Stevens-Henager College and its owner illegally paid recruiters for bringing in students, the U.S. government alleges in a whistle-blower lawsuit.
Stevens-Henager has campuses in Utah and Idaho, including one in Boise, one in Idaho Falls and a branch in Nampa. The for-profit college offers degrees in fields including business, health care, technology and graphic arts.
The college is owned by the Center for Excellence in Higher Education, a Utah nonprofit. Its CEO, Eric Juhlin, strenuously denied the allegations Thursday to the Idaho Statesman. For-profit colleges have faced criticism in recent years for having higher-than-average loan-default rates among their graduates. Federal regulators are working to hold the schools accountable for helping students prepare for gainful employment.
The Justice Department sued Stevens-Henager in federal court in Boise. The department says the college falsely certified compliance with a federal law that prohibits for-profit colleges from paying incentive-based compensation to admission recruiters based on the number of students they recruit.
Incentive programs are prohibited to discourage enrolling unqualified students, running up student-loan defaults rates and wasting student loans, government officials say. The lawsuit covers the period from July 1, 2007 to July 1, 2011. During that time, the college and students received millions of dollars in federal grant funds or loans backed by the government.
The federal government paid money to Stevens-Henager and its students that it would not have paid had the federal government known the true facts, the lawsuit says. The school encouraged its recruiters to enroll anyone willing to apply for federal funds regardless of the student's likelihood of success or ability to benefit from Stevens-Henager's educational programs.
The complaint was filed under the False Claims Act. It follows claims that were started in a whistleblower lawsuit filed in Idaho by two Stevens-Henager College workers from Utah. The False Claims act allows the Justice Department to intervene and take over the whistleblowers' allegations. It also allows for triple damages and penalties. The whistleblowers are entitled to share in any money recovered by the lawsuit.
Fighting fraud and protecting federal tax dollars from abuse is a priority for this office, said Wendy Olson, U.S. attorney for Idaho. The False Claims Act is an important tool for doing just that. Whistleblowers are necessary to our ongoing efforts to combat fraud, waste and abuse.
The lawsuit does not say how much the government will seek in damages.
Bill Roberts: 377-6408, Twitter: @IDS_BillRoberts