In separate lawsuits, the government alleged that two for-profit education companies defrauded a tuition assistance program for military veterans.
Two for-profit educational organizations will pay a combined $9.5 million for defrauding the U.S. Department of Veterans Affairs’ Post-9/11 GI Bill program in violation of the False Claims Act.
A federal court in Waco, Texas, awarded the government a $9 million judgment against ELPSS Career Institute LLC of Texas and its director Ricky J. Daniels Jr, after finding that they submitted false certifications regarding the school’s eligibility to receive funds from the VA program, which provides tuition assistance for veterans and service members.
Separately, Pinellas Corp., owner of the New Horizons Computer Learning Center, which runs IT and computer training facilities in Virginia, agreed to settle similar government False Claims Act allegations for $450,000.
The Post-9/11 GI Bill
The Post-9/11 GI Bill program provides educational benefits to veterans and active-duty service members, paying up to 100% of tuition and fees directly to qualified educational organizations and job-training programs as well as monthly housing allowances to students and stipends for books and supplies.
To receive funds, however, an educational organization must certify its compliance with the program’s requirements, which are set forth in Title 38 of the U.S. Code.
Those rules include the 85-percent or 85-15 rule, under which a school must have enrolled at least 15% non-veterans. This ensures that the educational offerings are sufficiently valuable that a minimum number of non-veterans will pay for it without government funding.
Schools are also prohibited from paying commissions, bonuses, or other success-based incentives to recruiters to enroll students. And non-accredited schools, such as career institutes, must have been in operation for at least two years.
False certifications of compliance with program requirements
According to the Justice Department, ELPSS and Daniels falsely certified that ELPSS complied with program requirements when in fact it had only been in operation for less than two years. Moreover, to back up the erroneous statements in its VA certification, Daniels allegedly provided a VA examiner who visited the school with false attendance records, according to the government.
Daniels also allegedly gave the VA fictitious attendance data with respect to the school’s purported compliance with the 85% rule. The Justice Department said its investigation revealed that students had said they had been frequently absent yet were marked “present” by Daniels.
Pinellas and its owner and CEO Giordano allegedly committed similar violations, according to the Justice Department. New Horizon in fact paid success-based bonuses to consultants for recruiting veteran enrollees, contrary to their certifications. The school was therefore in violation of program rules and ineligible to receive VA funds, the Justice Department alleged.
The False Claims Act
A federal statute dating back to the Civil War, the False Claims Act imposes significant liabilities—treble (three times) damages, plus substantial penalties—on parties who knowingly submit or cause the submission of false claims for payment to the government. It is the federal government’s most powerful and effective civil litigation tool in rooting out and punishing fraud against the United States and its agencies and programs.
Significantly, the False Claims Act’s qui tam provisions authorize whistleblowers, also known as “relators,” to sue violators on the government’s behalf. If the lawsuit is successful, they are entitled to 15-30% of the proceeds as a reward.
Whistleblowers play a key role in the government’s antifraud efforts. Of the $2.2 billion in False Claims Act recoveries in 2022, almost $1.9 billion stemmed from lawsuits filed by whistleblowers, who received a total of $488 million in rewards, according to the Justice Department.
Confer with a whistleblower attorney
If you know of educational organizations or other parties defrauding the federal government or its agencies, including the VA, it is important to speak with an experienced whistleblower attorney about your rights as a potential qui tam relator. Contact False Claims Act whistleblower attorney Mark A. Strauss for a free consultation. All communications are confidential and subject to the attorney-client privilege.
You must file a qui tam lawsuit to be eligible for a False Claims Act whistleblower award. Simply calling or submitting a tip to a government agency will not qualify you to receive a qui tam payment.