For $6,000, You Get A Pencil With The Answers Inc

IT WAS A SWEET LITTLE scam, as the Feds tell it. Prospective students respond to an ad promising a ""unique'' method that guarantees high scores on several standardized tests required for entry by most graduate schools. They have to pay up to $6,000 and get to Los Angeles. On the day of the exam, confederates in New York take the test and, taking advantage of the three-hour time difference, phone the West Coast ringleader with the answers. In L.A., the paying clients then receive the answers, carefully inscribed in a secret code on the side of pencils. The guarantee is good: they ace their tests.

Three years into the con, it went sour. According to Mark Godsey, an assistant U.S. attorney, one of the clients for the Oct. 19 Graduate Management Admission Test was an undercover postal inspector. A week later, federal agents charged Po Chieng Ma, the owner of the American Test Center in El Monte, Calif., with two counts of mail and wire fraud--he could get out on bail this week. If convicted, Ma faces up to 10 years in prison and a hefty fine. But now, critics of the Educational Testing Service, which administers the tests, want to know how ETS could have missed the scheme for so long. And university deans are preparing for bad news, trying to decide what to do if they find that one of their students was an exam cheater.

Ma's alleged plan wasn't entirely new. Four years ago ETS broke up a less well organized (though apparently successful) effort to hack the Scholastic Aptitude Test, another ETS product, using the time-zone quirk. But Ma is also accused of providing fake identities for the expert test-takers in New York and taking the tests himself a few times. He's apparently no stranger to aliases--the Feds swore out their complaint against ""George Kobayashi,'' the name used in the scam, but he was incarcerated as Ma. The authorities didn't get that worked out until Thursday afternoon, when they tried to arraign Kobayashi and learned he didn't exist.

According to the complaint, Ma would pick up his clients at Los Angeles International Airport in a black Mercedes the day before the test and drive them to a hotel. There, Ma laid out the plan and had the undercover agent sign a confession, which Ma threatened to send to ETS if he didn't get his $6,000 on time. The next day Ma and his staff drove their clients to various testing locations around L.A., spread out so their impending high scores wouldn't arouse suspicions. The agent reported that Ma rode along with two carloads of clients to a local university campus where the test was to be administered. In the parking lot, Ma took a call on a cellular phone and then announced the essay questions. He proved to be correct. During a break, the agent went outside and Ma gave him the coded pencils. The undercover op finished the test, though his score has not been released.

How could such a scam go on for so long? ""ETS has been told repeatedly about this security hole for 10 years, by me, and done nothing about it,'' says John Katzman, president of The Princeton Review, a major test-preparation company. Katzman and representatives of his main competitor, Kaplan Educational Centers (which is owned by NEWSWEEK's corporate parent, The Washington Post), say that ETS has consistently ignored or confounded their attempts to alert it to security problems. ETS denies those charges. ""There are many instances where we have thwarted and foiled efforts to compromise test security that never received the notoriety that this one has,'' says Stanford von Mayrhauser, ETS's general counsel. David Wilson, president of the Graduate Management Admission Council, which sponsors the GMAT, says that the Postal Service uncovered the scheme by following up on a tip from ETS security, whose scoring algorithms picked up unusual performance by one of the alleged cheaters. That student blew the whistle to the Feds. Neither von Mayrhauser nor Wilson would discuss plans for specific security changes.

There's one group very worried about its security: the customers who took part in the alleged scam. What happens to Ma's clients, some of whom are already in graduate school? Godsey says he can't discuss how many other people might be involved or what kind of action could be taken against them. But von Mayrhauser says ETS could cancel scores and notify schools. ""It would be a very serious character and integrity violation that might well involve separation from the program,'' says George Parker, director of the M.B.A. program at Stanford University.

But if the fix has been in for three years, as the Feds allege, then a few cheaters might have already graduated. ""I think you're probably facing something like a statute-of-limitations problem,'' Parker says. ""The number of degrees that are revoked is very small.'' In other words, if they've made it through the system and into the work force, they may be home free. Unless a dormant conscience proves hard to live with.