Education Fraud Schemes May Have False Claims Act Implications

Caldwell University has agreed to pay more than $4.8 million to settle a qui tam False Claims Act case for their involvement in an online education fraud scheme that targeted veterans.

Recognizing this fraud, a whistleblower came forward and filed a qui tam action detailing this scheme. The government was then able to intervene and pursue justice on this claim. To date, three Ed4Mil/Caldwell officials have pleaded guilty to conspiracy to commit wire fraud. The whistleblower will receive an award between 15 and 30 percent of the total amount recovered by the government.

According to the Department of Justice, in United States ex rel. Boyce v. Ed4Mil, LLC and Caldwell College, Inc., Ed4Mil applied for education benefits under the Post-9/11 GI Bill on behalf of Caldwell University. In its application, it claimed that Caldwell would be administering non-credit courses for veterans under Caldwell’s stringent educational standards. However, after Ed4Mill and Caldwell received approval, benefits, and funds from the VA, these courses were ultimately administered by another of Ed4Mill’s subcontractors. As a result, the government paid over $24 million in tuition benefits to Caldwell University under materially false pretenses, thus, effectively defrauding thousands of veterans.

The qui tam provisions of the False Claims Act allow persons and entities with evidence of fraud against federal programs or contracts to sue the wrongdoer on behalf of the United States. The government then has the right to intervene and join the lawsuit. However, if the government declines, the individual who instituted the case may still proceed as a plaintiff.

In recent years the number of online universities, classes, and training courses has sky-rocketed, and with them, so has the number of educational scams. These scams take many forms, the most problematic being claims of stringent academic standards, where no such conditions exist. Individual allegations of fraud against these online universities may be tough to prove where murky language works against a student who was promised a certain caliber of education only to receive a lesser academic experience. However, when a university receives funding from the government, it must provide students with the standard promised to the government. A deceived student may be potentially more successful in gaining justice by pursuing a qui tam action under the False Claims Act.