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Former online tutorial owner sent to prisonCarolyn Louper-Morris of Cyber-Study 101 defrauded the state and Kmart of more than $3 million. illegally using a tax credit.

By JAMES WALSH, Star Tribune

Last update: September 29, 2010 - 7:57 PM

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The former owner of the online tutorial service CyberStudy 101, who promised to provide low-income Minnesota families with free computers, internet access and an online study guide, was sentenced in federal court on Wednesday to 12 years in prison.

Carolyn Louper-Morris, 63, along with her son, William J. Morris Jr., defrauded the Minnesota Department of Revenue out of $2.2 million by causing the filing of false tax returns. In addition, Louper-Morris defrauded Kmart, the company that provided CyberStudy with its computers, out of more than $1 million.

Before she was sentenced, Louper-Morris closed a long and dramatic recounting of her life as an educator -- including trips to India, Africa, Haiti and China -- by insisting she never "cheated" anyone.

But Assistant U.S. Attorney Timothy Rank said Louper-Morris indeed cheated -- "shamelessly and brazenly" -- the very low-income people she claimed to try to help.

"It was a fair sentence," Rank said of the 144 months handed down by U.S. District Judge John Tunheim.

Louper-Morris and her son operated CyberStudy 101, which sold an online student tutorial to customers for $1,000 and in return promised to give customers free Internet access and a computer. Families paid the $1,000 by way of a tax credit available to low-income Minnesotans.

This is how it worked: CyberStudy filed tax returns for its customers, directing the tax credit payments to itself. At the time, Minnesota law provided a tax credit for supplemental educational expenses of $1,000 per child and as much as $2,000 per family.

Louper-Morris and Morris told families they wouldn't have to pay for their program up front if they agreed to allow CyberStudy to file a tax return on their behalf and claim the tax credit. Clients who agreed would also receive a free computer and Internet access for life.

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