The U.S. Department of Justice has announced a settlement with the University of Phoenix over its abuses in student recruitment. The university will pay $67.5 million, of which $19 million will go to two whistleblowers, Mary Hendow and Julie Behn. Hendrow and Behn were University of Phoenix employees. They alleged that the university accepted federal student financial aid while in violation of statutory and regulatory provisions prohibiting post-secondary schools from paying admissions counselors certain forms of incentive-based compensation tied to the number of students recruited.
Notably, the government chose not to intervene in the case. Hendrow and Behn pursued the case on their own, even after the trial judge dismissed the case for failure to state a claim. They appealed and won. U.S. ex rel. Hendrow v. University of Phoenix, 461 F.3d 1166 (9th Cir. 2006). The University of Phoenix, however, still would not settle until their appeal to the U.S. Supreme Court was rejected. Hendrow and Behn received a higher share of the settlement because of the government's decision to stay out of the case. "This settlement showcases how a working relationship between the Government and private whistle-blowers can bring about effective results in terms of protecting taxpayer dollars," said Benjamin Wagner, U.S. Attorney for the Eastern District of California. What the Justice Department's press release does not say is that the federal government would recover more money for taxpayers if it chose to intervene in more cases.
Congratulations to Hendrow, Behn and their lawyers, Nancy G. Krop of Burlingame, California, and Dan Bartley of Novato, California..