Lawyers in our Consumer Fraud Section are aggressively investigating several cases involving the fraudulent misuse of federal student loans by for-profit and public colleges and universities. The federal student loan programs involve several different programs including the Pell Grant program, Stafford, PLUS, and Perkins loans. These programs were instituted to serve as a means for students to obtain a higher education who otherwise would not be able to do so due to the high costs of college attendance.
Unfortunately, colleges and universities across the country have begun engaging in fraudulent practices to obtain as many federal dollars as possible. The for-profit higher education sector has boomed over the past 20 years as Congress has allowed these shareholder-driven “colleges” to be financed through the federal student loan program. Currently, for-profit colleges are allowed to operate off of 90% of federal taxpayer dollars.
Congress allowing for-profit colleges to operate on federal dollars has given these schools a negative incentive to increase tuition as much as possible without going over the “90% rule.” But, many for-profit colleges are outright ignoring the 90% rule and falsely obtaining more federal dollars than they are legally allowed. Additionally, both for-profit and traditional higher education institutions have been caught manipulating and lying on unsuspecting students’ FASFA applications in order to fraudulently obtain federal taxpayer dollars. This is a shocking revelation and can’t be tolerated.
The Department of Justice intervened recently in a False Claims Act lawsuit filed against ATI Enterprises, Inc., which owns several for-profit colleges in Texas, Florida, Oklahoma, and New Mexico. From 2007 through 2010, ATI knowingly misrepresented job placement statistics to the Texas Workforce Commission in order to maintain its state licensure and keep its eligibility to receive federal student loans, according to the complaint. ATI is also accused of enrolling students who did not have high school diplomas, or a GED, and falsifying their records to defraud the federal government of taxpayer-financed student loans.
Lawyers in our firm are investigating the claims of whistleblowers across the nation who are aware of for-profit and traditional colleges that are defrauding the federal government of student loans. Whistleblowers are protected under the False Claims Act from discrimination, harassment, threatening acts, demotion, and termination. In the event an employer retaliates against a whistleblower for standing up for the truth, and reporting fraudulent conduct, the False Claims Act requires that a whistleblower be reinstated to his or her previous job grade and receive double back pay. Furthermore, if a whistleblower files a suit on behalf of the federal government, he or she is entitled to receive at least 15% and potentially 30% of the funds recovered. This is a hefty incentive for employees everywhere to stand up for the truth and tell their employers to stop defrauding the American taxpayer.
If you have any direct information about a higher education institution defrauding the federal government, do not hesitate to contact us. Currently, the typical fraud includes falsifying student records; manipulating graduate job placements; and/or fraudulent acts to maintain accreditation/licensure in order to maintain federal student loan eligibility. If you are aware of any fraud committed against the federal government to obtain taxpayers’ funds then you may be protected as a whistleblower and have a potential False Claims Act case. If you have any questions as to whether you are a potential whistleblower, please contact Andrew Brashier, a lawyer in our Consumer Fraud Section, at 800-898-2034 or by email at Andrew.Brashier@BeasleyAllen.com.
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