Education fraud is a significant issue impacting the integrity of vocational programs. Recently, Five Point Enterprises, LLC (5PE) was involved in an approximately $2.05 million settlement due to false claims made for veterans’ education funding. While there was no whistleblower in this case, insiders or competitors of this vocational school operator could have blown the whistle under the qui tam provision of the False Claims Act.

Summary of the Allegations

In 2021, Five Point Enterprises, LLC (5PE) faced serious allegations from the United States Department of Justice. The company operated 20 vocational schools under franchise agreements, offering non-college degree programs for Information Technology (IT) subject areas. The U.S. government alleged that 5PE submitted false claims for reimbursement under the Post-9/11 GI Bill. According to the settlement agreement, the vocational school operator allegedly abused its approval from the U.S. Department of Veterans Affairs (VA) for its non-college degree programs by providing courses where more than 85% of the students enrolled had their tuition paid by the VA or the school. The vocational school operator also allegedly failed to report any tuition reductions it applied to veteran students, resulting in inflated payments from the VA to the schools.

The Post-9/11 GI Bill

For military members who served on active duty after September 10, 2001, the Post-9/11 GI Bill offers education benefits including funding for tuition, housing, books, and/or educational benefits for a spouse or children. The VA manages the payments to schools and has paid out $12 billion in benefits to veterans and their families since its inception in 2009 to 2019. Under the Servicemen’s Readjustment Act of 1944, qualified educational institutions will be paid by the VA for veteran students’ tuition if no more than 85% of the students enrolled in a course receive VA benefits or the school pays for those students (85/15 Rule). Additionally, the VA is supposed to be the “last payer” for educational support, paying for tuition, books, etc. after other scholarships and financial aid have been applied to a student’s bill. The Principal Deputy Assistant Attorney General, head of the Justice Department’s Civil Division said about this educational benefit, “The Post-9/11 GI Bill educational assistance benefits are part of our promise to the brave women and men who have served our country.”

What is Education Fraud?

Education fraud involves unlawful practices that compromise the integrity of educational programs. It can manifest in various ways, such as federal student aid fraud, for-profit colleges scams, federal grant fraud, or online education fraud. These actions not only violate ethical standards but also undermine student trust and defraud the federal government programs.

For vocational programs, the stakes are particularly high. These programs often serve vulnerable populations, including veterans seeking new career paths. When institutions engage in fraudulent activities, they exploit these individuals and waste taxpayer dollars.

Whistleblowers Under the False Claims Act

Whistleblowers play a crucial role in exposing education fraud. Under the False Claims Act, individuals can report fraudulent activities and help recover funds. These whistleblowers are often insiders who witness unlawful practices firsthand, but whistleblowers can also be competitors who want a level playing field.

The False Claims Act provides protections and incentives for whistleblowers. They can receive a portion of recovered funds as a reward for their efforts.

Legal Repercussions of Education Fraud

The legal consequences of education fraud are severe. Institutions found liable under the False Claims Act or guilty of fraudulent activities can face substantial fines, restitution payments, and even closure. The case of 5PE highlights the financial and reputational damage that can result from fraudulent practices.

Educators and vendors must prioritize ethical behavior and compliance with government funding regulations to avoid legal concerns. Whistleblowers who see misuse of taxpayer dollars can report that under the False Claims Act.