FOR-PROFIT SCHOOLS CHARGED WITH MISREPRESENTING THE TRUTH FOR PROFIT

FROM: U.S. DEPARTMENT OF JUSTICE
Thursday, August 30, 2012

Government Files Complaint Against Dallas Area-Based For-profit Chain of Schools for False Claims Act Violations

The United States has intervened and filed a complaint against the private, for-profit chain of schools, ATI Enterprises Inc. based in North Richland, Texas, the Justice Department announced today. ATI Enterprises, Inc., which does business as ATI Technical Training Center, ATI Career Training Center and ATI Career Training, operates career college campuses in Texas, Florida, Oklahoma and New Mexico.

The government’s complaint alleges that from 2007 through 2010, at three campuses in Dallas and North Richland Hills, Texas, ATI Enterprises knowingly misrepresented its job placement statistics to the Texas Workforce Commission in order to maintain its state licensure, and therefore its eligibility for federal financial aid under Title IV of the Higher Education Act of 1965, as amended. On Aug. 9, 2011, the Texas Workforce Commission revoked licenses for several of ATI’s programs at the three campuses after a third party audit of ATI’s reported placement statistics.

Furthermore, the complaint alleges that ATI employees at the three campuses knowingly enrolled students who were ineligible because they did not have high school diplomas or recognized equivalents; falsified high school diplomas, including five Dallas Independent School District diplomas for students who later defaulted on their federal student loans; fraudulently kept students enrolled even though they should have been dropped because they had poor grades or attendance; and made knowing misrepresentations to students about their future employability. The alleged misrepresentations included telling students that a criminal record would not prevent them from getting jobs in their fields of study, quoting higher salaries than the students would be likely to earn and reporting inflated job placement statistics both to the students and the Texas Workforce Commission. The complaint alleges that the executive directors at each campus, as well as various ATI corporate officers, including the chief operating officer, chief executive officer, executive vice president of operations, national director of career services, regional director of education, regional director of career placements and vice president of recruitment were aware of and in some cases encouraged the alleged conduct.

The complaint further alleges that ATI engaged in these practices in order to induce students to enroll and thereby increase the school’s receipt of federal dollars at the expense of students, who incurred long-term debt, and the taxpayers.

"Federal financial aid is designed to help students obtain an education ," said Stuart F. Delery, Acting Assistant Attorney General for the Civil Division of the Department of Justice. "We are committed to ensuring that educational institutions place the interests of their students ahead of their own financial interests. "

"Misuse of taxpayers’ dollars cannot be tolerated – not only for the sake of taxpayers, but especially in the case of innocent individuals who seek to improve their lives through a quality education," said U.S. Attorney Sarah R. Saldaña of the Northern District of Texas.

"Abuse of the federal student aid program is unacceptable" said Kathleen Tighe, Inspector General of the U.S. Department of Education. "Tracking down and holding accountable companies like ATI that take advantage of students to benefit the companies’ bottom line will continue to be a priority of our office."

The suit was originally filed by Portia Aldridge, Tiffany Turner, Monica Lewis, James Lewis, Nathan Wallace and Lori Jackson, all former employees of the Texas campuses of ATI Enterprises. The False Claims Act allows private citizens to file whistleblower suits to provide the government information about wrongdoing. The government then has a period of time to investigate and decide whether to intervene and take over the litigation or decline to pursue the case and allow the whistleblower to proceed. If the United States proves that a defendant has knowingly submitted false claims, it is entitled to recover three times the damages that resulted and a penalty of $5,500 to $11,000 per claim. When the government intervenes, the whistleblower can collect a share of 15 to 25 percent of the United States' recovery.

This matter was investigated by the Commercial Litigation Branch of the Justice Department’s Civil Division; the U.S. Attorney's Office for the Northern District of Texas; and the Department of Education, Office of Inspector General; and Office of General Counsel.

The claims asserted against ATI in the United States’ complaint are allegations only, and there has been no determination of liability.