NEW YORK(MainStreet) - The Federal Trade Commission (FTC) last month shut down two online high schools it described as “diploma mills” that were “selling academic degrees” at the secondary school level.

Alexander Wolfram and Marcia Garcia have settled charges that they deceived consumers that enrolled into their programs with the promise that they would obtain “official” and accredited high school diplomas that could be used to enroll in college, qualify for student loans and apply for jobs. The FTC’s complaint, filed in Federal court for the Southern District Court of Florida in Ft. Lauderdale, also charged the defendants with running a fake accrediting organization linked to their diploma mill operation. The judgment follows a temporary restraining order that was issued in by the Ft. Lauderdale court in September.

Doing business as Jefferson High School Online and Enterprise High School Online, the defendants, whose online multiple-choice tests mimicked the GED exam, charged between $200 and $300 for what they claimed were legitimate high school diplomas that were not recognized by any accrediting agency.

“A high school diploma is necessary for entry into college, the military, and many jobs,” said Jessica Rich, director of the FTC’s Bureau of Consumer Protection. “These defendants took students’ money but only provided a worthless credential that won’t help their future plans.”

The federal court order imposed a judgment of over $11 million against the defendants and corporate relief defendants. However, papers filed in federal district court last month stated that the monetary judgment was partially suspended based on the defendants’ inability to pay.

FTC spokesperson Cheryl Warner could not say what alternative punishment would be meted out by if the defendants were indeed broke. Unlike someone who, for example, defaults on a student loan and could be making payments for years on end, Wolfram and Garcia would appear to be off the hook when it comes to coughing up any cash. Warner indicated that being barred from any businesses that had to do with education was punishment enough.

“They’re under court order and can’t run another education-related business,” she said, and that their online high schools and related operations are permanently shut down. It was not clear how—or if—purchasers of these fake diplomas would be compensated.

She added that under the terms of the September restraining order that if they were found to have money the court was unaware of, it would be confiscated. Warner said that at the time the restraining order was issued, the defendants were found to have frozen assets worth $98,000.

How widespread are these fraudulent diploma mills? Warner declined to comment, but said “I can’t speak to other investigations, but we’re moving more broadly to scrutinize other similar businesses.” She added, “One of the major drivers of our investigations are complaints from consumers.”

Guidance posted on the FTC’s Website defines a diploma mill as a company that will offer degrees, usually at the high school level, that are unverifiable by any legitimate accrediting agency, in a short amount of time while requiring no coursework, almost always for a flat fee. They can be given solely on the basis of life experience. Colleges that require students to attend class and perform work charge by the credit, course or semester.

--Written by John Sandman for MainStreet