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Education Fraud Has Wide-Reaching Repercussions

Education fraud can hurt students, schools, the government, and taxpayers.

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fraud-highlighted-dictionary-300x188Some education scams focus on illegally obtaining grants and loans. Others use high-pressure sales tactics to enroll unqualified students who often end up defaulting on their school loans. However it occurs, education fraud wastes government funds.

The False Claims Act (FCA) allows citizens to sue wrongdoers on behalf of the government. This includes filing claims against organizations and individuals who purposely misuse government education funding for private gain.

Whistleblowers are critical to the efforts to recover taxpayer money lost to education funding waste, fraud, and abuse.

What is education fraud?

There are several different types of education fraud that violate the FCA, including:

  • Student aid records falsification – When for-profit schools encourage and/or help students to falsify their academic records in order to obtain federal loans
    These unqualified students often have a higher drop-out rate and difficulty repaying the loans.
  • Student loan loopholes – When student lenders exploit loopholes to inflate their eligibility for subsidies on student loans they issue or operate student aid scams to falsely obtain student loan financing
    This type of exploitation can funnel government dollars to a limited number of lenders.
  • High-pressure recruitment – When for-profit schools use deceptive sales tactics and misrepresentations to increase enrollment in targeted populations, often military veterans and impoverished students
    Title IV of the Higher Education Act (HEA) prohibits making misrepresentations when recruiting students.
  • Federal education benefit program fraud – When for-profit schools submit false claims to the government about coursework and administration of classes to receive education benefits
    The Post-9/11 GI Bill and the Defense Tuition Assistance Act have been targets of this type of fraud, which victimizes veterans.
  • Research grant fraud – When schools and researchers falsify statements in government grant applications or use government grant money for a non-approved purpose
    Falsifying research undermines the integrity of the government funding decisions.
  • Kickbacks and incentives – When public schools pay recruiters bonuses to enroll prospective students
    Title IV of the HEA also prohibits incentive-based compensation to school recruiters.

Examples of citizens blowing the whistle on education fraud

The government is committed to assisting whistleblowers who report education fraud. Following are five examples of FCA claims that the government and citizens worked together to settle. (While Carolina Whistleblower Attorneys was not involved in these specific cases, the firm has successfully handled a number of whistleblower/qui tam cases.1)

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Education affiliates pays $13 million

Education Affiliates (EA), a for-profit education company, agreed to pay $13 million to resolve allegations that it violated the FCA by submitting false claims to the Department of Education for federal student aid for students enrolled in its programs. Among the allegations was that EA used fake diplomas, incentivized enrollment personnel, and misrepresented graduation and placement rates. Five whistleblowers were awarded payments totaling approximately $1.8 million.1

“Schools have an obligation to live up to their commitment to the government and their students when they accept federal student aid funds,” said Principal Deputy Assistant Attorney General Benjamin C. Mizer.

Duke pays $112.5 million

A Duke University lab analyst alleged that a biology researcher at the university falsified data on numerous research projects which was included in applications for federal research grants from the National Institutes of Health, the Environmental Protection Agency, and other agencies. Duke agreed to pay a $112.5 million settlement in 2019. The whistleblower who filed the FCA claim was awarded $33.75 million.1

“Taxpayers expect and deserve that federal grant money will be used efficiently and honestly,” said Matthew Martin, the U.S. Attorney for the Middle District of North Carolina.

Caldwell University pays $4.8 million

Caldwell University in New Jersey agreed to pay $4.8 million1 to resolve allegations under the FCA that it submitted thousands of false claims to the U.S. Department of Veterans Affairs for Post-9/11 Veterans Education Assistance Act (Post-9/11 GI Bill) and the Department of Defense for payments under the Defense Tuition Assistance Act.

“Caldwell University tried to hoodwink the Department of Veterans Affairs and, worse, veterans themselves, by claiming to offer online classes developed and provided by Caldwell that were in fact marked-up offerings by an online correspondence school,” said U.S. Attorney Carpenita.

Education Management Corp pays $95.5 million

One of the largest U.S. for-profit education companies, Education Management Corp. (EDMC), reached a $95.5 million settlement resolving allegations of FCA violations for falsely certifying that it was in compliance with Title IV of the Higher Education Act (HEA). The primary allegation was that EDMC illegally recruited students by paying admissions personnel purely on enrollment numbers, in addition to using deceptive recruiting practices. The whistleblowers who filed the four FCA qui tam claims will collectively receive $11.3 million.1

“This historic resolution exemplifies the Justice Department’s deep commitment to protecting precious public resources; to defending American consumers; and to standing up for those who are vulnerable to mistreatment, abuse, and exploitation,” said Attorney General Loretta E. Lynch.

Student Aid Lenders pay $57.75

Four student aid lenders settled a $57.75 million FCA lawsuit to resolve allegations that they improperly inflated their entitlement to certain U.S. Department of Education (DOE) interest rates. A former DOE employee alleged that the lenders participating in the federal student financial aid programs had created billing systems that allowed them to receive improperly inflated interest rate subsidies from the DOE. The whistleblower will receive $16.65 million1 for his efforts from this settlement.

“Through the efforts of one citizen and the government, these lenders will be paying millions back to the government,” said Neil MacBride, in his capacity as U.S. Attorney for the Eastern District of Virginia.

How can a whistleblower attorney help me report education fraud?

In all of these examples, individuals faced an uphill battle in reporting the education fraud they encountered. But they prevailed.1 And the Carolina Whistleblower Attorneys can help you “fight the good fight” if you believe education fraud is happening.

Contact us online today for a free and confidential evaluation of your whistleblower qui tam case. Or call us at 1-888-292-8852. We are here to guide you through the process and help you report education fraud.

We believe that education fraud needs to be stopped and that the whistleblowers who come forward with qui tam claims should be protected and recognized for their efforts. Take a look at our “You-First Policy,” which spells out our commitment to whistleblower clients.

Whistleblowers can help stop education fraud so that government funds are not misused. We want to help whistleblowers.

Awards we’ve won

For standards of inclusion for awards listed, visit bestlawyers.com, thenationaltriallawyers.org, superlawyers.com, farrin.com/business-nc-power-list, and millondollaradvocates.com. National Trial Lawyers Top 100 designation is for 2022. Regarding the Million Dollar Advocates Forum, we do not represent that similar results will be achieved in your case. Each case is different and must be evaluated separately. Firm award is for the Law Offices of James Scott Farrin. Attorney awards are for attorneys with the Law Offices of James Scott Farrin.

Contact the Carolina
Whistleblower Attorneys

If you’re wondering if it’s a good idea to speak with a whistleblower lawyer about what you know, let us set the record straight.

  • Corporate ethics hotlines can be risky and may lead to termination. If you’ve already done this, call us immediately.
  • Your coworkers could be aware of the fraud – or complicit in it – and you should not talk to them about it.
  • The first claim to be filed under the False Claims Act can proceed – if you’re not first, you’re at a serious disadvantage and may get nothing (another reason not to speak to your coworkers about it).
  • A confidential discussion costs you a few minutes, but could save you time, stress, and money.

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Disclaimer: Submission of any information to CarolinaWhistleblower.com does not constitute an attorney-client relationship. We have attorneys licensed to practice law in North and South Carolina.

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