant names and
smiling professors at sun-dappled American campuses.
Their websites, glossy and assured, offer online
degrees in dozens of disciplines, like nursing and civil engineering. There are
glowing endorsements on the CNN iReport
website, enthusiastic video testimonials, and State Department authentication
certificates bearing the signature of Secretary of State John Kerry.
“We host one of the most renowned faculty in the
world,” boasts a woman introduced in one
promotional video as the head of a law school. “Come be a part of Newford
University to soar the sky of excellence.”
Yet on closer examination, this picture shimmers like
a mirage. The news reports are fabricated. The professors are paid actors. The
university campuses exist only as stock photos on computer servers. The degrees
have no true accreditation.
Related Coverage
Open Source: Axact, Fake Diploma Company, Threatens Pakistani
Bloggers Who Laugh at Its Expense MAY 18, 2015
In fact, very little in this virtual academic realm, appearing to span at least 370 websites, is real —
except for the tens of millions of dollars in estimated revenue it gleans each
year from many thousands of people around the world, all paid to a secretive
Pakistani software company.
Axact makes tens of millions
of dollars annually by offering diplomas and degrees online through hundreds of
fictitious schools. Fake accreditation bodies and testimonials lend the schools
an air of credibility. But when customers call, they are talking to Axact sales
clerks in Karachi.
That company, Axact, operates
from the port city of
Karachi, where it employs over 2,000 people and calls itself Pakistan’s largest
software exporter, with Silicon Valley-style employee perks like a swimming
pool and yacht.
Axact does sell some software applications. But
according to former insiders, company records and a detailed analysis of its
websites, Axact’s main business has been to take the centuries-old scam of
selling fake academic degrees and turn it into an Internet-era scheme on a
global scale.
As interest in online education is booming, the
company is aggressively positioning its school and portal websites to appear
prominently in online searches, luring in potential international customers.
At Axact’s headquarters, former employees say,
telephone sales agents work in shifts around the clock. Sometimes they cater to
customers who clearly understand that they are buying a shady instant degree
for money. But often the agents manipulate those seeking a real education,
pushing them to enroll for coursework that never materializes, or assuring them
that their life experiences are enough to earn them a diploma.
To boost profits, the sales agents often follow up
with elaborate ruses, including impersonating American government officials, to
persuade customers to buy expensive certifications or authentication documents.
Revenues, estimated by former employees and fraud
experts at several million dollars per month, are cycled through a network of
offshore companies. All the while, Axact’s role as the owner of this fake
education empire remains obscured by proxy Internet services, combative legal
tactics and a chronic lack of regulation in Pakistan.
“Customers think it’s a university, but it’s not,”
said Yasir Jamshaid, a
quality control official who left Axact in October. “It’s all about the money.”
Axact’s response to repeated requests for interviews
over the past week, and to a list of detailed questions submitted to its
leadership on Thursday, was a letter from its lawyers to The New York Times on
Saturday. In the letter, it issued a blanket denial, accusing a Times reporter
of “coming to our client with half-cooked stories and conspiracy theories.”
After the initial publication of this article, Axact posted a public response on
its website, saying it would seek legal action. The statement begins, “Axact
condemns this story as baseless, substandard, maligning, defamatory, and based
on false accusations and merely a figment of imagination published without
taking the company’s point of view.”
Also after publication, some of the testimonial
videos and specific website contents cited in this article were taken down
without explanation.
In an interview in November 2013 about Pakistan’s
media sector, Axact’s
founder and chief executive, Shoaib Ahmed Shaikh, described Axact as an
“I.T. and I.T. network services company” that serves small and medium-sized
businesses. “On a daily basis we make thousands of projects. There’s a long
client list,” he said, but declined to name those clients.
The accounts by former employees are supported by
internal company records and court documents reviewed by The New York Times.
The Times also analyzed more than 370 websites — including school sites, but
also a supporting body of search portals, fake accreditation bodies,
recruitment agencies, language schools and even a law firm — that bear Axact’s
digital fingerprints.
In academia, diploma mills have long been seen as a
nuisance. But the proliferation of Internet-based degree schemes has raised concerns about their possible use in
immigration fraud, and about dangers they may pose to public safety and legal
systems. In 2007, for example, a British court jailed Gene Morrison, a fake police criminologist who claimed to have degree certificates from the
Axact-owned Rochville
University, among other places.
Little of this is known in Pakistan, where Axact has
dodged questions about its diploma business and has portrayed itself as a
roaring success and model corporate citizen.
A screengrab taken from the
website Columbiana University. This and other Axact sites have toll-free American
contact numbers and calculatedly familiar-sounding names.
