The United States settled claims brought by our client against Massachusetts company Study Across the Pond LLC (SATP) and its principal, John Borhaug. Under the terms of the agreement, SATP will pay $1.3 million to resolve allegations that it violated the False Claims Act by knowingly causing foreign schools in the United Kingdom (UK) to submit false claims and false statements to the U.S. Department of Education in connection with the Direct Loan Program through arrangements that violated the federal ban on incentive-based compensation.
The conduct was brought to light by a qui tam complaint filed by our client. Pursuant to the FCA, our client will receive a relator share of $240,500, plus reasonable attorneys’ fees and costs.
Our client filed the qui tam complaint in 2021. The case is captioned United States ex rel. Hitrost, LLC v. Study Across the Pond, LLC, et al., No. 21-CV-10274-ADB (D. Mass.)
The Complaint alleged that SATP was violating the Incentive Compensation Ban by signing recruitment contracts with U.K. universities that provided for per-student payments for U.S. students recruited to attend these schools.
The Incentive Compensation Ban conditions higher education institutions’ participation in federal student aid programs, upon their agreement not to provide any commission, bonus, or other incentive payment to student recruiters based directly or indirectly on success in securing student enrollments. The Incentive Compensation Ban protects students against aggressive recruitment practices that serve the financial interest of the recruiter rather than the educational needs of the student.
After several years of investigation, the United States intervened in our client’s case. The United States alleged that SATP’s scheme involved at least 28 schools in the UK. Specifically, the United States alleged that SATP demanded a commission for its recruitment services. In many cases, this was money the schools had claimed from the Direct Loan Program for the education of American students. The United States further alleged that SATP created sham records to hide these tuition-sharing arrangements from the Department of Education and ultimately caused foreign schools to submit false claims to the Direct Loan Program.
The Incentive Compensation Ban has historically been a difficult to enforce area of government priority. The United States has rarely intervened in these matters. Similarly, very few – if any – cases have been brought related to American students studying abroad.
This unique case has had an impact that reaches beyond the United States. It has also helped to facilitate a national conversation in the U.K. around student recruitment practices.
The government’s press release emphasized the importance of protecting students from individuals and entities placing their profits ahead of the student’s best interest.
My office is committed to ensuring American students are not taken advantage of for financial gain and protecting the integrity of federal student financial aid programs.
U.S. Attorney Leah B. Foley for the District of Massachusetts
American students deserve to make enrollment decisions free of the improper influence of third-party recruiters who pursue their own financial gain rather than the students’ best interests.
Assistant Attorney General Brett A. Shumate of the Justice Department’s Civil Division
FCA investigations and litigations require coordination among many government agencies and personnel. Here, they came together to ensure that the federal student loan programs are protected from profiteers.
Today’s settlement is a result of the hard work and effort of the Office of Inspector General, the U.S Department of Education, and the U.S. Department of Justice to protect and maintain the integrity of the Federal student aid programs by enforcing applicable laws, including the incentive compensation ban.
Jason Williams, Assistant Inspector General for Investigation Services, U.S. Department of Education Office of Inspector General
Whistleblower Law Collaborative commends the outstanding efforts of their client and the government prosecutors.
We are especially grateful for our client who shed light on this problematic practice and for the government team that doggedly investigated and litigated this matter. AUSAs Alexandra Brazier and Brian LaMacchia, along with DOJ Civil Fraud Trial Attorney Allison Carroll committed countless hours to this investigation and litigation. They refused to ignore the alleged conduct. We are grateful to each of these dedicated public servants.
Erica Blachman Hitchings, WLC Partner
WLC is also grateful to its co-counsel, Whistleblower Partners and Constantine Cannon, for identifying this important matter and their collaboration throughout the life of the case.