United States Intervenes in Suit Against American Commercial College Inc. Alleging False Claims Act Violations

The United States has intervened in a whistleblower suit pending under the False Claims Act against American Commercial College Inc. (ACC), a chain of for-profit colleges located in west Texas.

The government alleges that ACC falsely certified compliance with provisions of federal law that prohibit a college or university from obtaining more than 90 percent of its yearly tuition from federal student aid provided through the U.S. Department of Education. Congress enacted the “90/10 Rule” to ensure that educational institutions are able to attract funding from outside sources.

“Colleges and universities that receive federal funds must be honest with the government and follow the law,” said Tony West, Assistant Attorney General of the Justice Department’s Civil Division. “We will use the False Claims Act and other tools to protect students and taxpayers from for-profit institutions that fail to measure up to that standard.”

The suit was originally filed by Shawn Clark and Anthony Delgado, former ACC employees. The False Claims Act allows for private citizens to file whistleblower suits to provide the government information about wrongdoing. The government then has a period of time to investigate and decide whether to take over the prosecution of the allegations or decline to pursue them and allow the whistleblower to proceed. If the United States proves that a defendant has knowingly submitted false claims, it is entitled to recover three times the damage that resulted and a penalty of $5,500 to $11,000 per claim. When the government intervenes, the whistleblower can collect a share of 15 to 25 percent of the United States’ recovery. The government will file its own complaint shortly.

“Misuses of the federal student aid system must not be tolerated, for the sake of the taxpayers and of the innocent individuals who are seeking a quality education,” Sarah R. Saldaña, the U.S. Attorney for the Northern District of Texas, where ACC is located.

The suit is United States ex rel. Clark et al. v. American Commercial Colleges, Inc., Civil No. 5:10-CV-129-C (N.D. Tex.).

This matter was investigated by the Department of Justice, Commercial Litigation Branch, Civil Division; the U.S. Attorney’s Office for the Northern District of Texas; and the Department of Education, Office of Inspector General.

The claims contained in the complaint against ACC are merely allegations and do not constitute a determination of liability