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For-Profit University Agrees to Pay $5.2M For Alleged False Claims Act Violations

August 19, 2010

Whistleblower claims that for-profit online universities have employed illegal and misleading marketing practices have prompted Grand Canyon Education Inc., to pay $5.2 million, the company announced Wednesday. According to the allegations in the qui tam action, Grand Canyon wrongly paid its recruiters incentives causing them to make false promises to students and ultimately causing the federal government to waste millions of dollars in financial assistance that will never be recouped. Busisnessweek reports that:

Lawmakers have criticized aggressive marketing practices and allegedly misleading conduct by recruitment counselors in the for-profit education industry. Since 1992, it has been illegal in most cases for schools getting federal financial aid to compensate recruiters based on how many students they get enrolled. A rule proposed by the DOE this summer would eliminate the remaining exceptions.

The qui tam whistleblower award could be as much as $1,300,000.  To report false claims involving government programs, contact Frohsin & Barger.

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