School Settles Student Aid Fraud Claims for $2.5M; Whistleblowers May Get $170K

American Commercial Colleges Inc. (ACC), a Texas-based for-profit corporation, has agreed to pay the United States government up to $2.5 million, including interest, to resolve allegations that they knowingly submitted or caused the submission of false claims to federal student aid programs, the U.S. Department of Justice announced last week.

In order to be eligible for federal student aid programs authorized by Title IV of the Higher Education Act of 1965, for-profit colleges such as ACC must obtain no more than 90 percent of their annual revenues from Title IV student aid programs.  The other 10 percent of their revenue must come from other sources, such as student payments or private loans.  ACC allegedly violated the False Claims Act when it orchestrated certain short-term private student loans that ACC repaid with federal Title IV funds.  The short-term loans at issue in this case were not sought or obtained by students on their own; the United States contends ACC orchestrated the loans for the sole purpose of manipulating its 90/10 Rule calculations.

Under the terms of the settlement, ACC will pay the United States $1 million, plus interest, over five years, and could be obligated to pay an additional $1.5 million under the terms of the agreement.

The lawsuit was originally brought by Shawn Clark and Juan Delgado, former directors of ACC campuses in Odessa and Abilene, Texas, under the whistleblower provisions of the False Claims Act.  The False Claims Act allows private citizens with knowledge of fraud perpetrated against the government to sue on behalf of the government and share in the recovery.  Clark and Delgado will receive $170,000 of the $1 million fixed portion of the government’s recovery, and an additional $255,000 if ACC becomes obligated to pay the maximum $1.5 million contingent portion of the settlement.

The Chanler Group, in association with the Hirst Law Group, represents whistleblowers who take action under the False Claims Act to report fraud committed against the federal and state governments.  We have years of experience representing whistleblower clients who expose every kind of fraud against the government, including health care fraud, contract fraud, and tax fraud.  Read more about our expertise in False Claims Act cases and how you can take action.