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Caldwell University in New Jersey has agreed to pay $4.8 million to resolve allegations under the False Claims Act that it engaged in a scheme to defraud federal education benefit programs. Caldwell summitted thousands of false claims both to the U.S. Department of Veterans Affairs (VA) for education benefits and funds pursuant to the Post-9/11 Veterans Education Assistance Act (Post-9/11 GI Bill) and to the Department of Defense (DOD) for payments under the Defense Tuition Assistance Act.
Caldwell entered into an agreement with Ed4Mil, a Pennsylvania online correspondence school, to recruit and enroll eligible military veterans in online classes purportedly offered by Caldwell. The VA approved the online courses for education benefits under the Post-9/11 GI Bill based upon false representations by Caldwell that it had developed and would itself be teaching and administering the courses. In fact, the courses were developed, taught, and administered by Ed4Mil, which was not approved to receive education benefits under the Post-9/11 GI Bill.
As a result, thousands of veterans were enrolled in unapproved online correspondence courses without their knowledge. In turn, Caldwell charged the VA 10 to 30 times the prices charged by Ed4Mil correspondence school for the same courses.
The U.S. Attorney for the District of New Jersey aptly characterized the insidious nature of Caldwell’s scheme:
“Caldwell University tried to hoodwink the Department of Veterans Affairs and, worse, veterans themselves, by claiming to offer online classes developed and provided by Caldwell that were in fact marked-up offerings by an online correspondence school,” U.S. Attorney Carpenito said. “Our veterans should never be treated this way, and we will continue to work to ensure that they receive all of the benefits that they deserve as a result of their service to the country.”
The settlement also resolved allegations made by a whistleblower in a related qui tam case that Caldwell and Ed4Mil had defrauded another government education program for service members, the Department of Defense Tuition program.
In addition to the civil settlement against Caldwell, three individuals were convicted criminally for their involvement in the scheme to defraud the VA. These individuals were Caldwell’s former associate dean of the Office of External Partnership (sentenced to three years probation), the founder and president of Ed4Mil (sentenced to five years in prison), and a former employee of Ed4Mil (sentenced to three years probation). They pleaded guilty to conspiring to commit wire fraud and were ordered to pay $24 million in restitution.
The federal government offers many types of educational benefits and programs for veterans and others. For veterans, for example, there is the GI Bill and the two programs at issue in the Caldwell case: The Post 9/11 GI bill, administered by the VA and designed specifically to help veterans who served in the armed forces following the terrorist attacks on Sept. 11, 2001; and the DOD Tuition Assistance Program.
For non-veterans, the Department of Education administers programs such as the Perkins Loan Program, which provides low-interest loans to help needy students finance the costs of post-secondary education. The United States has used the False Claims Act to recover for fraud on this program, and has successfully prosecuted an individual for such fraud.