GREENVILLE, SC (FOX Carolina) - An Upstate university will now pay a hefty fine for violating a federal ban on incentive-based compensation.
The Department of Justice announced that North Greenville University will have to pay $2.5 million for violating Title IV of the Higher Education Act, which prohibits higher education institutions that receive federal student aid from compensating student recruiters based on the recruiters' success in securing student enrollment. The ban, according to the Department, protects students against aggressive recruitment practices that serve the financial interests of the recruiter instead of the educational needs of the prospective student.
According to the department, whistleblower Maurice Shoe alleged to federal authorities that between 2014 and 2016, NGU hired Joined Inc., a company partially owned by NGU, to recruit students to the university and compensated Joined based on the number of students who enrolled at the university.
“Offering unlawful financial incentives for recruiting undermines the integrity of our higher education system,” said Assistant Attorney General Jody Hunt of the Department of Justice’s Civil Division. “Prospective students are entitled to make enrollment decisions without the improper influence of recruiting companies who pursue their own financial gain at the expense of the students’ best interests.”
The allegations resolved by the settlement were brought in a lawsuit filed under the qui tam, or whistleblower, provisions of the False Claims Act by Shoe. The Act permits private parties to sue on behalf of the government for false claims and to receive a share of any recovery. As part of the resolution, Shoe - a co-owner of Joined - will receive $375,000.
“This settlement will help ensure that schools and recruitment services put the educational interests of students and potential enrollees first,” said U.S. Attorney Sherri A. Lydon for the District of South Carolina. “It should serve as a warning to institutions that would attempt to maximize enrollments to line their own pockets, disregarding the best interests of students in the process. Through False Claims Act cases like this one, the U.S. Attorney’s Office will continue to help protect federal taxpayer dollars from waste, fraud, and abuse.”
The case was investigated by the U.S. Attorney’s Office for the District of South Carolina and the Civil Division’s Commercial Litigation Branch. Investigative assistance was provided by the Office of Inspector General of the Department of Education.
“The Office of Inspector General has a unique and special law enforcement mission – to protect public education funds for eligible students. Today’s settlement is an example of our commitment to this mission,” said Neil Sanchez, Special Agent in Charge of the U S. Department of Education Office of Inspector General’s Southern Regional Office. “The OIG will continue to work with our law enforcement colleagues and pursue allegations of violations of the False Claims Act in carrying out our important public service.”