White Marsh-Based Education Company Admits to Submitting False Claims for Federal Student Aid
Education Affiliates (EA), a for-profit education company based in White Marsh, Maryland, has agreed to pay $13 million to the United States to resolve allegations that it violated the False Claims Act by submitting false claims to the Department of Education for federal student aid for students enrolled in its programs. The company operates 50 campuses in the United States under various trade names, including All State Career, Fortis Institute, Fortis College, Tri-State Business Institute Inc., Technical Career Institute Inc., Capps College Inc., Driveco CDL Learning Center, Denver School of Nursing and Saint Paul’s School of Nursing.
According to the government, employees at EA’s All State Career campus in Baltimore altered admissions test results to admit unqualified students. They also created false or fraudulent high school diplomas and falsified students’ federal aid applications. Furthermore, multiple EA schools referred prospective students to “diploma mills” to obtain invalid online high school diplomas. These allegations led to the criminal convictions of two All State Careers admission representatives, Barry Sugarman and Jesse Moore, and a test proctor, Jacqueline Caldwell.
“Students who apply for federal financial aid to attend trade and professional schools are required to show that they have the necessary skills to complete the educational program and work in the field,” said U.S. Attorney Rod J. Rosenstein of the District of Maryland. “This settlement resolves the government’s allegations that Education Affiliates defrauded the government by changing students’ test scores and enrolling students with invalid diploma mill high school ‘diplomas’ ordered online.”
The settlement agreement also resolves allegations related to EA schools in Birmingham, Alabama, Houston and Cincinnati, including violations of the ban on incentive compensation for enrollment personnel, misrepresentations of graduation and job placement rates, alteration of attendance records and enrollment of unqualified students. The settlement provides for repayment of $1.9 million in liabilities ordered by Secretary of Education Arne Duncan that resulted from EA awarding federal financial aid to students at its Fortis-Miami campus based on invalid high school credentials issued by a diploma mill.
“Using fake high school diplomas is a particularly insidious abuse of the federal student aid system,” said Inspector General Kathleen Tighe of the U.S. Department of Education’s Office of Inspector General (OIG). “Students received only a worthless piece of paper.” Tighe commended the efforts of OIG staff and Department of Justice attorneys, whose outstanding investigative work led to this significant settlement.
The settlement resolves five lawsuits filed under the whistleblower provisions of the False Claims Act. Principal Deputy Assistant Attorney General Benjamin C. Mizer, head of the Justice Department’s Civil Division, stated, “Today’s settlement is an excellent example of cooperation among multiple offices of the federal government to achieve a result that protects federal student aid funding and the interests of individual students. Schools have an obligation to live up to their commitment to the government and their students when they accept federal student aid funds.”
The $13 million settlement is a significant blow to Education Affiliates, and it serves as a warning to other for-profit education companies that engage in similar practices. The investigation and subsequent settlement demonstrate the government’s commitment to ensuring that federal student aid funds are used for legitimate purposes and that students are protected from predatory conduct.
Related Federal Cases
- Western Union Scam · Washington
- Amgen Pays $71M for Pushing Drugs Off-Label · Washington
- Amgen Inc. $71M Settlement · Washington
- Bankruptcy Bandit: MD Man Gets 90 Months for $1.8M Scam · Washington
- Maryland Man Gets 90 Months for $1.8M Bankruptcy Scam · Washington
Key Facts
- State: Ohio
- Category: White Collar Crime|Fraud & Financial Crimes
- Source: DOJ Press Release â†â€â€
ðŸâ€Â’ Get the grimiest stories delivered weekly. Subscribe free →
