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Education Company Agrees to Settle Five Qui Tam Cases

According to the Department of Justice, a for-profit education company based in Baltimore, Maryland, Education Affiliates (“EA”), has agreed to settle five qui tam cases alleging the company submitted fraudulent claims to the U.S. Department of Education in violation of the False Claims Act.  According to EA’s website, it offers post-secondary education programs at 51 campuses throughout the United States.  EA operates under several trade names, including All State Career, Fortis College, Tri-State Business Institute, Technical Career Institute, Fortis Institute, St. Paul’s School of Nursing, Capps College, Denver School of Nursing, and Driveco CDL Learning Center.  The campuses are located in Pennsylvania, Alabama, Florida, Maryland, Texas, and Ohio.

According to the government, five whistleblowers initiated lawsuits against EA under the qui tam provisions of the False Claims Act between 2010 and 2014 in United States District Courts in Maryland, Texas, Alabama and Ohio. The whistleblowers alleged that the for-profit operator of trade and professional schools altered admissions tests scores to admit unqualified students, created fraudulent high school diplomas or referred prospective students to “diploma mills” in order to procure invalid online high school diplomas, and falsified federal student loan applications.  According to the whistleblowers, each submission of a claim for federal student aid for a student that was admitted through improper and/or fraudulent means was a violation of the federal False Claims Act.

In addition, the whistleblowers alleged that employees who were involved with enrolling students for campuses in Birmingham, Houston, and Cincinnati received improper incentive compensation and made material misrepresentations to prospective students about graduation and job placement rates.

EA has agreed to pay $13 million to the federal government to settle the allegations that it violated the False Claims Act.  Of that amount, $1.9 million relates to federal financial aid awarded to students at the Fortis-Miami campus based on invalid high school diplomas issued by a diploma mill.  The whistleblowers will share in $1.8 million of the settlement proceeds as their reward under the qui tam provisions of the False Claims Act.

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