On June 12th, the U.S. Department of Justice (DOJ) announced a settlement with Metro Beauty Academy (MBA), a private beauty school located in Allentown, Pennsylvania. MBA will pay $425,000 to resolve allegations of its involvement in a federal student financial aid fraud scheme.

A whistleblower alleged that MBA submitted claims for federal student financial aid on behalf of students who did not qualify for said financial aid. These fraudulent actions spanned from January 2009 to December 2013, and the allegations also include MBA’s admittance of students that lacked the proper certifications. The United States alleges that in some cases, MBA “created fake diplomas for students, or encouraged students to obtain false credentials from ‘diploma mills.’”

A whistleblower brought the lawsuit against MBA under the False Claims Act (FCA), who under the FCA’s qui tamprovisions can “bring lawsuits on behalf of the United States and obtain a portion of the government’s recovery.” The whistleblower, or “relator,” will receive a portion of the $425,000 settlement.

“When schools agree to participate in the Title IV federal financial aid program, they must comply with regulations designed to ensure that qualified students have access to higher education,” said U.S. Attorney William M. McSwain. He went on to say that fraud cases like this one are not only harmful to law-abiding educational institutions but also unfair to students attending other schools “who may find themselves unqualified for employment and saddled with debt.”

Finally, McSwain said, “We thank the relator and relator’s counsel for their invaluable contribution to this case. Without information from citizens like the relator, detecting fraud and conserving government program funds would be much more difficult.”

Read more:

DOJ press release

WFMZ’s article on the settlement