Eastern Gateway's 'free college' union program drew $20M in federal aid — 3 indicted

Eastern Gateway Community College, a public two-year college in Steubenville, Ohio, ran a 'Free College Benefit Program' from 2017 that let union members, their families and friends enroll at no direct cost. It outsourced outreach and marketing to Student Resource Center LLC, a private company owned by Michael Perik and Nicole Rowe Colclasure. Between 2017 and March 2022, enrollment grew from about 8,500 to more than 60,000, with over 90% of students online-only and roughly 80% living out of state.

According to Ohio Auditor Keith Faber, that growth was a scheme. Pell Grants were drawn down illegally through what he called a 'pretend last-dollar scholarship' — barred by federal rules against charging scholarship students more than others. Aid went to ineligible students, attendance and withdrawal were never confirmed, and records were falsified and concealed. Perik used four for-profit entities, including Student Resource Center, to divert funds through incentive payments; Geoghegan knew of the scheme and approved the disbursements anyway, the filings state.

On October 9, 2026, a grand jury indicted Geoghegan (nine felony counts), Perik and Colclasure (twelve each) on first-degree racketeering, aggravated theft of $1.5 million or more, tampering with records, telecommunications fraud, money laundering, receiving stolen property, bribery and having an unlawful interest in a public contract. Faber said the crimes diverted $20 million in federal financial aid and state subsidies and led to the college's closure in 2024. The charges are indictments, not convictions; all three are scheduled for arraignment in Jefferson County Common Pleas Court.

$20M in federal financial aid and state subsidies diverted; the college closed in 2024; three people indicted on racketeering and theft charges in October 2026.

The college let a private contractor it did not control run recruitment and marketing — and, in the auditor's words, effectively the institution — paying it incentives tied to enrollment.

The 'free' model leaned on Pell Grants drawn in students' names without confirming eligibility, attendance or withdrawals — growth nobody was paying for, which Faber called the tell.

The Education Department had already sent a 2022 cease-and-desist over charging scholarship students more — by then the scheme had run five years.

Participants changed records internally as the investigation approached, which Faber said made the work of his investigators harder.

When enrollment explodes and nobody pays, audit where the money comes from: growth built on improperly drawn federal aid is not traction, it is an unpaid liability.

The Ohio Auditor's Special Investigations Unit opened the case after reports of questionable purchasing, and in January 2024 executed a search warrant at the college with the Jefferson County Sheriff, State Highway Patrol and Secret Service. The college closed in 2024. Geoghegan alone faces two theft-in-office charges because he was a public official. The auditor urged former students to check whether Pell Grants were taken out in their names; the indictments were announced with the US Under Secretary of Education.