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Fake University of Farmington case nets emotional sentencing

Robert Snell
The Detroit News

Detroit — A Kentucky man who recruited 74 students to a fake university created by the government during a crackdown on immigration fraud was sentenced to six months in federal prison Wednesday.

Phanideep Karnati, 36, of Louisville was the eighth and final person sentenced in a case that drew international headlines due to the government inventing a phony university and because the crackdown drew complaints of entrapment that led to about 250 foreign-born students being forced to leave the country.

A photo on the university's website is almost identical to one available on the stock photography website Shutterstock.

Prosecutors wanted U.S. District Judge Gershwin Drain to sentence Karnati to as much as 30 months in federal prison, saying he abused the student visa system to "line his pockets" and knew the phony university did not offer any classes.

"Karnati chose to engage in criminal conduct even though he had already achieved what others desired; the ability to live and work in the United States with the possibility of a pathway to U.S. citizenship," Assistant U.S. Attorney Timothy McDonald wrote in a court filing.

The sentencing hearing marked an emotional coda to a high-profile case that ended with Karnati, a native of India who was in the U.S. on a work visa, in the custody of immigration officials and with the cries of his wife and two young children echoing off the marble floors of federal court.

The undercover sting, dubbed "Operation Paper Chase," targeted an immigration fraud scheme that involved at least 600 people who collectively paid recruiters more than $250,000 to stay in the United States, according to prosecutors.

Phanideep Karnati (in blue) sits next to co-conspirator Santosh Sama, right, during a secretly recorded meeting at the University of Farmington.

Karnati was paid at least $25,000.

Homeland Security agents used "The University of Farmington," which had no staff, instructors, curriculum or classes, to arrest eight recruiters accused of visa fraud conspiracy and harboring aliens for profit, according to federal court records.

The investigation dates to 2015 during the administration of former President Barack Obama but intensified one month into President Donald Trump's tenure as part of a broader crackdown on illegal immigration.

The university barely existed beyond a few documents.

The University of Farmington president is a fictional character invented by federal agents who does not exist beyond a bare-bones LinkedIn profile. President Dr. Ali Milani, who is listed on the university's state business filings, owns no property, has no relatives and has never voted, according to a public records database.

Milani was listed in state business filings as one of five officers and directors at the university. Like Milani, Treasurer Omar Parsi does not appear in a national public records database. 

The University of Farmington's headquarters was in an office building on Northwestern Highway north of Inkster Road in Farmington Hills.

The entrance to the University of Farmington.

The university had a sheen of legitimacy, however, thanks to the Accrediting Commission of Career Schools and Colleges in Virginia. The commission accredited the fake university after Homeland Security agents outlined the scope of the investigation, its executive director, Michale McComis, told The News last year.

Democratic U.S. Reps. Andy Levin of Royal Oak and Susan Davis of California, as well as Democratic presidential hopeful Elizabeth Warren, questioned Education Secretary Betsy DeVos earlier this month about the commission's role.

In a letter to DeVos, lawmakers wrote that the accreditation played a key role in the deception by publicly listing the fake university as accredited. That led potential students to believe they were enrolling in a real university to maintain their student visas.

"These actions undermine ACCSC's credibility as an accreditor and the legitimacy of the U.S. higher education system as a whole," according to the letter by Levin, Davis and Warren, a U.S. senator from Massachusetts, to ACCSC. "It is deeply misleading, unfair, and irresponsible to falsify accreditation information that students can and should use to evaluate their educational options before uprooting their lives and making significant financial investments in their education."

Karnati was a leader in the fraud, prosecutors said.

He knew the university had no classes, no homework or any semblance of a real education institution, McDonald said.

"These weren't students. They were fraudsters," U.S. Attorney Matthew Schneider said. "They knew they were cheating. They knew they were lying to the government."

Prosecutors secured seven other convictions, including:

• Barath Kakireddy, 30, of Lake Mary, Florida, sentenced to 18 months;

• Suresh Kandala, 32, of Culpeper, Virginia, sentenced to 18 months;

• Prem Rampeesa, 27, of Charlotte, North Carolina, sentenced to 12 months and one day;

• Santosh Sama, 29, of Fremont, California, sentenced to 24 months;

• Avinash Thakkallapally, 29, of Harrisburg, Pennsylvania, sentenced to 15 months

• Aswanth Nune, 27, of Atlanta, sentenced to 12 months and one day;

• Naveen Prathipati, 27, of Dallas, sentenced to 12 months and one day

Karnati was no mastermind, defense lawyer Anjali Prasad wrote in a court filing.

He provided legitimate recruiting services for students at real universities before adding the University of Farmington to his portfolio, she wrote.

She urged the judge to keep Karnati, an information technology professional, out of prison so he could leave the country immediately. Karnati is the family's sole provider and his wife and young children, including a 3-year-old born in the U.S., would be forced to live in isolation in India if he was sentenced to prison, the lawyer argued.

"When measured against a short custodial sentence and an unknowable amount of time in a DHS detention facility, the family hardship in this case is both exceptional and insurmountable," she wrote.

The judge sentenced Karnati to six months, in part, because of the hardship faced by the defendant's family.

"I sympathize with your family and your children but ... it's just a part of life when you commit a crime," Drain said.

Karnati had a fleeting victory Wednesday.

Prosecutors wanted him jailed immediately, calling Karnati a flight risk with a wife and children poised to leave the country.

Drain said no, citing Karnati's good conduct while on bond.

But immigration officials were waiting in the hallway and took Karnati into custody.

His wife and children — including a son who spent his 10th birthday Wednesday in Drain's courtroom — sat on a hallway bench and cried while federal agents escorted Karnati to an undisclosed immigration detention facility.

"We hit a home run with the six-month sentence," Karnati's lawyer said, "but the government has to have the last laugh."

rsnell@detroitnews.com

Twitter: @robertsnellnews