For-Profit College Chain Agrees to Pay More Than $1 Million to Resolve Allegations of Inflated Graduation Statistics

PHILADELPHIA – United States Attorney David Metcalf announced today that American Higher Education Development Corporation (“AHED”), a Pennsylvania company that operates for-profit colleges, has agreed to pay $1,032,500 to resolve allegations that it violated the False Claims Act by inflating graduation statistics and failing to return Federal Student Aid money at three of its schools: Stautzenberger College in Ohio, Rockford Career College in Illinois, and Madison Media Institute in Wisconsin.

“Federal student aid comes with clear rules: report truthful outcomes and return unearned funds,” said U.S. Attorney Metcalf. “Through the False Claims Act, we will continue to deter misconduct, protect taxpayers, and ensure that schools meet their obligations to students and the public.” 

The United States contends that AHED exaggerated its graduation rates in reports to the United States Department of Education by failing to include certain students who withdrew from AHED programs after the drop period and before completing the programs. In addition, the United States contends that AHED failed to return $413,000 in Federal Student Aid for those students to the Department of Education. 

The settlement resolves a lawsuit filed under the whistleblower provisions of the False Claims Act, which permit private parties to sue on behalf of the government when they believe that a defendant has submitted false claims for government funds and receive a share of any recovery. The settlement provides for the whistleblower, Christopher Wargo, a former Chief Operating Officer and Compliance Officer for AHED, to receive a $227,150 share of the settlement amount. The qui tam case is captioned United States ex rel. Christopher Wargo v. American Higher Education Development Corp., et. al., No. 23-cv-4941 (E.D. Pa.). The government recognizes the significant contribution of Mr. Wargo in bringing the issues resolved by this settlement to light. 

“Today’s settlement reflects the diligent work of the Office of Inspector General and the U.S. Attorney’s Office to safeguard the integrity of the Federal student aid programs,” said Jamila Davis, Special Agent in Charge of the U.S. Department of Education Office of Inspector General’s Eastern Regional Office. “We remain committed to working together to ensure that entities that participate in the Federal student aid programs do so in accordance with laws and regulations. America’s taxpayers and students deserve nothing less.”

This matter was handled in the Eastern District of Pennsylvania by Assistant United States Attorneys Peter Carr and Anthony St. Joseph. 

The claims resolved by the settlement are allegations only and there has been no determination of liability.