New York Times investigative journalist Declan Walsh – whose report last year unveiled a “secretive Pakistani software company” that allegedly earned millions of dollars from scams involving fake degrees, non-existent online universities and manipulation of customers – has detailed in a new report published Monday fresh details about the case surrounding Axact.

New details on the case, disclosed in the report, purport that the scandal is “bigger than initially imagined”.

• Axact allegedly took money from at least 215,000 people in 197 countries.
• CEO Shoaib Shaikh found to be owner of several shell companies in the US and other Caribbean countries that were used to channel funds to Pakistan.
• Shaikh used a pseudonym on documentation linked to offshore companies.
• Shaikh became a citizen of St. Kitts and Nevis, a small Caribbean island that sells passports to rich investors.
• Axact sales agents employees used "threats and false promises" and impersonated government officials to rake money from customers, mostly in the Middle East.
• The company earned at least $89 million in its final year of operation through illicit operations.

Axact CEO Shoaib Ahmed Shaikh, managers Viqas Atique, Zeeshan Anwar, Mohammad Sabir and Zeeshan Ahmed and 14 other officials/employees of software firm Axact were booked in May last year for allegedly preparing and selling fake degrees, diplomas and accreditation certificates of fictitious schools/universities through a fraudulent online system and illegally minting “hundreds of millions of dollars".

The Federal Investigation Agency filed a final charge-sheet in the case last month, but the accused await trial.

Shell companies

According to the new report, United States officials had informed Pakistani authorities that the Federal Bureau of Investigation (FBI) had identified Axact as a “diploma mill” that operated a “worldwide web of shell companies and associates.”

Sheikh was found to be the owner of three of the offshore firms, registered in Delaware, that were used to channel “illicit earnings” to Pakistan, the NYT report quoted US officials as saying.

The new findings stem from financial records, company registrations, sworn testimony, communications between Pakistani and American officials, and “hundreds of hours of taped phone conversations filed in court.”

Documents linked with the company show it owned other shell companies in the British Virgin Islands, Cyprus, Dubai and Panama. Sheikh allegedly used the pseudonym 'Ryan Jones' to sign papers for these companies, the report said.

Impersonation of govt officials

Citing "hundreds of hours of taped phone conversations extracted from Axact servers", the NYT report said Axact sales agents impersonated American lawyers or US State Department officials to cajole customers into paying more money.

In one case mentioned in the report of such impersonation, a Pakistani man pleaded for respite from "Jacob" — an Axact sales agent acting as a US university official.

“Please, please, Mr. Jacob,” said the man, saying he had already paid $150,000 to Axact. “I have sold all of my assets to pay this last amount. I am not eating well. I am not sleeping well.”

“Look, you’re not paying that much,” the sales agent responded, before threatening with possible police action. “Just another $10,000.”

Measures to hide alleged fraud

When local police began its investigation, Sheikh instructed his employees to "burn company documents" and destroy other evidence but investigators managed to procure a vast trove of data revealing that Axact's main business was to provide fake degrees from non-existent online universities with American-sounding names, the report said.

In a US court hearing, which came after customers of the online Belford High School sought damages, "Axact officials persuaded an attendant in the company’s cafeteria to pose as the founder of the school", the report quoted a police report as saying.

Shaikh's sister, Chicago resident Uzma Shaheen, was called to testify in the case. Court documents revealed Shaheen "transferred more than $37 million from American bank accounts to Axact in Pakistan in recent years".

According to prosecution documents quoted by the NYT report, at least 32 bank accounts linked to Axact, holding millions of dollars, exist in various countries. Three banks accounts linked to Shaikh were frozen in the US lawsuit.

Uncertainty surrounds case

The investigation against Axact hit a snag when special public prosecutor Zahid Jamil, who was at the centre of the prosecution, quit the proceedings citing only "circumstances" that would make it difficult for him to continue, before the trial was to begin.

Read: Charge-sheet against Axact submitted

According to the NYT report, two judges involved in the proceedings have excused themselves without explanation.

Media analysts speculate Axact CEO's power connections "may yet work in his favour", the report said, adding that Shaikh "publicly boasted of his work for the Pakistani military".