A for-profit college chain, American Higher Education Development Corp. (AHED), agreed to pay more than $1 million to resolve allegations of inflated graduation statistics, in a settlement announced by the U.S. Attorney's Office for the Eastern District of Pennsylvania.DOCUMENTED
The case was brought under the whistleblower provisions of the False Claims Act, which allow a private party with inside knowledge of alleged fraud against the government to sue on the government's behalf and receive a share of any recovery. The whistleblower in this case, Christopher Wargo, a former Chief Operating Officer and Compliance Officer for AHED, will receive a $227,150 share of the settlement — meaning the person who caught the alleged fraud held one of the company's own senior compliance positions.DOCUMENTED
- AHED agreed to pay more than $1 million to resolve allegations of inflated graduation statistics used to attract and retain federally funded students.
- The United States separately alleges AHED failed to return $413,000 in Federal Student Aid funds owed for students who were entitled to a refund.
- Whistleblower Christopher Wargo, formerly AHED's own Chief Operating Officer and Compliance Officer, will receive a $227,150 share of the settlement under False Claims Act whistleblower provisions.
- The claims resolved by the settlement are allegations only; the settlement itself does not constitute a legal determination of liability.
- The case was investigated jointly by the U.S. Department of Education's Office of Inspector General and the U.S. Attorney's Office.
Why an internal compliance officer is a particularly credible whistleblower
Whistleblower cases brought by a company's own former compliance or oversight personnel carry a specific evidentiary weight that outside whistleblowers often lack: a compliance officer typically has direct, contemporaneous access to the internal reporting and data-verification processes that a fraud of this kind would need to circumvent, meaning their account of how graduation statistics were allegedly inflated is less likely to rest on secondhand or circumstantial evidence.REVIEWED
Today's settlement reflects the diligent work of the Office of Inspector General and the U.S. Attorney's Office to safeguard the integrity of the Federal student aid programs.
Graduation statistics as a marketing and eligibility lever
Graduation and job-placement statistics function as a dual-purpose figure for for-profit colleges: they are simultaneously a marketing claim used to recruit prospective students, and in some contexts a factor relevant to a school's continued eligibility to participate in federal student aid programs at all. Inflating that single number therefore serves two distinct fraudulent purposes at once — attracting tuition-paying, aid-eligible students who might not enroll if given accurate outcome data, and helping the institution maintain the federal certifications it depends on to keep receiving aid disbursements in the first place.
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