We’ve heard horror stories about some for-profit colleges from students: the false promise of gainful employment after completing a short program at the cost of thousands of dollars. Now come claims from former employees about alleged fraud carried out by officials at a for-profit college group thanks to a federal lawsuit.

Seven former employees are part of a federal lawsuit accusing the Harris School and its parent company, Premier Education Group, of misleading students — who paid more than $10,000 a year for various programs — about career prospects, and falsifying records to enroll students and keep them enrolled in order to continue receiving government grant and loan dollars, The New York Times reports.

The lawsuit, which was first filed in 2011 and unsealed last fall, is filed under the federal False Claims Act, charging that the conduct of Premier defrauded the federal government out of student loan funds. If found liable Premier could be on the hook for triple the actual damages, enough to potentially put the company out of business.

As whistleblowers, the former employees could collect as much as 30% of any verdict awarded. Officials with Premier believe the former employees brought the suit as a way to make a buck.

From 2011-2012, Premier collected $112 million in federal Pell grants and federal student loans. Premier runs more than two dozen trade schools and community colleges in 10 states. The schools operate under various names including Branford Hall, Salter School and Harris School.

Employees allege that the Harris School enrolled students who were not capable of doing the work because they lacked the mental stability, academic skills or English proficiency. When students didn’t make progress toward completion, a requirement to receive federal aid, administrators would allegedly change the grades or falsify attendance records.

“I saw students who never should have been there, students with whopping gaps in learning abilities and major psychiatric problems who were just not capable of doing the work,” a former administrator at Harris’s Linwood, NJ, campus, and then at its Wilmington, Del., campus told the Times. “The bosses were always like, ‘Stop asking why they’re enrolled, just get them to graduation however you can.’ ”

The former employees say the school allowed students to enroll who should not be in the program. For example, a student was enrolled in massage therapy even though he had been convicted of a sex crime, a charge that would prevent him from being licensed. In another instance, a pharmacy technician student wore an electronic monitor on his ankle; certification for pharmacy technicians exclude anyone convicted of a felony or a low-level drug offense.

Officials and lawyers for Premier maintain the lawsuit is frivolous.

“We’re proud of the record we have. When you employ 1,500 people, you can’t always make the best of decisions in the people you hire,” Gary Camp, chief executive of Premier said.

This isn’t the first suit in which Premier has been involved. A separate case in New Jersey involves dozens of former Harris students who say the school lied about what professional certifications they would qualify for after completing courses. A few years ago, Premier settled a similar suit before it went to trial, the Times reports.

For-profit schools have come under increased scrutiny in recent years. The Government Accountability Office has conducted investigations into a number of schools that use high-pressure enrollment tactics and misleading promises to attract students.

Many for-profit colleges rely heavily on government aid. These schools tend to market themselves toward lower-income, minority and immigrant students, and some have been accused of deliberately targeting these markets in order to reap more student loan revenue.

Last October, the California Attorney General filed suit against Corinthian Colleges, Inc., the operators of 111 North American campuses and three online programs, claiming that it lied to students about the prospect of job-placement and to investors about the success rate of graduates.

In December, a court ordered a for-profit school in Kentucky to pay $1,000/day for avoiding a subpoena related to the state’s investigation into for-profit National College schools.

In addition to investigating for-profit colleges for misleading students and investors, the Department of Education is working to prevent such misdeeds from happening.

Last summer, the DOE began reviewing a new rule aimed at higher education institutions that fail to demonstrate their students could find gainful employment in the fields in which they trained. In the months since the review began, for-profit colleges have weakened the rule to the point it would have little effect. Earlier this month more than 51 groups, including consumer advocates, veterans, and students, urged the President to propose a stronger version of the rule.

Just last month the federal government launched a new reporting system to streamline consumer complaint investigations of veterans’ and servicemembers’ being targets of higher education abuse.

Federal Lawsuit Accuses For-Profit Schools of Fraud [The New York Times]

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