Consumer Fraud

Whistleblower Instrumental in Recovering $2.5 Million in Taxpayer Funds From SC University

whistleblower award shutterstock 615750110 339x210 Whistleblower Instrumental in Recovering $2.5 Million in Taxpayer Funds From SC UniversityA whistleblower was instrumental in helping the U.S. government recover $2.5 million in taxpayer funds from a private South Carolina “Christian” university that allegedly engaged in unlawful incentive-based recruitment schemes.

According to the U.S. Department of Justice, North Greenville University (NGU) entered a settlement agreement with the federal government resolving a False Claims Act lawsuit initiated by whistleblower Maurice Shoe.

The complaint alleged NGU made payments in the form of commissions, bonuses, and other incentives to a company named Joined Inc., a marketing and recruiting company for Christian colleges and universities. The unlawful payments were based on the company’s success in recruiting students.

NGU owns one-third of Joined and has an equal control over its Board of Directors. According to the whistleblower complaint, NGU never disclosed to its students that it was paying a referral or contingency fee to Joined equal to half the gross tuition collected for each student recruited by the company.

The U.S. Higher Education Act prohibits any institution of higher education that receives federal student aid from compensating student recruiters with a commission, bonus or other incentive payment based on the recruiters’ success in securing student enrollment. The rules are meant to protect students against aggressive admissions and recruitment practices that serve the financial interests of the recruiter rather than the educational needs of the student.

Ninety-five percent of the students attending NGU receive Title IV financial aid from the U.S. government. To be eligible to accept federal aid, schools agree not to pay referral or contingency fees to recruit students, and they must not enter into any tuition-sharing agreements.

“Offering unlawful financial incentives for recruiting undermines the integrity of our higher education system,” said Assistant Attorney General Jody Hunt of the Department of Justice’s Civil Division. “Prospective students are entitled to make enrollment decisions without the improper influence of recruiting companies who pursue their own financial gain at the expense of the students’ best interests.”

U.S. Attorney Sherri A. Lydon for the District of South Carolina added: “It should serve as a warning to institutions that would attempt to maximize enrollments to line their own pockets, disregarding the best interests of students in the process. Through False Claims Act cases like this one, the U.S. Attorney’s Office will continue to help protect federal taxpayer dollars from waste, fraud and abuse.”

Mr. Shoe, a part owner of Joined, will receive a whistleblower award of $375,000 for bringing the False Claims Act lawsuit on behalf of the U.S.