For-Profit College Pays At least $1 Million To Settle False Claims Suit

June 7th, 2013 by Qui Tam

American Commercial College, which is based in Lubock, Texas, will pay $1 million over the next five years to settle allegations that it falsified financial records in order to qualify for federal student aid money.  The college may also have to pay an additional $1.5 million.  However, it is unclear under what circumstances more money would have to be paid. 

The federal government requires that for-profit colleges receive no more than 90% of their annual revenues from a federal student aid program known as Title IV.  The lawsuit against American Commercial College claimed that the school arranged for short-tem private loans, which were ultimately paid with federal student aid, so the school could appear to be complying with federal requirements.  An attorney for the college stated that the Lubbock campus will reopen after it reapplies for a license.  Two other campuses that were also the subject of investigation are still open. 

Two whistleblowers, former administrators at the college, will receive $170,000 as a result of the settlement.  In the event that the school is required to pay an additional $1.5 million, the whistleblowers would receive another $255,000. 

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