The Department of Justice filed a complaint against Study Across the Pond, LLC and its principal, John Borhaug, (“SAPT”) for allegedly violating the False Claims Act (“FCA”). While we typically hear about FCA violations in the health care space, the DOJ is alleging that SAPT, an international student recruiting firm, caused foreign schools to submit false claims to the Department of Education by demanding incentive compensation for their recruiting services in violation of Title IV of the Higher Education Act of 1965.

Since 2004, SAPT has recruited American students to attend colleges and university in the U.K. According to the complaint, SATP received thousands of dollars for recruiting American students beginning in January 2015. The government contends that this practice runs afoul of the Incentive Compensation Ban in Title IV of the Higher Education Act of 1965, which prohibits schools participating in federal student aid programs from paying incentives to recruiters. SATP allegedly negotiated a percentage of the tuition paid by students to be paid as a commission upon successful recruitment and other fees. The commission SATP received was a portion of money the foreign schools claimed from federal financial aid programs, like the Federal Direct Loan Program. The government further alleges that SATP created sham contracts, specifically told the U.K. institutions that they were not in violation of the Incentive Compensation Ban, and took steps to conceal their scheme. In turn, the foreign schools falsely certified that they were not in violation of the Incentive Compensation Ban when submitting claims for payment or approval to the Department of Education.

This matter was initially brought under the qui tam provisions of the FCA by Hitrost LLC. Hitrost LLC’s principal was formerly employed by SATP as a lead North American student recruiter. The Government only intervened against some of the original defendants named by the relator. Upon announcing the complaint, Principal Deputy Assistant Attorney Brian M. Boynton commented, “[t]hird-party recruiters who demand illegal financial incentives for recruiting students to institutions of higher learning, no matter where those institutions are located, undermine the integrity of our system of higher education.”

The attorneys at Chilivis Grubman represent clients of all types and sizes in connection to false claim act investigations and litigation. If you need assistance with such a matter, please contact us today.