Student Loan | Governments Get Go-ahead To Try To Recoup Bogus Loans

December 25, 2011 – 6:11 am

The provincial and federal governments have been given the green light to proceed with a civil case in an attempt to recoup monies paid out in a bogus Vancouver Film School student loan scheme dating back nearly 10 years.

On Dec. 14, B.C. Supreme Court dismissed an application by the school which would have prevented both governments from suing employees or former employees who may have taken part in duping the federal and provincial governments out of roughly $400,000 in loans for people who never attended the school.

The case goes back to November 2003, when the federal government accused the film school of “vicarious” liability for a series of fraudulent students loans that were signed by Istvan Bajkay – the school’s former student loan officer. Bajkay was prosecuted and sentenced in criminal court for his role in the scheme.

In two statements of claim filed in 2004, the federal government and the province alleged “fraud on the part of Mr. Bajkay that was intended to induce B.C. to grant Student Loans to persons who were not entitled to receive them.”

Judgment in the civil case has been delayed for years while the court sorted out who could be held responsible. The school argued it had no role in the matter and shouldn’t be on the hook for the lost funds.

Despite an application by the film school to have its liability struck from the case, the court eventually decided this month to allow both governments to target the school, in addition to Bajkay, 28 named individual loan claimants, and an unknown number of yet-to-be-named employees at the school who may also have been involved.

Justice Gregory Bowden denied the film school’s request to narrow the suit’s parameters, giving the green light to the province and the federal government to try to recoup its losses.

In an affidavit filed on June 23, 2011, the film school’s man-aging director Marty Hassel-bach told the court Bajkay was fired by the school for an unrelated matter in October 2001. Shortly after that, the “school became aware of possible irregularities in [student loan] funding,” and a month later, the school contacted government officials and police about its concerns.

That report sparked a provincial forensic investigation, which included an audit of the school’s files and personnel. Hasselbach said the province never suggested to him “at any point” that employees other than Bajkay were involved in the scheme.

“[The film school] assisted the authorities in the investigations that followed the report by VFS,” said Brad Dixon, a lawyer representing the film school in the case.

“Those investigations revealed that there had been fraudulent student loan applications processed for individuals who did not attend Vancouver Film School,” Dixon said in an email.

Throughout the case, the film school has “remained in good standing as a designated institution for purposes of the provincial and federal student assistance programs,” Dixon said.

No trial date for the civil claim has been set.

The film school did not return calls Thursday.



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