State Rep. Paul Miller of Durham was arrested Wednesday on charges that he sent copies of doctored checks to the U.S. Department of Education to make it appear that he had paid off more than $20,000 in student loan debt to avoid garnishment of his pay.
The U.S. attorney filed a warrant for Miller's arrest in U.S. District Court on Tuesday, charging the Durham Democrat with making a false, fictitious or fraudulent statement or representation to the federal government and using the U.S. Postal Service to execute a scheme or artifice to defraud.
"At this point, I don't really have any comment yet. I really can't give you anything further," Miller said when reached by telephone Wednesday afternoon.
Miller would not affirm or deny his arrest.
But a warrant shows Miller was arrested at 6:35 a.m. at his Durham home and released on personal recognizance or unsecured bail.
Miller has served three terms in House District 29. He did not seek re-election this year. Larry D. Hall, a lawyer and community volunteer, won the Democratic primary runoff last week. No Republicans sought the seat in House District 29.
According to a criminal complaint filed in the Middle District of North Carolina, Miller borrowed $13,750 in federally insured student loans in 1980 when he was a student at the Massachusetts Institute of Technology.
By March of last year, Miller had paid back just $1,700, according to the complaint, and his loan balance had increased to $23,378 with penalties and interest.
In December 2004, Miller learned that the government would begin garnishing his wages, so he offered to make monthly payments of $200 to the U.S. Department of Education, the complaint said.
Four months later, Miller sent several letters to the garnishment branch of the Department of Education claiming that he had paid the debt in full in 1992 and enclosing copies of five canceled checks from 1992 totaling $20,500.
The education department researched the checks and found that instead of being written for $4,100 each as Miller claimed, they had been written for $100 each. Further, the government found that Miller only owed $14,361 in June 1992, not the more than $20,000 he said he had paid.
When confronted in Atlanta with the copies of the checks archived by the Department of Education, Miller did not admit guilt but agreed to participate in an investigation, the complaint said.
But when interviewed in August 2005 in Raleigh by Department of Education special agents, according to the complaint, Miller said that his loan balance was $26,000 and that "this situation" would be "catastrophic."
In February, the State Bureau of Investigation concluded that the check copies had been altered.
Members of the Durham delegation said that Miller did not show up to their session Wednesday. They expressed shock when they learned of the charges.
"Oh, are you kidding? I'd not heard anything," Sen. Jeanne Lucas said. "Oh, Lord, no."
(News researcher Lamara Hackett contributed to this report.)
Staff writer Nikole Hannah-Jones can be reached at 956-2433 or nikole.hannahjones@ newsobserver.com.