BOSTON – In a brazen scheme to deceive American students, Study Across the Pond, LLC (SATP) and its principal, John Borhaug, have agreed to pay $1.3 million to resolve a lawsuit alleging that they knowingly caused United Kingdom (UK) schools to submit false claims to the U.S. Department of Education.
According to the lawsuit, SATP convinced foreign schools to enter arrangements that violated the federal ban on incentive-based compensation for student recruitment. The company paid a percentage share of the American student’s tuition to the UK school in exchange for SATP’s recruitment of that student, while federal student financial aid programs paid those American students’ tuition, of which SATP received a share under the illegal agreement.
“Today’s settlement resolves the United States’ lawsuit against Study Across the Pond and Mr. Borhaug, who used improper incentives in an attempt to influence American students to attend foreign schools,” said United States Attorney Leah B. Foley. “My office is committed to ensuring American students are not taken advantage of for financial gain and protecting the integrity of federal student financial aid programs.”
“American students deserve to make enrollment decisions free of the improper influence of third-party recruiters who pursue their own financial gain rather than the students’ best interests,” said Assistant Attorney General Brett Shumate, Head of the Justice Department’s Civil Division. “Today’s settlement demonstrates the Department’s commitment to holding accountable individuals and corporate entities who violate the Incentive Compensation Ban and to protect the integrity of the federal student aid programs like the Direct Loan Program.”
Study Across the Pond, LLC and John Borhaug entered into contracts with UK schools that provided for a percentage share of the American student’s tuition in exchange for SATP’s recruitment of that student. This arrangement was a direct violation of the Incentive Compensation Ban, which prohibits any institution of higher education that receives federal student aid from compensating student recruiters with a commission, bonus, or other incentive payment based directly or indirectly on the recruiters’ success in securing student enrollments.
The Incentive Compensation Ban protects students against aggressive recruitment practices that serve the financial interest of the recruiter, rather than the educational needs of the student. The settlement also includes claims that were brought under the qui tam or whistleblower provisions of the False Claims Act, which allows a private party to file an action on behalf of the United States and receive a portion of any recovery.
Assistant U.S. Attorneys Brian LaMacchia and Alexandra Brazier of the Affirmative Civil Enforcement Unit are handling the matter along with Trial Attorney Allison Carroll of the Justice Department’s Civil Division. U.S. Attorney Foley, AAG Shumate, and DOE-OIG Assistant IG Williams made the announcement today. The relator will receive a share of the settlement amount.
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Key Facts
- State: Massachusetts
- Category: Fraud & Financial Crimes
- Source: DOJ Press Release â†â€â€
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