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Justice News

Department of Justice
U.S. Attorney’s Office
Western District of Texas

FOR IMMEDIATE RELEASE
Monday, January 5, 2015

For-Profit College Kaplan To Refund Federal Financial Aid Under Settlement With United States

Over $1 Million will be paid in the form of tuition refunds for 289 students

Over $1 Million will be paid in the form of tuition refunds for 289 students

Kaplan Higher Education (“Kaplan”), a leading for-profit education company with campuses located throughout the country, will pay roughly $1.3 million under a civil settlement with the United States Department of Justice.  The settlement resolves whistleblower allegations that the company employed unqualified instructors at its campuses in Texas, Acting U.S. Attorney Richard L. Durbin, Jr. announced today.

Kaplan operates for-profit colleges on several campuses in Texas, including Kaplan College – San Antonio (San Pedro) and Kaplan College – San Antonio (Ingram).  These campuses offer a mix of degree and diploma programs, such as a Medical Assistant Diploma program designed to train students for entry-level positions in the health care field.  Many of Kaplan’s students receive financial assistance under federal programs that help eligible students obtain higher education.  These federal programs, authorized under Title IV of the Higher Education Act of 1965 (“Title IV”), include the Federal Pell Grant Program, Federal Direct Loan Program, and Federal Family Education Loan Program, among others.

The Department of Justice began investigating Kaplan after a whistleblower, Leslie Coleman, filed a qui tam lawsuit under the False Claims Act accusing Kaplan of employing unqualified instructors to teach Medical Assistant courses at its San Antonio campuses.  The suit alleged that Kaplan knowingly requested, received, and retained federal tuition funds for courses taught by individuals who did not meet the minimum requirements established by Texas law.  Following the United States’ investigation, the parties negotiated a settlement pursuant to which Kaplan will pay $1,329,753.25 to resolve the whistleblower claims.  The majority of the settlement – roughly $1,077,000 – will be paid in the form of tuition refunds.  These refunds will benefit 289 students, whose student loan debt will decrease as a result of the settlement.

Kaplan fully cooperated with the government’s investigation and negotiated the settlement in good faith, stated Acting U.S. Attorney Durbin.  The settlement is not an admission of liability by Kaplan or its affiliates.

The Department of Education Office of Inspector General (DOE-OIG) and the U.S. Attorney’s Office for the Western District of Texas investigated the allegations raised in the whistleblower suit captioned United States ex rel. Leslie Coleman v. Kaplan, Inc., The Washington Post Company, Kaplan Higher Education Corporation, Kaplan College – San Antonio (San Pedro) and Kaplan College – San Antonio (Ingram), no. SA:12-cv-0459-FB (W.D. Tex.)   DOE-OIG Special Agent Edd Cole, Assistant U.S. Attorney John J. LoCurto, and ACE Auditor Jamie Cole, CPA handled the investigation for the Government.

Individuals who suspect Title IV fraud, waste, or abuse are encouraged to report their information to the Department of Education by calling the Inspector General’s fraud hotline at 1-800-MIS-USED.

Updated February 4, 2016