A Pennsylvania company operating for-profit colleges has agreed to pay more than $1 million to resolve federal allegations that it exaggerated graduation statistics and failed to return unearned student aid.
American Higher Education Development Corporation, known as AHED, will pay $1,032,500 under a False Claims Act settlement announced July 1 by the U.S. Attorney’s Office for the Eastern District of Pennsylvania.
The allegations involve three AHED-operated institutions: Stautzenberger College in Ohio, Rockford Career College in Illinois and Madison Media Institute in Wisconsin.
Federal officials alleged that AHED inflated the schools’ graduation rates in reports submitted to the U.S. Department of Education. According to the government, the company omitted certain students who withdrew after the permitted drop period but before completing their programs.
The government also alleged that AHED failed to return approximately $413,000 in federal student aid associated with those students.
“Federal student aid comes with clear rules: report truthful outcomes and return unearned funds,” U.S. Attorney David Metcalf said in a statement. “Through the False Claims Act, we will continue to deter misconduct, protect taxpayers, and ensure that schools meet their obligations to students and the public.”
The settlement resolves a whistleblower lawsuit filed by Christopher Wargo, a former chief operating officer and compliance officer for AHED.
The False Claims Act allows private parties to sue on behalf of the federal government when they believe a person or organization has improperly obtained government money. Whistleblowers may receive a portion of funds recovered through resulting settlements or judgments.
Wargo will receive $227,150 as his share of the AHED settlement. Federal officials credited him with helping bring the disputed practices to the government’s attention.
The case was investigated with assistance from the U.S. Department of Education’s Office of Inspector General.
“America’s taxpayers and students deserve nothing less” than compliance with federal student aid laws and regulations, said Jamila Davis, special agent in charge of the inspector general’s Eastern Regional Office.
Assistant U.S. Attorneys Peter Carr and Anthony St. Joseph handled the case for the Eastern District of Pennsylvania.
The settlement resolves the government’s allegations without further litigation. The claims remain allegations, and there has been no judicial determination that AHED is liable for the alleged conduct.
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