False Claims Act Lawsuits
In 2008 three former academic officers at Kaplan University filed wide-ranging federal False Claims Act lawsuits accusing the university of defrauding the United States government out of more than $4 billion. The lawsuits alleged that Kaplan enrolled unqualified students, inflated their grades so they could stay enrolled, and falsified documents to obtain accreditation for certain academic programs. The three suits were consolidated and filed in the U.S. District Court in Tampa, Florida in March 2008.
Kaplan moved to dismiss the consolidated suit. The Justice Department maintained that the “parade of horribles” that Kaplan predicted if the case were not dismissed was “entirely illusory”. The government is entitled to a portion of the proceeds if the employees prevail against the company. Kaplan University has denied any wrongdoing. The suit was withdrawn in 2012 after a settlement was reached with two of the former employees. The third was charged in federal court for hacking into Kaplan's computers and sending threatening emails.
The Chronicle of Higher Education has reported that the U.S. Department of Justice has taken a stance in siding with several whistle-blowers in false claims lawsuits against various colleges owned by Kaplan Higher Education. Under the False Claims Act, individuals are allowed to file lawsuits on behalf of the government in cases which involve allegations of fraud.
Kaplan argued that the consolidated lawsuit should be dismissed because it lacks the specificity required in a federal fraud case.
Separately, former employee Charles Jajdelski brought a lawsuit in Nevada alleging that Kaplan’s Heritage College had filed fraudulent student financial aid requests, allegations denied by Kaplan. Jajdelski's request to transfer the suit to Florida to join with the others was denied as a "potential tag-along action". In July 2011, after Jajdelski had amended the original complaint several times, a judge dismissed the suit due to Jajdelski's failure to "state with particularity the circumstances constituting fraud".
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