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Education Fraud

This archive displays posts tagged as relevant to fraud in government education programs. You may also be interested in the following pages:

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August 24, 2016

The insurance carrier for defunct, for-profit cosmetology school B&H Education, Inc., which operated the Marinello Schools of Beauty in locations across Southern California, agreed to pay $8,631,000 to resolve allegations the school violated the False Claims Act by obtaining federal student loan funds for ineligible students who received bogus high school diplomas.  The allegations originated in a whistleblower lawsuit filed by six former B&H employees under the qui tam provisions of the False Claims Act.  The whistleblowers will collectively receive a whistleblower award of $2.5 million from the proceeds of the government's recovery.  In addition to the $8.6 million payment, the insurer will also pay $2,369,000 to the six whistleblowers’ attorneys.  DOJ (CDCA)

August 24, 2016

Six former employees of defunct for-profit cosmetology school B&H Education, Inc., which operated the Marinello Schools of Beauty in locations across Southern California, will receive a whistleblower award of $2.5 million from the $8.6 million B&H's insurance carrier agreed to pay to resolve allegations that B&H violated the False Claims Act by obtaining federal student loan funds for ineligible students who received bogus high school diplomas.  DOJ (CDCA)

August 22, 2016

The CFPB sued Wells Fargo Bank for illegal private student loan servicing practices that increased costs and unfairly penalized certain student loan borrowers.  The consent order requires Wells Fargo to pay at least $410,000 to compensate consumers for illegal late fees, improve its consumer billing and student loan payment processing practices, and pay a $3.6 million civil penalty to the CFPB.  CFPB

August 3, 2016

New York announced that Keisha Relf Davis, a New York State Department of Education vocational counselor, pleaded guilty to taking part in a scheme that stole over $2.3 million from New York State. As part of the scheme, Relf Davis, in exchange for cash bribes, approved students for the Office of Adult Career and Continuing Education Services’ Vocational Rehabilitation Program (“ACCES-VR”), although these students never applied to the program. The ACCES-VR program was created to help eligible New Yorkers with disabilities and functional limitations gain self-dependence through education, training, and employment. Relf Davis knew that the students she approved did not have disabilities or functional limitations to qualify for this program. NY

July 8, 2016

California announced that the Bureau of Children’s Justice and False Claims Unit of the California Department of Justice has reached a settlement agreement with K12 Inc., a for-profit online charter school operator, and the 14 affiliated non-profit schools known as the California Virtual Academies (“CAVA Schools”) that it manages, over alleged violations of California’s false claims, false advertising and unfair competition laws. As part of the settlement, which is subject to court approval, K12 will provide approximately $160 million in debt relief to the non-profit schools it manages—“balanced budget credits” that were accrued by the schools as a result of the fee structure K12 used in its contracts—and will pay $8.5 million in settlement of all claims. In addition, K12 has agreed to implement significant reforms of its contracts with the CAVA Schools, undergo independent reviews of its services for students with disabilities, ensure accuracy of all advertisements, and provide teachers with sufficient information and training to prevent improper claiming of attendance dollars. CA

May 25, 2016

Florida and the Federal Trade Commission announced two joint actions against alleged unlawful debt relief operations targeting student loan holders. In the first action, the enforcement agencies filed a joint action against Chasity Valdes and her companies, Consumer Assistance LLC, Consumer Assistance Project Corp. and Palermo Global LLC, alleging that the defendants took illegal up-front fees in return for their purported debt relief and credit repair services that they falsely claimed would reduce consumers’ student loan debt and repair the consumers’ credit. According to the complaint, the defendants led consumers to believe they qualified for government student loan forgiveness programs that would result in a reduction of their student loan debt, even though the programs have strict requirements that the consumers were likely not to meet. The complaint also alleges defendants misrepresented that they would audit consumers’ loans for errors that would invalidate the loans or reduce the balance, when in reality, at most, defendants merely sent worthless form dispute letters. FL

May 25, 2016

The FTC and the State of Florida have taken action against the Consumer Assistance LLC, Consumer Assistance Project Corp. and Palermo Global LLC with running phony student loan debt relief schemes, and defendants in a similar FTC action brought earlier this year have agreed to a ban on participating in any debt relief business, as part of a consumer protection crackdown to combat such frauds. “The FTC is not going to stand on the sidelines when it uncovers evidence of fraudsters targeting students,” said Jessica Rich, Director of the FTC’s Bureau of Consumer Protection. “Consumers should be wary of any company that claims it can eliminate or greatly reduce debt, especially if they ask for money in advance.” FTC

Trump University: A Foreboding

Posted  04/29/16
By Gordon Schnell and Phillip Brown (Published in US News and World Report) Big news for Donald Trump on the campaign trail.  It has nothing to do with his inexorable march to the Republican nomination.  It is about the fraud action New York brought against him concerning his now-defunct Trump University.  On Tuesday, a New York judge ruled the case will go to trial, perhaps as early as the fall, clearly...

April 7, 2016

Washington announced favorable resolutions for consumers with six student loan debt adjustors that overcharged Washington state students and collected unlawful fees. The six loan adjustors will pay a total of $162,000 to refund Washington students for illegal charges and an additional $56,000 for the Attorney General’s costs and attorney’s fees, as well as monitoring and future enforcement of the Consumer Protection Act. Student loan debt adjustment firms offer to help students fill out and submit paperwork to the U.S. Department of Education to consolidate their federal student loans. But information about repayment options and help consolidating federal student loans is available — for free — directly from the U.S. Department of Education. All 346 Washington student victims will receive full refunds of the money they paid to the various companies. The Attorney General’s Office will notify eligible consumers and distribute the refunds directly to them in July 2016. WA
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