Five students have filed a class action lawsuit against for profit Globe University after an earlier whistleblower case resulted in a $395,000 judgment against the school. The students claim the university misleads prospective students and lies about job placement rates.
Earlier this summer, a former dean of the school, Heidi Weber, won a $395,000 judgment after bringing a whistleblower claim against the school. She accused Globe of ethical breaches.
According to an article in the Minneapolis Star Tribune, one former student “said that when she enrolled, she was told that Globe was fully accredited and that its credits would transfer to any school or university. But she discovered the opposite when she graduated from its health care management program in 2010, with more than $41,000 in student loans. When she tried to transfer her credits to three other postsecondary institutions, all of them rejected Globe’s credits, saying Globe’s health care management program is unaccredited.”
We have heard similar stories about other for profit schools. (See our feature story, For Profit Colleges, Next Big Opportunity for Whistleblowers (False Claims Act).)
Students that enroll in some of these schools find themselves saddled in debt and unable to find a job. Often they find that their degree is not recognized either.
As demonstrated by this post, there are often two methods of recovery in these cases. First, students can sue the school directly if they can show they were defrauded or misled.
Students aren’t the only victims of these scams. Another victim is Uncle Sam. The U.S. government stands behind many student loans. When graduates of these schools can’t find jobs, they often default on their loans. When that happens, the government frequently picks up the table. That creates a loss for taxpayers and makes the case actionable under the False Claims Act.
The False Claims Act, sometimes called a Qui Tam case, originated with Abraham Lincoln at the time of the Civil War. The law allows whistleblowers with original source information to file a lawsuit on behalf of the government for losses sustained by a government program. The whistleblower can receive a cash award of up to 30% of what the government collects. (The normal award is 20%). Not a bad payday.
Whistleblowers are an important first line of defense against fraud. The government recognizes the importance of whistleblowers and offers substantial awards to encourage people with knowledge of fraud to come forward.
To become a whistleblower, you must have inside “original source” information. That means most whistleblowers are employees or vendors with knowledge about the false statistics or other fraud. A former student might qualify as well, however.
The whistleblower lawyers at Mahany & Ertl represent the whistleblower in the largest pending federal false claims act case in the nation, HUD’s $2.4 billion case against Allied Home Mortgage. The potential returns in that case – as well as the for -profit school cases – are huge. (We are currently investigating potential claims against Cambridge / Allied Institute of Medical Professionals.)
If you have inside information about a fraud affecting taxpayers give us a call. All inquiries are protected by the attorney – client privilege and kept in strict confidence. Misleading placement statistics by for profit colleges, Medicare fraud, false lending practices, military procurement fraud and Buy America cases are all potential false claims cases.
Post by Brian Mahany, Esq.
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