Education

Overcharging for books sold to schools, libraries, and government agencies

A national book distributor agreed to pay a total of $15.5 million to settle a qui tam suit alleging that it overcharged schools, libraries, and government agencies which purchased its books using federal grant money.  The lawsuit alleged that the distributor agreed to provide discounts of approximately 40 percent on trade books, and did provide the discount to retail purchasers, but then misclassified trade titles as non-trade titles for institutional purchasers.  The qui tam suit was filed by the head librarian for the city of Richmond, Virginia, and a former distributor sales representative.

Fraud involving research grants and contracts

A major university medical center agreed to pay the Government $15.5 million to settle a qui tam suit alleging that it submitted false information in connection with indirect costs associated with federally-sponsored research grants and contracts.  Allegedly, the medical center negotiated and received an inflated indirect cost rate by providing false information regarding dollar figures for voluntary cost sharing that were different from amounts reflected in its internal documents and consultants’ reports, and submitting duplicate claims for the same utility costs in its research-related indirect cost proposals and in-hospital institutional cost reports submitted for Medicare reimbursement.  Additionally, the medical center allegedly submitted duplicate claims for certain environmental services costs in separate indirect cost proposals.  The medical center was also accused of by submitting claims for certain unallowable expenses involving entertainment and capital interest, overstating housekeeping expenses based on budgeted instead of actual costs, inconsistently allocating the indirect and direct costs of certain activities and departments, and using an outdated space survey which resulted in over-allocation of costs.

Private education consultant fraud

The federal government has begun spending billions of dollars annually to revitalize failing public schools.  This increased federal spending has been accompanied by an increase in companies claiming to specialize in overhauling schools.  The reality, though, is that many of these companies have little or no experience in the educational arena, much less with overhauling schools.  And with very few government auditing and regulatory resources available to monitor these companies, the stage is set for fraud and abuse involving federal funds. 

Higher education recruiting, financial aid, and placement fraud

Colleges and universities must follow certain laws to qualify for federal funding, including federal financial aid.   With the rise of for-profit institutions of higher education—and for-profit components of otherwise non-profit schools—fraud and abuse in higher education is becoming more common.  For example, some schools are illegally paying recruiters a “commission” based on the number of students they bring to the school.  Others are providing the government with falsified job placement statistics in order to qualify for federal funding and loan subsidies.  Still others are awarding federal financial aid to students who do not meet minimum grade requirements and falsely certifying that these students qualify for continued financial aid.  Illegal activities such as these can form the basis for qui tam cases against these colleges and universities.

E-Rate Program fraud

A qui tam case settled in 2009 alleged that Computer Assets, a telecommunications company based in New Mexico, defrauded the federal E-Rate Program.  This program provides funding for technology upgrades in impoverished school districts.  The lawsuit alleged that Computer Assets targeted poor school districts in the Southwest and used them to bill E-Rate for multi-year technology projects.  However, many of these projects were for redundant systems that were ineligible for compensation, while other projects were often never initiated or completed.  In fact, Computer Assets allegedly billed E-Rate for work on buildings that did not even exist.  The company also put school district employees on its payroll and neglected to follow the proper procedures for submitting competitive bids to E-Rate.  As a result, the E-Rate Program paid Computer Assets millions of dollars for ineligible and/or nonexistent technology upgrade projects. Read more about E-Rate Program Fraud.