Consumer Fraud

Texas school chain pays $3.7 million to settle whistleblowers’ fraud allegations

osha whistle Texas school chain pays $3.7 million to settle whistleblowers fraud allegationsA Texas-based chain of career-training schools with campuses in several states has agreed to pay the U.S. government $3.7 million to resolve allegations brought against it by two whistleblowers who accused the school of defrauding federal financial aid programs.

ATI Enterprises Inc. and affiliated companies agreed to settle the allegations brought by two separate whistleblower complaints under the False Claims Act, which allows U.S. citizens to sue on behalf of the U.S. government when they witness fraud, waste, mismanagement, and other wrongdoing. Whistleblowers who sue under the qui tam provisions of the False Claims Act share a portion of the recovery, usually 20 to 25 percent.

According to the complaints ATI knowingly misrepresented its job placement statistics to the Texas Workforce Commission and the Accrediting Commission of Career Schools and Colleges in an effort to maintain its state license and accreditation.  The falsified records amounted to a violation of the laws and terms governing schools that participate in federal student aid programs, in addition to misleading students.

“Federal financial aid is meant to help students obtain a quality education from an eligible institution, and the Department of Justice is committed to ensuring colleges comply with the rules to make certain that happens,” said Stuart Delery, Assistant Attorney General for the U.S. Justice Department’s Civil Division.

The U.S. also alleged that ATI employees engaged in fraudulent practices to boost and maintain student enrollment. The school’s falsely inflated enrollment numbers increased the amount of federal dollars the schools received at the expense of taxpayers and students, who incurred long-term debt.

Federal financial aid is there to help students attain their dreams and goals, and misuse of these funds to increase corporate profits is unacceptable,” said Wifredo Ferrer, U.S. Attorney for the Southern District of Florida. “We are committed to ensuring that federal student aid is used for the benefit of students.”


U.S. Department of Justice