For-Profit College to Pay U.S. at Least $1-Million to Settle Whistle-Blower Suit

American Commercial Colleges Inc. has agreed to pay the United States at least $1-million over the next five years to settle a whistle-blower lawsuit accusing it of defrauding the government, the U.S. Department of Justice announced on Friday.

The lawsuit against the Texas-based chain of for-profit colleges was filed by two of its former campus directors, in 2010. The Justice Department then said last February that it would intervene in the case. The lawsuit accused the institution of orchestrating a scheme to conceal violations of a requirement that for-profit colleges receive no more than 90 percent of their revenue from federal student-aid programs. Colleges that violate that requirement, known as the 90/10 rule, for two consecutive years can lose their eligibility to participate in those programs.

In addition to the $1-million plus interest over five years, the company could be obligated to pay $1.5-million more under the terms of the settlement, the Justice Department said in its announcement.

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