Government intervenes in whistleblower suit against Texan for-profit schools

by Ben Vernia | September 1st, 2012

On August 30, the Department of Justice announced that it was intervening in a qui tam, or whistleblower lawsuit against a chain of for-profit higher education schools based in Dallas. According to DOJ’s press release:

The United States has intervened and filed a complaint against the private, for-profit chain of schools, ATI Enterprises Inc. based in North Richland, Texas, the Justice Department announced today. ATI Enterprises, Inc., which does business as ATI Technical Training Center, ATI Career Training Center and ATI Career Training, operates career college campuses in Texas, Florida, Oklahoma and New Mexico.

The government’s complaint alleges that from 2007 through 2010, at three campuses in Dallas and North Richland Hills, Texas, ATI Enterprises knowingly misrepresented its job placement statistics to the Texas Workforce Commission in order to maintain its state licensure, and therefore its eligibility for federal financial aid under Title IV of the Higher Education Act of 1965, as amended. On Aug. 9, 2011, the Texas Workforce Commission revoked licenses for several of ATI’s programs at the three campuses after a third party audit of ATI’s reported placement statistics.

Furthermore, the complaint alleges that ATI employees at the three campuses knowingly enrolled students who were ineligible because they did not have high school diplomas or recognized equivalents; falsified high school diplomas, including five Dallas Independent School District diplomas for students who later defaulted on their federal student loans; fraudulently kept students enrolled even though they should have been dropped because they had poor grades or attendance; and made knowing misrepresentations to students about their future employability. The alleged misrepresentations included telling students that a criminal record would not prevent them from getting jobs in their fields of study, quoting higher salaries than the students would be likely to earn and reporting inflated job placement statistics both to the students and the Texas Workforce Commission. The complaint alleges that the executive directors at each campus, as well as various ATI corporate officers, including the chief operating officer, chief executive officer, executive vice president of operations, national director of career services, regional director of education, regional director of career placements and vice president of recruitment were aware of and in some cases encouraged the alleged conduct.

The complaint further alleges that ATI engaged in these practices in order to induce students to enroll and thereby increase the school’s receipt of federal dollars at the expense of students, who incurred long-term debt, and the taxpayers.

The case was originally brought by six former employees of the company.

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