New Jersey recently entered into two settlements, a consumer fraud settlement and a qui tam whistleblower agreement, with a major for-profit higher education provider.
NJ is one of several states participating in the settlements with Education Management Corporation (EDMC), which is a Pennsylvania-based operator of for-profit post-secondary educational institutions throughout the United States and Canada. The multi-state agreement affects students in 39 states, including New Jersey.
The settlements were announced by NJ Acting Attorney General John J. Hoffman, who stated that EDMC’s deceptive practices caused serious harm to its students by leaving them with significant debt and very little chance of succeeding in their chosen fields upon graduating.
Consumer Fraud Agreement
The first settlement requires EDMC to make significant changes to its practices and policies regarding student recruitment. The company allegedly misled many of its prospective and current students about the true cost of college programs, as well as the terms of their student loan agreements. The deal with the government requires EDMC to reform its student recruitment practices and demonstrate a commitment to preparing its students for success in the business world after graduation.
Students are going to benefit immensely from the deal reached by the government. Under the terms of the agreement, approximately 80,000 former EDMC students will no longer have to pay more than $100 million in outstanding student loan debts. This figure includes $1.3 million in outstanding student loan debt currently held by students in New Jersey. Although EDMC does not have any physical campuses in the Garden State, all of the NJ students were enrolled in online programs through out-of-state colleges.
Federal Qui Tam Agreement
The second settlement will require EDMC to pay nearly $9 million to resolve a whistleblower lawsuit that involved several states, including New Jersey, New York, California and Florida.
The whistleblower agreement stems from allegations that the company used financial incentives and a bonus structure to encourage its recruiters to deceive prospective students, in clear violation of the federal Higher Education Act.
A former EDMC worker served as a whistleblower for the government and filed the federal qui tam action. As a result of the agreement reached by EDMC and the government, the ex-employee will likely be entitled to a large reward for spurring the investigation and subsequent settlements.
For further information about the recent New Jersey student loan debt forgiveness agreement, read the BergenDispatch.com article entitled, “For-Profit Educator to Forgive $1.3 Million in New Jersey Student Loan Debt.” http://bergendispatch.com/articles/37645496/For-Profit-Educator-To-Forgive-1-3-Million-In-New-Jersey-Student-Loan-Debt-.aspx
If you have information that may lead to a whistleblower lawsuit, it is important for you to speak with a savvy and experienced qui tam attorney. The qui tam lawyers at Begelman & Orlow have decades of experience in these kinds of cases. Contact us today for a free consultation.