Education Fraud

August 27, 2019

Career Education Corporation (CEC) and its post-secondary school subsidiaries have agreed to pay the FTC $30 million to settle charges of using illegal means to market its schools.  In addition to calling numbers on the Do Not Call Registry, which violates the Telemarking Sales Rule, CEC also misrepresented to students that its schools were affiliated with or recommended by the military.  FTC

May 15, 2019

Robert C. Leonard, CEO of Force Multiplier Solutions, has been ordered to pay $125 million in restitution for his part in a bribery scheme which took down public officials and brought about the collapse of Dallas County Schools. Mr. Leonard pleaded guilty to conspiracy to commit honest services wire fraud and was sentenced to seven years in federal prison.  DOJ

February 11, 2019

North Greenville University (NGU) in South Carolina has agreed to pay $2.5 million to settle claims that it violated Title IV of the Higher Education Act, as well as the False Claims Act, by improperly compensating student recruiters with bonuses while receiving federal student aid. The alleged fraud was exposed by Maurice Shoe, co-owner of a recruiting company partially owned by NGU; Shoe will now receive $375,000 of the government’s recovery. DOJ

January 3, 2019

For-profit education company Career Education Corporation has entered in to settlement agreements with attorneys general in 48 states plus the District of Columbia to forgive $494 million in outstanding student loan debt issued by CEC and held by nearly 175,000 former students, and to provide additional protections for students enrolling in CEC programs.  CEC was alleged to have mislead prospective students regarding CEC enrollment, including the total cost of attendance, job placement rates, the transferrability of credits, and program offerings. See: CT; IL; KS; PA; WA

December 21, 2018

Vielka Maritza McFarlane, the founder and former CEO of Celerity Educational Group, a Los Angeles-based non-profit that owned and operated charter schools, has agreed to plead guilty for misappropriating public funds and falsely certifying that Celerity was complying with applicable rules and regulations.  McFarlane admitted that she directed approximately $2.5 million in public funds, including funds from the U.S. Department of Education, to improper uses.  USAO CD Cal

October 29, 2018

The FTC has settled with an online student loan refinancer, SoFi Lending Corps, for allegedly misrepresenting the amount that student loan borrowers could save by refinancing with their company, sometimes by double the actual amount. In calculating the savings, SoFi allegedly excluded certain borrowers and failed to disclose or disclose clearly the fact that it had made those exclusions, a violation of the FTC Act. It will face civil penalties if it violates the finalized settlement order. FTC

October 26, 2018

A former U.S. Department of Veterans Affairs official, James King, pleaded guilty to demanding and receiving bribes from three for-profit schools, Atius Technology Institute, Eelon Training Academy, and School A, in exchange for enrolling disabled military veterans in those schools.  All three school owners sent King and other VA officials false information about the education being provided to veterans.  King facilitated over $2 million in improper payments from the VA using the veterans’ federal benefits. DOJ