The U.S. Department of Justice announced its intervention in a qui tam False Claims Act (FCA) complaint filed against Study Across the Pond LLC (SATP) and its principal, John Borhaug, in the District of Massachusetts. The complaint asserts that SATP and Borhaug induced U.K. schools to file false claims for federal student aid to the Department of Education. This was allegedly accomplished by pressuring the schools to engage in agreements that contravened the federal prohibition on incentive-based compensation. A whistleblower originally filed the qui tam lawsuit, and if successful, could share in 15-25% of the government’s recovery from the alleged fraudsters.

Protecting the Integrity of Federal Student Aid Programs

Under Title IV of the Higher Education Act, the Incentive Compensation Ban seeks to put students’ educational needs before schools’ or recruiters’ financial interests. Schools that receive federal financial aid are prohibited from incentivizing recruiters based on the number of students they persuade to enroll.

According to the complaint, SATP colluded with at least 28 U.K. schools to deceive the United States Department of Education (Department of Education), concealing their incentive compensation payments through fraudulent contracts. The Department of Education relied on these false statements to permit the schools’ participation in federal student aid programs and to disburse tens of millions of dollars in federal student aid. Since January 1, 2015, SATP has allegedly received tens of thousands of dollars in incentive compensation for recruiting American students, knowingly prompting foreign schools to submit false claims for payment to federal student aid programs, in violation of the False Claims Act.

The Crucial Role of Whistleblowers

This case highlights the vital role whistleblowers play in uncovering fraud against the government. The lawsuit was filed under the qui tam, or whistleblower, provisions of the False Claims Act, which allow private citizens to sue on behalf of the government and share a portion of the recovery. Whistleblowers help protect opportunities for students and preserve public funds by reporting fraud, and they may be eligible for significant payouts in exchange for their honesty. The False Claims Act also protects whistleblowers from retaliation, such as being fired, demoted, or harassed, for disclosing information about education fraud.

The government’s intervention in this case underscores its commitment to upholding the ban on incentive compensation, combating undue financial influence in student recruitment, and safeguarding the integrity of federal student financial aid programs. The Principal Deputy Assistant Attorney General said about the government’s intervention, “Third-party recruiters who demand illegal financial incentives for recruiting students to institutions of higher learning, no matter where those institutions are located, undermine the integrity of our system of higher education.” As the case progresses, it serves as a reminder of the importance of whistleblowers in exposing fraudulent practices and ensuring that educational institutions prioritize the best interests of their students.