“Winning and caring” is the motto of Mr. Shaikh, who
claims to donate 65 percent of Axact’s revenues to charity, and last year
announced plans for a program to educate 10 million Pakistani children by 2019.
More immediately, he is working to become Pakistan’s most influential
media mogul. For almost two years now, Axact has been building a broadcast
studio and aggressively recruiting prominent journalists for Bol, a television and newspaper group
scheduled to start this year.
Just how this ambitious venture is being funded is a
subject of considerable speculation in Pakistan. Axact has filed several
pending lawsuits, and Mr.
Shaikh has issued vigorous public denials, to reject accusations by
media competitors that the company is being supported by the Pakistani military
or organized crime. What is clear, given the scope of Axact’s diploma operation,
is that fake degrees are likely providing financial fuel for the new media
business.
“Hands down, this is probably the largest operation
we’ve ever seen,” said Allen
Ezell, a retired F.B.I. agent and author of a book on diploma mills who has been
investigating Axact. “It’s a breathtaking scam.”
Building
a Web
At first glance, Axact’s universities and high
schools are linked only by superficial similarities: slick websites, toll-free
American contact numbers and calculatedly familiar-sounding names, like Barkley, Columbiana and Mount Lincoln.
But other clues signal common ownership. Many sites
link to the same fictitious accreditation bodies
and have identical graphics, such as a floating green window with an image of a
headset-wearing woman who invites customers to chat.
There are technical commonalities, too: identical
blocks of customized coding, and the fact that a vast majority route their
traffic through two computer servers run by companies registered in Cyprus and
Latvia.
Five former employees confirmed many of these sites
as in-house creations of Axact, where executives treat the online schools as
lucrative brands to be meticulously created and forcefully marketed, frequently
through deception.
The professors and bubbly students in promotional
videos
are actors, according to former employees, and some of the stand-ins feature
repeatedly in ads
for different schools.
The sources described how employees would plant fictitious reports about Axact
universities on iReport,
a section of the CNN website for citizen journalism. Although CNN stresses that
it has not verified the reports, Axact uses the CNN logo as a publicity tool on
many of its sites.
Social media adds a further patina of legitimacy. LinkedIn
contains profiles for purported faculty members of Axact universities, like Christina
Gardener, described as a senior consultant at Hillford University and a former
vice president at Southwestern Energy, a
publicly listed company in Houston. In an email, a Southwestern spokeswoman
said the company had no record of an employee with that name.
The heart of Axact’s business, however, is the sales
team — young and well-educated Pakistanis, fluent in English or Arabic, who
work the phones with customers who have been drawn in by the websites. They
offer everything from high school diplomas for about $350, to doctoral degrees
for $4,000 and above.
“It’s a very sales-oriented business,” said a former
employee who, like several others, spoke on the condition of anonymity because
he feared legal action by Axact.
Axact employees often follow
up aggressively with previous customers, pushing them to buy more. Some pose as
American officials, badgering clients to spend thousands of dollars on State
Department authentication letters. Payments are funneled through offshore
firms.
A new customer is just the start. To meet their
monthly targets, Axact sales agents are schooled in tough tactics known as upselling, according
to former employees. Sometimes they cold-call prospective students, pretending
to be corporate recruitment agents with a lucrative job offer — but only if the
student buys an online course.
A more lucrative form of upselling involves
impersonating American government officials who wheedle or bully customers into
buying State Department authentication certificates signed by Secretary Kerry.
Such certificates, which help a degree to be recognized
abroad, can be lawfully purchased in the United States for less than $100. But
in Middle Eastern countries, Axact officials sell the documents — some of them
forged, others secured under false pretenses — for thousands of dollars each.
“They would threaten the customers, telling them that
their degrees would be useless if they didn’t pay up,” said a former sales
agent who left Axact in 2013.
Axact tailors its websites to appeal to customers in
its principal markets, including the United States and oil-rich Persian Gulf
countries. One Saudi man spent over $400,000 on fake degrees and associated
certificates, said Mr.
Jamshaid, the former employee.
Usually the sums are less startling, but still
substantial.
One Egyptian man paid $12,000 last year for a doctorate
in engineering technology from Nixon University and a certificate signed by Mr. Kerry. He
acknowledged breaking ethical boundaries: His professional background was in
advertising, he said in a phone interview, speaking on the condition of
anonymity to avoid potential legal trouble.
But he was certain the documents were real. “I really
thought this was coming from America,” he said. “It had so many foreigner
stamps. It was so impressive.”
Real-Life
Troubles
Many customers of degree operations, hoping to secure
a promotion or pad their résumé, are clearly aware that they are buying the
educational equivalent of a knockoff Rolex. Some have been caught.
