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Arizona’s Universal Technical Institute Under Investigation for Alleged False Claims Act Violations

July 2012 — The U.S. Department of Justice has notified Universal Technical Institute, Inc. in Scottsdale, Arizona that it has become the target of a preliminary investigation involving federal False Claims Act violations, the company has announced in a press release. UTI is one of the nation’s largest providers of automotive technician training.

The investigation comes after a whistleblower alleged that the school paid its enrollment counselors in violation of the “incentive compensation ban” contained in Title IV of the Higher Education Act. The former UTI employee also alleged that the school violated numerous other provisions over many years.

The whistleblower has also filed a complaint with the U.S. Occupational Safety and Health Administration, claiming that the school engaged in retaliatory employment practices that are prohibited by whistleblower provisions contained in the Sarbanes-Oxley Act of 2002. UTI maintains that the whistleblower was terminated not for reporting UTI’s alleged fraud, but for legitimate performance reasons.

UTI provides post-secondary education for students who want to work as professional automotive, diesel, collision repair, marine and motorcycle technicians. Over the last 47 years, UTI has graduated 160,000 students at eleven campuses in the U.S. UTI’s schools include the Motorcycle Mechanics Institute and Marine Mechanics Institute (MMI) and NASCAR Technical Institute (NTI) as well as Universal Technical Institute (UTI).

For-profit schools like UTI often receive a large part of their revenue from federal student aid. This has led some schools to pay recruiters based on the number of students they enroll, regardless of the students’ chances of success.

But students at for-profit institutes default on their student loans at very high rates. Twenty years ago, Congress sought to deal with this problem by outlawing incentive pay to school recruiters that is tied to the number of new students they bring in to the school. Whistleblowers help to stop such unlawful practices. The qui tam provisions of the False Claims Act reward whistleblowers for their courage in coming forward by allowing them to share in a portion of any recovery by the government.

While Waters & Kraus is not handling this particular case, we are handling similar cases.  If you have similar claims against a different for-profit college or technical institute, contact us or call our attorneys at 800.226.9880 to learn more about our practice and how we can assist. Waters & Kraus is a national firm with highly skilled lawyers practicing qui tam litigation in four offices, including Dallas, Los Angeles, San Francisco, and Baltimore. Our attorneys have decades of experience successfully representing whistleblowers in a variety of fraud cases. Contact us or call our attorneys at 800.226.9880 to learn more about our practice and how we can assist.

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