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DOJ Intervenes in False Claims Act Education Fraud Case Brought by Constantine Cannon

Posted  May 9, 2024

Constantine Cannon is pleased to announce that on May 7, the Department of Justice (DOJ) announced its decision to intervene in a whistleblower-initiated False Claims Act (“FCA”) case brought by our client against Study Across the Pond (“ATP”), an educational recruitment company.  For years, ATP placed U.S. college students in universities across the United Kingdom, offering to help them with their admissions paperwork and, crucially, applications for federal financial aid.  The U.K. schools in turn would pay ATP for their recruitment of students to their campuses. However, as alleged in the Government’s complaint, ATP would charge these universities on a per-student basis, in violation of what is known as the “incentive compensation ban.”

The incentive compensation ban provides that any educational recruitment company representing students that receive federal financial aid may not be paid on a per-student basis. The prohibition is designed to disincentivize recruitment companies from attempting to maximize their profits by recruiting students who might not be fully qualified or are otherwise ill-equipped to take on student loans.  Such students bear a greater risk of ultimately defaulting on their loans, thus harming both the student and the government.

Despite the clear prohibition, as alleged by the Government, ATP designed their contracts to pay on a per-student basis.  In some cases, they hid their incentivized contract structure by creating sham agreements with the universities that purported to pay on a flat fee basis, all the while having side agreements where the parties agreed that the “flat fee” would be adjusted based on the number of students recruited.

This alleged fraud was brought to the attention of the Government by a whistleblower who filed a qui tam complaint to alert the Government to ATP’s conduct.  The whistleblower in this matter is represented by Constantine Cannon partner Gordon Schnell, along with Poppy Alexander of Whistleblower Partners LLP and Erica Hitchings of Whistleblower Law Collaborative LLC.  After the Government investigated the whistleblower’s claims, it brought its Complaint-in-Partial-Intervention.

This Complaint is notable because there have been very few intervened cases related to incentive compensation ban violations in the past.  It is good to see the Government actively working to stop this kind of fraud, and to protect the students harmed by shameless recruiting practices.

As whistleblower counsel, we look forward to continuing to work closely with the Government as this case progresses.

A link to the Government’s complaint is here.

If you have information relating to potential education fraud or any other kind of government contract fraud, please do not hesitate to contact us and we will connect you with an experienced member of the Constantine Cannon whistleblower team for a free and confidential consult.