Appeals Court Backs Dismissal of Whistleblower Suit Against Lenders

May 6, 2011

A federal appeals court on Thursday upheld a lower court's ruling dismissing a whistleblower's lawsuit alleging that three private student loan providers violated the False Claims Act by defrauding the government. The decision by the U.S. Court of Appeals for the Eighth Circuit came in a suit brought by a former loan adviser at Nelnet, who sought to hold the lender liable under the False Claims Act for regulatory violations that resulted in hundreds of millions of dollars in federal overpayments to the Nebraska lender. But the appeals panel agreed with the lower court that the former employee had failed to show that Nelnet and two other lenders, JP Morgan Chase and Citigroup, had made false claims to the government, as the law requires.

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