08.15 Empowered Consumer: Beware! Private College Scammed Government Out of Billions, Lawsuit Alleges

A college degree is becoming as common as a high school diploma thanks to the availability of a college education to most anyone who is willing to pay the right price.  This includes private colleges that charge several thousands in tuition for deceitful programming to under-qualified applicants, leading to a multi-billion dollar lawsuit.

Last week the U.S. government sued Education Management Corporation alleging it defrauded the government out of billions of dollars in student loans.   Education Management Corporation, based in Pittsburgh is 41 percent owned by Goldman Sachs, enrolls about 150,000 students in 105 schools.

The names of its schools are:Art Institute (such as Seattle Art Institute), Argosy University, Brown Mackie College and South University. The Department of Justice and four states on Monday filed a multibillion-dollar fraud suit against Education Management Corporation charging that it was not eligible for the $11 billion in state and federal financial aid it had received from July 2003 through June 2011.

The government’s fraud lawsuit was sparked by two 2007 whistle-blower lawsuits brought by Lynntoya Washington, an assistant director of admissions at the Art Institute of Pittsburgh Online Division, and Michael T. Mahoney, the director of training for the Online Higher Education Division.

The recently filed lawsuit alleges deceitful business practices that violate the U.S. False Claims Act.   Private college recruiters were instructed to use high-pressure sales techniques and inflate claims about career placement to increase student enrollment, despite applicants being under-qualified.  The college’s policy provided financial incentives, through federal funding, to enroll applicants who were unable to write coherently, appeared under the influence of drugs or who had not computer, yet enrolled in an online college program.

According to the suit, recruiters were also led to exploit applicants’ psychological vulnerabilities — for example, a parent’s hopes of moving a child out of a dangerous neighborhood.

Under the False Claims Act, individual whistle-blowers can file suits charging that the government has been defrauded, leaving the government the option to intervene. Either way, the government gets the majority of any money recovered; the whistle-blowers also get a share.

If you feel that a company you work for is scamming the government, you have whistle-blower protection and can help bring a lawsuit like the one mentiond above, to protect the government and its people from being scammed.

Disclaimer: This page is intended for general information purposes only and should not be construed as legal advice or legal opinions on any specific facts or circumstances.  An attorney-client relationship is not created or continued. If you are seeking a consultation on a legal matter, contact Alexandra Filutowski.



Alexandra Filutowski

Alexandra is a Puget Sound native with a passion to help individuals stand up for their legal rights. She opened her own law practice in the Queen Anne neighborhood of Seattle. The Filutowski Law Firm, PLLC is dedicated to representing individuals throughout Washington State in personal injury, insurance coverage, employment and business disputes. They offer expeditious legal solutions and superior client satisfaction. In her spare time she enjoys rock climbing, boating and traveling abroad.

* This post is from a Girl Power Hour featured blogger. It is not written, edited or endorsed by Girl Power Hour. The authors are solely responsible for content.

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