Former Officials Sue American InterContinental for Fraud

August 25, 2009

Lawsuits charging for-profit colleges with misleading students or abusing federal financial aid laws are not uncommon, and many such suits are dismissed without findings of wrongdoing. But it is rarer for such lawsuits to be brought by senior administrators at the colleges in question, as is the case with one now being brought against American InterContinental University, as reported Monday by the Atlanta Journal-Constitution. The lawsuit, which was filed in federal court in Atlanta last year but unsealed only last month, was brought under the federal False Claims Act and revealed after the federal government declined to join the lawsuit. (The False Claims Act permits lawsuits by an individual who believes he or she has identified fraud committed against the federal government, and who sues hoping to be joined by the U.S. Justice Department. The plaintiff then shares in any financial penalties, which can include trebled damages.) The suit against American InterContinental accuses it of violating federal laws barring colleges from compensating admissions officers based on how many students they enroll and of admitting students who had not proven themselves qualified to benefit from a higher education. (AIU was on probation with its accrediting agency, the Southern Association of Colleges and Schools, because of similar concerns from 2005 to 2007.) The lawsuit was filed by a former vice president for academic affairs/acting president, a former human resources director, a former academic adviser, and a current official in the registrar's office at one suburban Atlanta campus of American Intercontinental. A spokesman for Career Education Corp., a for-profit higher education company that owns AIU, told the Journal-Constitution that the lawsuit is "without merit."

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