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Falsifying Reports — Student Enrollment, Loan Default Rates, and Graduation Data

Colleges may falsify reports to maintain their own eligibility for student financial aid.

Some for-profit colleges are accused of falsifying records provided to government agencies, such as job records, graduation rates, student grades, student enrollment rates, and loan default rates. Such records are important, because they demonstrate a school’s eligibility for student financial aid. To protect their eligibility status, some schools may “fudge” the numbers, defrauding the government of financial aid dollars.

School employees who know about such fraudulent reporting can help stop such illegal behavior by filing a False Claims Act lawsuit. Such whistleblowers have been very important in recovering federal funds and stopping illegal behavior.

Examples of for-profit colleges’ attempts to falsify reports include the following:

Misrepresenting costs and aid eligibility.

In a March 2010 SEC filing by Corinthian Colleges, parent company of Everest College, the company revealed that the U.S. Department of Education found that Everest College’s Phoenix division misrepresented costs and aid eligibility.

The department called the misrepresentation an “intentional evasion of the 90/10 requirements.” The “90/10” rule under Title IV of the Higher Education Act mandates that for-profit colleges receive at least 10% of school revenue from non-Title IV funds.

Falsifying job records of former students.

A Dallas/Fort Worth news station investigation into local for-profit colleges found evidence that an Everest College campus falsified the job records of at least 288 former students over four years. The investigation also revealed that admissions representatives at ATI, a smaller for-profit college chain, recruited parolees and homeless shelter residents as students.

The Texas Workforce Commission, which regulates Texas for-profit schools, conducted an independent investigation and found that ATI had falsely reported that 300 graduates were successfully placed in jobs when they had no jobs at all.

Failing to comply with the "70 percent rule."

In September 2011, a federal district judge refused to dismiss whistleblower suits brought by former employees of Kaplan University and Kaplan Higher Education Corp. alleging that the for-profit colleges failed to comply with the “70 percent rule.”

The 70 percent rule requires that schools receiving federal grants and loans from the U.S. Department of Education demonstrate graduation and job placement rates of at least 70%. The judge dismissed other claims, ruling that the plaintiffs did not plead adequate facts to support them. The suit, which consolidates several related suits against Kaplan, continues.

Colleges have a strong financial incentive to maintain their own eligibility for student financial aid.

For-profit colleges depend so heavily on student financial aid that college officials may be very tempted to falsify records of their own eligibility for assistance. When they do falsify these records, they defraud the federal government of money to which the schools are not entitled. Whistleblowers have an important role to play in combating this fraud.

How Waters Kraus Paul & Siegel can help whistleblowers

With a national presence and in-depth experience fighting fraud against the government, Waters Kraus Paul & Siegel, LLP, provides aggressive representation of whistleblowers in qui tam actions and related complaints. The firm currently represents whistleblowers seeking to recover funds on behalf of the federal and state governments in a variety of cases, which may involve defendants such as large pharmaceutical companies, government contractors, school district contractors, and hospice and nursing home care providers.

To learn more about qui tam representation at Waters Kraus Paul & Siegel, or to have one of our attorneys review your potential case, email us or call 800.226.9880.

What is Qui Tam?

Under the Federal False Claims Act (FCA), whistleblowers have the power to save taxpayers billions of dollars each year by taking a stand against fraud. The U.S. False Claims Act allows private citizens to file suits on the government’s behalf when the government has been defrauded through any federally funded contract or program. The qui tam provisions of the False Claims Act allow these citizens to recover damages. A number of states and the city of Chicago also have laws similar to the False Claims Act to protect against fraud. To learn more about the different types of fraud … READ MORE

Types of Qui Tam/Whistleblower LItigation

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