Graduate Students

Proprietary College to Pay $7-Million to Settle Federal Student-Aid Charges

April 20, 2009

A for-profit college based in Denver and its campuses in Texas have agreed to pay the federal government $7-million to settle allegations of student-aid fraud, the U.S. Justice Department announced today.

The company, Alta Colleges Inc., faced a lawsuit asserting that it had obtained federal student aid by falsely claiming that it had complied with state-licensing requirements. Such licensing is required to receive federal aid.

According to the allegations, which were part of a False Claims Act lawsuit initially filed by unnamed whistle-blowers, Alta Colleges and its Westwood College campuses obtained a state license to operate in Texas by falsely stating that they observed state requirements on job-placement reporting and that their interior-design programs complied with the requirements for a professional license in the field.

Alta’s chief executive, George Burnett, said in a letter to faculty and staff members that the company had acted lawfully but had settled with the government because of the time and expense associated with litigation, the Associated Press reported.

The False Claims Act enables private citizens to sue on behalf of the federal government and to get a share of any judgments or settlements, whether or not the Justice Department chooses to get involved. Under the settlement, the whistle-blowers will get $1.19-million. —Andrew Mytelka