The Department of Justice and four states filed a multibillion-dollar fraud suit against the Education Management Corporation, the nation's second-largest for-profit college company, charging that it was not eligible for the $11 billion in state and federal financial aid it had received from July 2003 through June 2011.

An Arizona woman pleads guilty to running an elaborate scam that highlights what federal authorities describe as the vulnerability of online education to financial-aid fraud. The scheme embroiled Rio Salado College, home to one of America's largest online programs, in a half-million-dollar con.

A federal grand jury in Kansas indicted a former college-basketball coach last month on charges that he arranged for his players to receive phony academic credit and stole $120,000 in Pell Grants. The former coach faces a total of 51 years in prison and over $1.5-million in fines if found guilty of all counts.

An online university that supposedly granted a graduate degree in business to a pet cat was sued Monday for consumer fraud by the Pennsylvania Attorney General's Office.

La Salle University, a religious degree-granting correspondence university, was shut down by the FBI for issuing falsely accredited degree in 1996. Due to the fraud, the students were notified personally or through advertisements that they could receive restitution from the over $ 10 million seized from La Salle. However, due to a bad computer system it is still possible that some students were left out.

Diploma-mill owners are an elusive bunch. They flood e-mail boxes with offers of cheap college degrees, and collect payment through Web sites, then filter that money into overseas bank accounts. When the police try to shut one of the businesses down, the owners just set up shop elsewhere, often in a poor country with weak fraud laws. Unable to snuff out these illegal businesses, many states have changed their strategy: if you can't catch the dealers, go after the consumers. A handful, like Illinois, Indiana, and New Jersey, have recently criminalized the use of fake degrees.

A non-profit corporation that provides a high-speed computer network to colleges in New York State agreed last month to pay the federal government $1.4-million in a lawsuit alleging that it had misused a federal grant.

The U.S. Education Department last week proposed new rules that would loosen a ban on incentive compensation for college recruiters and get rid of a financial-aid regulation. The proposal to eliminate the 12-hour rule follows years of debate. Distance-education providers have pushed the department and Congress to throw out the regulation, but others have cited fears that relaxing the rule would lead to fraud.