In the United States, one federal
prosecution in 2008 revealed that 350 federal employees, including
officials at the departments of State and Justice, held qualifications from a
non-Axact-related diploma
mill operation based in Washington State.
Some Axact-owned school websites have previously made
the news as being fraudulent, though without the company’s ownership role being
discovered. In 2013, for instance, Drew Johansen, a former Olympic swim coach, was
identified in a news report as a graduate of Axact’s bogus Rochville University.
The effects have sometimes been deeply disruptive. In
Britain, the police
had to re-examine 700 cases that Mr. Morrison, the falsely credentialed police criminologist and
Rochville graduate, had worked on. “It looked easier than going to a
real university,” Mr. Morrison said during his 2007 trial.
In the Middle East, Axact has sold aeronautical
degrees to airline employees, and medical degrees to hospital workers. One
nurse at a large hospital in Abu Dhabi, United Arab Emirates, admitted to
spending $60,000 on an Axact-issued medical degree to secure a promotion.
Shoaib Ahmed Shaikh, the
founder of Axact, in an image taken from social media.
But there is also evidence that many Axact customers
are dupes, lured by the promise of a real online education.
Elizabeth Lauber, a bakery worker from Bay City, Mich., had been
home-schooled, but needed a high school diploma to enroll in college. In 2006,
she called Belford
High School, which had her pay $249 and take a 20-question knowledge
test online.
Weeks later, while waiting for the promised
coursework, Ms. Lauber
was surprised to receive a diploma in the mail. But when she tried to
use the certificate at a local college, an official said it was useless. “I was
so angry,” she said by phone.
Last May, Mohan, a junior accountant at a construction firm in Abu Dhabi, paid
$3,300 for what he believed was going to be an 18-month online master’s program
in business administration at the Axact-owned Grant
Town University.
A sales agent assured Mohan, a 39-year-old Indian citizen who asked to be
identified only by part of his name, of a quality education. Instead, he
received a cheap tablet computer in the mail — it featured a school logo but no
education applications or coursework — followed by a series of insistent
demands for more money.
When a phone caller who identified himself as an
American Embassy official railed at Mohan for his lack of an English-language
qualification, he agreed to pay $7,500 to the Global
Institute of English Language Training Certification, an Axact-run
website.
In a second call weeks later, the man pressed Mohan
to buy a State Department authentication certificate signed by Mr. Kerry. Mohan
charged $7,500 more to his credit card.
Then in September a different man called, this time
claiming to represent the United Arab Emirates government. If Mohan failed to
legalize his degree locally, the man warned, he faced possible deportation.
Panicking, Mohan spoke to his sales agent at Axact and agreed to pay $18,000 in
installments.
By October, he was $30,000 in debt and sinking into
depression. He had stopped sending money to his parents in India, and hid his
worries from his wife, who had just given birth.
“She kept asking why I was so tense,” said Mohan
during a recent interview near his home in Abu Dhabi. “But I couldn’t say it to
anyone.”
Chasing
Bill Gates
In Pakistan, Mr. Shaikh, Axact’s chief executive, portrays
himself as a self-made tycoon of sweeping ambition with a passion for charity.
Unusual for a software entrepreneur, Mr. Shaikh does
not habitually use email or a cellphone, said several people recruited to his new station, Bol.
Barkley University claims
that its degrees are recognized all over the world.
But his ambition is undimmed: Last year he announced
plans for Gal Axact, a
futuristic headquarters building with its own monorail system and space for
20,000 employees. His philanthropic vision, meanwhile, has a populist streak
that resonates with many Pakistanis’ frustrations with their government.
As well as promising to educate 10 million children,
Mr. Shaikh last year started a project to help resolve small civil disputes — a
pointed snub to the country’s sclerotic justice system — and vowed to pump
billions of dollars into Pakistan’s economy.
“There is no power in the universe that can prevent
us from realizing this dream,” he declared in the speech.
But some employees, despite the good salaries and perks
they enjoyed, became disillusioned by the true nature of Axact’s business.
During three months working in the internal audit
department last year, monitoring customer phone calls, Mr. Jamshaid grew dismayed by what he
heard: customers being cajoled into spending tens of thousands of dollars, and
tearful demands for refunds that were refused.
“I had a gut feeling that it was not right,” he said.
In October, Mr. Jamshaid quit Axact and moved to the United Arab Emirates,
taking with him internal records of 22 individual customer payments totaling
over $600,000.
Mr. Jamshaid has since contacted most of those customers,
offering to use his knowledge of Axact’s internal protocols to obtain refunds.
Several spurned his approach, seeing it as a fresh effort to defraud them. But
a few, including Mohan, accepted his offer.
