In a recent turn of events, three men have found themselves in hot water after being charged with defrauding the U.S. Department of Veterans Affairs (VA) of more than $9.1 million. One member of the trio, Brian Matsudo, 58, from Honolulu, has pleaded guilty to his involvement in this fraudulent scheme, which exploited education benefits designed to support our nation's veterans, including the lucrative Post-9/11 GI Bill education benefit program.
According to a press release from the U.S. Attorney's Office for the District of Hawaii, Matsudo was the owner of an Honolulu-based massage therapy training school. From roughly November 2016 to November 2022, he colluded with Marshall Scott, 39, of Kapolei, Hawaii, and Raheem Wells, 37, of Indianapolis, Indiana, to secure VA tuition assistance payments by intentionally hiding the fact that his school failed to adhere to VA rules and regulations. Scott, who began working at the school around the same time the scheme started, allegedly submitted false enrollment certification forms for at least 40 military veterans, claiming they were enrolled when they were not.
Wells, a former student at the massage training school, joined the conspiracy later, teaming up with Scott from May 2020 to November 2022 to recruit individuals who allowed the school to mislead the VA with fictitious enrollment statuses. Both Scott and Wells allegedly benefited financially from this arrangement. Matsudo compensated Scott for each individual recruited leveraging the VA's tuition payments, while Wells pocketed monthly payments from the recruits he brought into the scheme.
In a statement made in April 2025, Matsudo pleaded guilty to one count of conspiracy to commit wire fraud and is now facing a maximum penalty of five years imprisonment. Both Scott and Wells, on the other hand, were charged with one count of conspiracy to commit wire fraud and three counts of wire fraud each. The potential penalty for these crimes could be as severe as 20 years in prison for each count. Adding to his charges, Wells was also accused of obstruction of justice for allegedly instructing a witness to provide false information to federal law enforcement agents.
Matthew R. Galeotti, Head of the Justice Department’s Criminal Division, along with other officials, announced the charges. The ongoing investigation is being conducted by the VA Office of Inspector General (VA OIG) and the FBI. Trial Attorney Ariel Glasner of the Criminal Division’s Fraud Section is leading the prosecution effort against Matsudo, with Scott and Wells’ case being handled by Glasner in conjunction with Assistant U.S. Attorney Craig Nolan for the District of Hawaii. As always, an indictment is nothing more than an allegation, and all suspects in the case are considered innocent until proven guilty in a court of law.
