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Goldberg Kohn is pleased to have represented a whistleblower in connection with a $1.03 million settlement to resolve allegations that American Higher Education Development Corporation (“AHED”), a Pennsylvania-based operator of for-profit colleges, violated the False Claims Act (“FCA”) by inflating graduation statistics and failing to return federal student aid funds. The whistleblower, Christopher Wargo, was formerly AHED’s chief operating officer.
The settlement resolves allegations involving two AHED schools: Stautzenberger College, which operated campuses in Maumee and Brecksville, Ohio, and Rockford Career College in Rockford, Illinois. Wargo alleged that AHED overstated graduation rates reported to the U.S. Department of Education by excluding certain students who withdrew from educational programs after the drop period but before completing their studies. These are figures that prospective students rely on when making decisions about their education.
Before Wargo objected and demanded the practice stop, AHED’s published graduation figures showed near-uniform compliance with the benchmark rates set by its accreditor, the Accrediting Commission on Career Schools and Colleges (ACCSC), which ranged from 40% to 73% during the relevant period:
- Stautzenberger College, Maumee campus: 100% of programs met or exceeded the benchmark in 2019, 2020, and 2021, followed by 90.5% in 2022. After Wargo put a stop to the practice, the reported rate for 2023 fell to 54.2%, or 13 of 24 programs.
- Stautzenberger College, Brecksville campus: 100% compliance from 2018 through 2021, followed by 82.4% in 2022. The reported rate for 2023 fell to 44.4%, or 8 of 18 programs, after Wargo came forward.
- Rockford Career College: 94.4% compliance in 2021 and 95.2% in 2022. The reported rate for 2023 fell to 76.9%, or 20 of 26 programs, after Wargo came forward.
The settlement resolves a qui tam action filed under the whistleblower provisions of the FCA, which allow private individuals to bring actions on behalf of the U.S. government and share in any recovery. The case is United States ex rel. Christopher Wargo v. American Higher Education Development Corp., et al., No. 23-cv-4941 (E.D. Pa.).
“Mr. Wargo saw firsthand how AHED misrepresented its graduation outcomes to the federal government, and he made the difficult decision to come forward,” said David Chizewer, lead counsel to Wargo and Chair of Goldberg Kohn's Litigation Practice Group. “When a school inflates its success rates, the students who trust those numbers to make a major financial decision are the ones who pay the price. This settlement sends a clear message that graduation rates must be treated as more than just a marketing tool.”
Goldberg Kohn’s FCA team included William C. Meyers and W. Kyle Walther.
For more information about the United States’ settlement with AHED, please see CLICK HERE.
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We have significant experience representing qui tam relators in healthcare fraud cases just like this one and have recovered almost $2 billion for the government in our cases to date. If you would like more information about Goldberg Kohn's False Claims Act practice, call us at 312.863.7222 or contact us online. We are always willing to provide a free, confidential consultation to discuss a potential case.