Three men have been charged with conspiring to defraud the U.S. Department of Veterans Affairs (VA) of over $9.1 million, including funds from the Post 9/11 GI Bill. One of the individuals has entered a guilty plea concerning his involvement in the scheme.
Court documents reveal that Brian Matsudo, 58, Marshall Scott, 39, and Raheem Wells, 37, were involved in the conspiracy targeting the VA. Matsudo, owner of a massage therapy training school in Honolulu, allegedly collaborated with Scott and others to unlawfully obtain tuition payments by withholding information regarding the school’s non-compliance with VA regulations. This activity spanned from November 2016 to November 2022.
According to the indictment, Scott, who started working at Matsudo's school in 2016, submitted falsified enrollment forms for at least 40 veterans claiming enrollment. He reportedly certified compliance with VA regulations despite knowing the forms included false information. Additionally, Wells, a former student at the school, allegedly assisted Scott in recruiting individuals posing as students from May 2020 to November 2022.
Financial gain from the scheme was shared by Scott and Wells. Matsudo compensated Scott for recruiting participants, with funds sourced from the VA's tuition payments. Wells received financial incentives from those he recruited.
In April 2025, Matsudo pleaded guilty to conspiracy to commit wire fraud, which carries a maximum sentence of five years' imprisonment. Sentencing will be determined by a federal judge after evaluating the U.S. Sentencing Guidelines and other statutory criteria.
Following Matsudo’s plea, Scott and Wells were indicted with one count of conspiracy to commit wire fraud and three counts of wire fraud each. Convictions could lead to a maximum of 20 years in prison per count. Wells also faces an additional charge of obstruction of justice for instructing a witness to mislead federal agents, potentially resulting in a separate 20-year sentence.
This case announcement was made by Matthew R. Galeotti, the Head of the Justice Department's Criminal Division, and Kenneth M. Sorenson, Acting U.S. Attorney for the District of Hawaii, supported by Dimitriana Nikolov from the VA Office of Inspector General (OIG) and David Porter from the FBI’s Honolulu Field Office.
The investigation into the fraudulent scheme is being conducted by the VA OIG and the FBI. The prosecution of Matsudo is being handled by Ariel Glasner of the Criminal Division’s Fraud Section, with additional input from Jennifer Bilinkas. Glasner along with Assistant U.S. Attorney Craig Nolan for the District of Hawaii are prosecuting Scott and Wells.
Charges brought forth in an indictment are mere allegations, and the defendants remain presumed innocent until proven guilty in a court of law.