After weeks of fraught negotiations, Axact refunded
Mohan $31,300 last fall.
The Indian accountant found some satisfaction, but
mostly felt chastened and embarrassed.
“I was a fool,” he said, shaking his head. “It could
have ruined me.”
Deception
and Threats
Axact’s role in the diploma mill industry was nearly
exposed in 2009 when an American woman in Michigan, angry that her online high
school diploma had proved useless, sued two Axact-owned websites, Belford High School and
Belford University.
The case quickly expanded into a class-action lawsuit
with an estimated 30,000 American claimants. Their lawyer, Thomas H. Howlett, said
in an interview that he found “hundreds of stories of people who have been
genuinely tricked,” including Ms. Lauber, who joined the suit after it was established.
A broadcast studio at Bol, a
television and newspaper group owned by Axact that is scheduled to start this
year. Credit Sara Farid for The New York Times
But instead of Axact, the defendant who stepped
forward was Salem
Kureshi, a Pakistani who claimed to be running the websites from his apartment.
Over three years of hearings, his only appearance was in a video
deposition from a dimly lit room in Karachi, during which he was barely
identifiable. An associate who also testified by video, under the name “John
Smith,” wore sunglasses.
Mr. Kureshi’s legal fees of over $400,000 were paid
to his American lawyers through cash transfers from different currency exchange
stores in Dubai, court documents show. Recently a reporter was unable to find
his given address in Karachi.
“We were dealing with an elusive and illusory
defendant,” said Mr.
Howlett, the lawyer for the plaintiffs.
In his testimony, Mr. Kureshi denied any links to
Axact, even though mailboxes operated by the Belford schools listed the
company’s headquarters as their forwarding address.
The lawsuit ended in 2012 when a federal judge
ordered Mr. Kureshi and Belford to pay $22.7 million in
damages. None of the damages have been paid, Mr. Howlett said.
Today, Belford is still open for business, using a
slightly different website address. Former Axact employees say that during
their inductions into the company, the two schools were held out as prized
brands.
Axact does have regular software activities, mainly
in website design and smartphone applications, former employees say. Another
business unit, employing about 100 people, writes term papers on demand for
college students.
But the employees say those units are outstripped by
its diploma business, which as far back as 2006 was already earning Axact
around $4,000 a day, according to a former software engineer who helped build
several sites. Current revenues are at least 30 times higher, by several
estimates, and are funneled through companies registered in places like Dubai,
Belize and the British Virgin Islands.
Axact has brandished legal threats to dissuade
reporters, rivals and critics. Under pressure from Axact, a major British
paper, The Mail on
Sunday, withdrew an article from the Internet in 2006. Later, using an
apparently fictitious law firm, the company faced down a consumer rights group
in Botswana that had criticized Axact-run Headway
University.
It has also petitioned a court in the United States,
bringing a lawsuit in 2007 against an American company that is a competitor in
the essay-writing business, Student Network Resources, and that had called Axact a “foreign
scam site.” The American company countersued and was
awarded $700,000, but no damages have been paid, the company’s lawyer said.
In his interview with The New York Times in 2013,
Axact’s chief executive, Mr.
Shaikh, acknowledged that the company had faced criticism in the media
and on the Internet in Britain, the United States and Pakistan, and noted that
Axact had frequently issued a robust legal response.
“We have picked up everything, we have gone to the
courts,” he said. “Lies cannot flourish like that.”
Mr. Shaikh said that the money for Axact’s new media venture,
Bol, would “come from our own funds.”
With so much money at stake, and such considerable
effort to shield its interests, one mystery is why Axact is ready to risk it
all on a high-profile foray into the media business. Bol has already caused a
stir in Pakistan by poaching star talent from rival organizations, often by
offering unusually high salaries.
Mr. Shaikh says he is motivated by patriotism: Bol will “show
the positive and accurate image of Pakistan,” he said last year. He may also be
betting that the new operation will buy him influence and political sway.
In any event, Axact’s business model faces few
threats within Pakistan, where it does not promote its degrees.
When reporters for The Times contacted 12 Axact-run
education websites on Friday, asking about their relationship to Axact and the
Karachi office, sales representatives variously claimed to be based in the
United States, denied any connection to Axact or hung up immediately.
“This is a university, my friend,” said one
representative when asked about Axact. “I have no idea what you’re talking
about.”
Griffin Palmer and
Kimiko de Freytas-Tamura contributed reporting.
A version of this article appears in print on May 18,
2015, on page A1 of the New York edition with the headline: Fake Diplomas, Real
Cash: A Net of Made-Up Schools . Order Reprints| Today's
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