Education Fraud

March 23, 2016

California obtained a $1.1 billion judgment against defunct Corinthian Colleges, Inc. (CCI) for their predatory and unlawful practices. While CCI filed for bankruptcy in May 2015, this judgment can help secure further relief for struggling students. In October 2013, Attorney General Kamala D. Harris led the charge against CCI and its subsidiaries that operate Everest, Heald, and Wyotech colleges, filing suit seeking to put an end to abusive practices that left tens of thousands of students under a mountain of debt and useless degrees. CCI filed for bankruptcy in May 2015. In granting the default judgment, the Court ordered restitution on behalf of students in the amount of $820,000,000 and civil penalties totaling $350,025,000, for a total of $1,170,025,000 in monetary relief. CA

March 9, 2016

New York-based Bard College agreed to pay $4 million to resolve allegations it violated the False Claims Act by receiving funds under the Department of Education’s Teacher Quality Partnership Grant Program despite failing to comply with the conditions of the grant.  The settlement also resolves allegations that Bard awarded, disbursed, and received Title IV student loan funds at campus locations before such locations were accredited or before providing notice of such locations to the Department of Education in violation of applicable regulations and Bard’s Title IV Program Participation Agreements with the agency.  The allegations originated in a whistleblower lawsuit filed under the qui tam provisions of the False Claims Act by two former students of Bard’s Master of Arts in Teaching Program at Paramount Bard Academy in Delano, California.  They will receive a yet-to-be-determined whistleblower award from the proceeds of the government's recovery.  DOJ (EDCA)

February 17, 2016

The U.S. District Court of South Carolina awarded a $9,283,123.00 default judgment against Lacy School of Cosmetology and its president Earnest “Jay” Lacy, for presenting false claims to the U.S. Department of Education for federal student loans and grants.  According to the government, the school failed to comply with numerous federal program regulatory requirements, making unauthorized disbursements of federal student aid funds, failing to refund student credit balances, and concealing its actions by submitting false statements of compliance.  The default judgment is based on a whistleblower lawsuit filed under the qui tam provision of the False Claims Act.  DOJ (SC)

February 19, 2016

The FTC has charged online distance education school Stratford Career Institute with misleading consumers about its high school equivalency program that the agency alleges failed to meet the basic requirements set by most states. In its complaint, the FTC alleges that Stratford’s extensive advertising for its high school program included multiple references to a “high school diploma” leading to an increase in earning potential, access to better jobs and promotions, and the ability to apply for higher education. The FTC’s complaint alleges that Stratford’s high school program fell short of its promises, meaning thousands of students nationwide paid as much as $989 for a diploma that could not meet their educational or career needs. FTC

January 27, 2016

The FTC has filed suit against the operators of DeVry University, alleging that DeVry’s advertisements deceived consumers about the likelihood that students would find jobs in their fields of study, and would earn more than those graduating with bachelor’s degrees from other colleges or universities. “Millions of Americans look to higher education for training that will lead to meaningful employment and good pay,” said FTC Chairwoman Edith Ramirez. “Educational institutions like DeVry owe prospective students the truth about their graduates’ success finding employment in their field of study and the income they can earn.” FTC

November 16, 2015

Pittsburgh-based for-profit education company Education Management Corp. agreed to pay $95.5 million to resolves allegations it violated the federal False Claims Act and several state False Claims Acts by falsely certifying it was in compliance with Title IV of the Higher Education Act and parallel state statutes.  The government alleged the company violated the statute’s Incentive Compensation Ban by running a high pressure boiler room where admissions personnel were paid based purely on the number of students they enrolled.  The allegations first arose in series of whistleblower lawsuits filed under the qui tam provisions of the False Claims Act.  The whistleblowers will collectively receive a whistleblower award of $11.3 million from the proceeds of the government’s recovery.  Whistleblower Insider IN, IL, IA, MT, NJ, NY, NM, VA, WA

June 24, 2015

For-profit education company Education Affiliates agreed to pay $13 million to settle charges it violated the False Claims Act by submitting false claims to the Department of Education for federal student aid.  The Maryland-based company operates 50 campuses under various trade names, including All State Career, Fortis Institute, Fortis College, Tri-State Business Institute Inc., Technical Career Institute Inc., Capps College Inc., Driveco CDL Learning Center, Denver School of Nursing and Saint Paul’s School of Nursing.  According to the government, the company engaged in a variety of fraudulent acts to increase admissions including admitting unqualified students, creating false high school diplomas, falsifying students’ federal aid applications, and referring prospective students to “diploma mills” to obtain invalid online high school diplomas.  The allegations first arose in five whistleblower lawsuits filed under the qui tam provisions of the False Claims Act.  As part of this resolution, the five whistleblowers will receive whistleblower award payments totaling approximately $1.8 million.  Whistleblower Insider

May 13, 2014

Student loan company Sallie Mae, and its former student loan servicing arm, Navient Solutions, agreed to pay $100M to settle charges that they violated the Servicemembers Civil Relief Act (SCRA) by overcharging military members for student loans. Whistleblower Insider