SC university settles whistleblower action for $2.5M

North Greenville University has settled a False Claims Act lawsuit for $2.5 million after the federal government alleged the school had illegally used U.S. Department of Education funds to pay for incentive-based student recruitment services.

Title IV of the Higher Education Act prohibits universities that get federal student aid money from paying recruiters with a commission, bonus, or any other form of incentive which is designed to increase student enrollment. The idea is to protect students from recruitment practices that serve the financial interests of the school and recruiter at the expense of the students’ education.

Whistleblower Maurice Shoe, who was part-owner of the company offering recruitment services, will receive $375,000 for his part in filing the lawsuit on behalf of the government.

Shoe co-owned a company called Joined which was hired by the university to recruit students from 2014 to 2016. The company paid employees based on the number of students who enrolled in the school, in violation of the act, the Department of Justice said in a news release.

“The law is really clear,” said Reuben Guttman of Guttman, Buschner & Brooks in Washington D.C., Shoe’s lead attorney. “This law is important because it ensures money is spent prudently. It protects students and ensures they go to institutions for the right reasons and that the money is spent on education and not on marketing.”

The settlement resolves the qui tam action without assigning liability.

Dick Harpootlian and Christopher Kenney of Harpootlian Law in Columbia also represented Shoe, along with Traci Buschner and Justin Brooks of Guttman, Buschner & Brooks.

Sandra Miller of Womble Bond Dickinson in Greenville represented NGU. She said that the DOJ’s allegations were the result of an unusual technicality resulting from the actions of a previous administration.

“There were no allegations or expressed concerns by the Department of Justice that the students recruited were unqualified to enter the program or that they did not receive a quality education,” Miller said.