Education Fraud

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

December 10, 2019

The University of Phoenix and its parent company, Apollo Education Group, have agreed to resolve FTC charges through a record $191 million settlement, with $50 million to be paid in cash and $141 million in debts owed by affected students to be canceled.  The charges involved ads that gave prospective students the false impression that the university worked with major technology companies to design its curriculum and provide job opportunities.  FTC

December 4, 2019

A small for-profit college and manager accused of defrauding the G.I. Bill program has agreed to pay $120,000 to resolve their liability under the False Claims Act.  New Horizons Spokane and its general manager, Spirit Dorris, admitted to failing to comply with a VA requirement that limited the enrollment of students funded by the G.I. Bill to no more than 85% of any given course. The “85/15 Rule,” as it is known, is meant to ensure that educational courses are offered because of public interest and value and not solely to take advantage of VA funding.  USAO EDWA

November 25, 2019

Two entities agreed to pay a total of $1.2 million to resolve claims that the Puerto Rico Municipality of Sabana Grande improperly subcontracted work to be performed under a grant from the U.S. Dept. of Education to the Puerto Rico Department of Education for teacher training. The grant required that the work could not be performed by private entities, but the municipality subcontracted with and disbursed grant funds to private entity the Puerto Rico Olympic Committee (COPUR), which further subcontracted with the company Administrative, Environmental and Sports Consultants (AESC).  The municipality will pay $500,000, and COPUR agreed to pay $700,000.  In addition, the United States seized more than $1 million from bank accounts belonging to AESC owner Irving Riquel Torres in connection with related criminal proceedings against him.  USAO PR