Archive

January 14, 2022

Conduent Education Services LLC, f/k/a Xerox Education Services LLC, d/b/a ACS Education Services LLC (CES)—a contractor that serviced student loans for lenders—has agreed to pay $7.9 million to resolve allegations of submitting or causing the submission of false claims to the Department of Education (DOE) between 2006 and 2016.  In violation of Federal Family Education Loan (FFEL) program rules and the False Claims Act, CES allegedly failed to accurately report required data on the impact of monthly student loan repayments, principal capitalization, and other changes to DOE.  Under a prior remediation plan, CES paid DOE $1.4 million to partially resolve its liability, which it received credit for in the current settlement.  DOJ

January 13, 2022

One of the nation’s largest student loan servicers, Navient, f/k/a Sallie Mae, has agreed to a $1.85 billion settlement with 39 states to resolve allegations of widespread deceptive and predatory lending practices in the early-to-mid 2000s.  $95 million of the settlement proceeds will be in the form of restitution payments of approximately $260 each to about 357,000 borrowers, while the remaining $1.7 billion will be in the form of cancelled debts for about 7,400 borrowers.  In addition to the monetary settlement, Navient has also agreed to substantial injunctive terms.  CA AG; FL AG; VA AG

September 22, 2021

Jonathan Dean Davis, the owner of the Retail Ready Career Center, a for-profit trade school, was sentenced to nearly 20 years in prison following his conviction on fraud charges.  Davis marketed his school’s HVAC training course to veterans by falsely securing certification of his program by Texas state agencies in order qualify the program to charge veterans’ tuition and fees to the Veteran’s Administration under the Veteran’s Educational Assistance Act.  In fact, Retail Ready used up veteran’s GI Bill benefits and failed to prepare them for careers while collecting more than $72 million in GI Bill benefits from the VA.  Davis was also ordered to pay $65.2 million in restitution and forfeit $72.5 million.  USAO ND TX

September 2, 2021

Jonathan Dean Davis, the owner of for-profit trade school called Retail Ready Career Center, has agreed to forfeit over $72 million after being convicted of defrauding the U.S. Department of Veterans Affairs.  According to evidence presented at trial, Davis falsely certified that he was not personally facing any criminal or civil actions, and that his school was an established, financially-secure educational institution—neither of which were true.  The scheme unraveled after student veterans realized the HVAC training they received at the school was insufficient for entry-level jobs in the industry.  USAO NDTX; subsequent sentencing

February 5, 2021

Michael Malone, the founder and former executive director of the St. Louis College Prep Charter School, was sentenced to one year in prison and ordered to pay restitution of $2.4 million, following his guilty plea to charges arising from a fraudulent scheme to obtain education funds from the Sate of Missouri by inflating the school’s average daily attendance in reports to the state and falsely claiming regular school days and hours as summer school or remedial hours.  USAO ED MO

November 3, 2020

Illinois-based charter school management company Concept Schools, NFP, will pay $4.5 million to settle allegations that it violated the False Claims Act by rigging the bidding process for E-Rate contracts with its network of charter schools between 2009 and 2012 so that its preferred technology vendors received contract awards, despite the fact that they provided equipment at higher prices than those approved by the FCC for equipment with the same functionality.  DOJ

October 27, 2020

In what appears to be one of the largest Post-9/11 G.I. Bill fraud cases ever prosecuted in the country, the owner of a technical training school in San Diego has been sentenced to over three years in prison and ordered to pay almost $30 million in restitution for defrauding the VA out of almost $30 million.  To conceal the fact that Blue Star Learning had close to 100% veteran students—which violated the VA’s “85/15 Rule” that required 85% non-veteran students per course—and to conceal the fact that most of the school’s graduates did not obtain jobs in the fields they were trained in, owner Nimesh Shah allegedly created and submitted elaborate student and graduate files to the California State Approving Agency for Veterans Education (CSAAVE) and the VA.  Because he knew the fake students and employers could be contacted by the agencies, Shah went so far as to have an employee buy 30 mobile phones outfitted with fake company voicemails, as well as hire overseas individuals to man fake email addresses that he created.  As a result of the fraud scheme, Blue Star Learning was paid over $11 million in tuition and over $18 million in housing allowances and stipends.  USAO SDCA

September 15, 2020

ITT Technical Institute settled claims with the CFPB and 48 states and the District of Columbia, agreeing to discharge outstanding student loans incurred for attendance at the for-profit college, run by holding company PEAKS.  PEAKS allegedly knew or was reckless in not knowing that many student borrowers did not understand the terms and conditions of those loans, could not afford them, or in some cases did not even know they had them. The settlement, valued at $330 million, also requires PEAKS to provide credit reporting agencies information to correct credit scores negatively affected by the illegal lending scheme, and to shut down after carrying out the settlement.  CFPB; Cal; FL; MI; PA; VA; WA

January 27, 2020

Florida Academy, a for-profit trade school, has agreed to pay $512,500 to the United States for making false certifications to the Department of Veterans Affairs (the VA) regarding its compliance with a Post-9/11 GI Bill program requirement called the 85%-15% Rule.  To ensure the VA is paying tuition rates at fair market value, the 85%-15% Rule requires participating schools to certify that at least 15% of their students are paying with private funds.   USAO MDFL

January 3, 2020

Following a qui tam lawsuit alleging fraud against the Post-9/11 GI Bill in violation of the False Claims Act, Caldwell University has agreed to pay more than $4.8 million to the United States.  The alleged misconduct occurred between 2011 and 2013 and involved falsely claiming to the Department of Veterans Affairs that classes were developed and taught by the university, when in fact they were developed and taught by an unapproved subcontractor.  Caldwell had also charged the Post-9/11 GI Bill up to 30 times the prices charged to others for the same courses, leading the government to pay over $24 million in tuition.  USAO NJ