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Education & Financial Aid Fraud

Kohn, Kohn & Colapinto represents qui tam whistleblowers who file claims of education and financial aid fraud under the False Claims Act.

Each year, universities and other educational institutions receive billions of dollars from the United States government in the form of grants and loans. In recent years, the U.S. Department of Justice (DOJ) has pursued a number of high-profile enforcement actions against universities and other institutions committing education and financial aid fraud.

The False Claims Act (FCA) prohibits the submission of a materially false claim or false statement in regards to the receipt of federal funds, including funds for research grants and financial aid programs. Thus, many types of education and financial aid fraud are covered under the FCA.

Whistleblowers play a critical role in FCA enforcement. Under the law, individuals with knowledge of FCA violations may file qui tam whistleblower suits against the fraudster on behalf of the U.S. government. When a whistleblower’s disclosure leads to a successful enforcement action, they are entitled to an award of 15-30% of the sanctions collected by the government.

Individuals considering blowing the whistle on education and financial aid fraud should first consult an experienced False Claims Act whistleblower attorney to ensure they are fully protected and qualify for the largest award possible.

Key Takeaways

  • Education and financial aid fraud comes in many different forms such as paying incentives to college recruiters and including falsified data in research grant funding applications
  • When education and financial aid fraud involves government funding, in the form of research grants or financial aid programs, it is often in violation of the False Claims Act
  • The False Claims Act empowers individuals with first-hand knowledge of education and financial aid fraud to file qui tam whistleblower lawsuits on behalf of the U.S. government
  • False Claims Act whistleblowers who instigate successful qui tam suits are entitled to an award of 15-30% of the funds collected by the government in the case

Financial Aid Fraud Cases

Education and financial aid fraud comes in many different forms covering federal funding for research as well as financial aid programs.

A common form of financial aid fraud involves paying fraudulent incentives to college recruiters to enroll new students. In order to apply for Title IV financial aid funding, institutions must certify that they comply with the Higher Education Act’s provisions banning the payment of incentives to recruiters.

For example, in 2015, the DOJ announced a $95.5 million settlement with Education Management Corp. (EDMC), the second-largest for-profit education company in the country. According to the DOJ, EDMC violated the False Claims Act by violating the Higher Education Act’s Incentive Compensation Ban “by running a high pressure boiler room where admissions personnel were paid based purely on the number of students they enrolled.”

In another such case, whistleblower Ronald D. Irwin, a Kohn, Kohn & Colapinto client, filed a qui tam action against Grand Canyon University for giving fraudulent incentives to college recruiters to enroll new students. The case, Ronald D. Irwin v. Significant Education, Inc., et al., resulted in a $5.2 million recovery for the United States. Mr. Irwin was awarded 27% of the settlement amount for his role in recovering these funds.

Another type of education fraud which violates the FCA is research grant fraud. This can take many different forms, including falsifying data in research grant applications and failing to disclose foreign influence in federal research grant applications.

In 2019, the DOJ announced a $112.5 million settlement with Duke University over allegations that it violated the FCA “by submitting applications and progress reports that contained falsified research on federal grants to the National Institutes of Health (NIH) and to the Environmental Protection Agency (EPA).” The case was initiated by whistleblower Joseph Thomas, a former Duke employee, who filed a qui tam suit against the university. Thomas was awarded over $33 million for his whistleblowing.

Also in 2019, the DOJ announced a $5.5 million settlement with Van Andel Research Institute over allegations that it violated the FCA by submitting federal grant applications to the National Health Institute which failed to disclose Chinese government grants that funded two researchers.

False Claims Act Whistleblowing

Individuals may utilize the qui tam whistleblower provisions of the False Claims Act to blow the whistle on education and financial aid fraud. Any individual with knowledge of FCA violations may file a qui tam lawsuit against the fraudulent entity on behalf of the U.S. government. The DOJ may then choose to intervene and take over the case. If a whistleblower’s qui tam suit results in the collection of funds from the fraudsters, the whistleblower is entitled to an award of 15-30% of the money collected. An experienced False Claims Act whistleblower attorney can help guide an individual through the whistleblowing process. By consulting an experienced attorney, a whistleblower can better protect themselves against retaliation and ensure they qualify for the largest award possible.

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Frequently Asked Questions

Those living outside the U.S. can obtain an education fraud attorney.

Many whistleblower attorneys work for a “contingency” fee. If the whistleblower loses his or her case, they do not owe the attorney any money. If the whistleblower wins the case, they will generally owe the attorney 33-40% of the money earned.

Individuals who provide the government with information of education or Financial Aid fraud can qualify as whistleblowers.

Education fraud whistleblowers can file their cases under the qui tam provisions of the False Claims Act. In a qui tam action, a private party known as a relator brings an action on the government’s behalf against a person or company who is believed to have violated the law. The government can then choose whether or not to intervene in the case. Whistleblowers can obtain a reward of between 15-30% of the sanctions collected, plus legal fees and costs.