International Student Recruiting Firm and Co-Founder to Pay $1.3M to Resolve False Claims Act Allegations Related to the U.S. Department of Education’s Direct Loan Program

Massachusetts company Study Across the Pond LLC (SATP) and its principal, John Borhaug, have agreed to pay $1,300,000 to resolve allegations that they violated the False Claims Act by knowingly causing foreign schools in the United Kingdom (UK) to submit false claims and false statements to the U.S. Department of Education in connection with the Direct Loan Program through arrangements that violated the federal ban on incentive-based compensation. “American students deserve to make enrollment decisions free of the improper influence of third-party recruiters who pursue their own financial gain rather than the students’ best interests.” said Assistant Attorney General Brett A. Shumate of the Justice Department’s Civil Division. “Today’s settlement demonstrates the Department’s commitment to holding accountable individuals and corporate entities who violate the Incentive Compensation Ban and to protect the integrity of the federal student aid programs like the Direct Loan Program.” “Today’s settlement resolves the United States’ lawsuit against Study Across the Pond and Mr. Borhaug, who used improper incentives in an attempt to influence American students to attend foreign schools,” said U.S. Attorney Leah B. Foley for the District of Massachusetts. “My office is committed to ensuring American students are not taken advantage of for financial gain and protecting the integrity of federal student financial aid programs.” “Today’s settlement is a result of the hard work and effort of the Office of Inspector General, the U.S Department of Education, and the U.S. Department of Justice to protect and maintain the integrity of the Federal student aid programs by enforcing applicable laws, including the incentive compensation ban,” said Jason Williams, Assistant Inspector General for Investigation Services, U.S. Department of Education Office of Inspector General. “We will continue to work together to ensure that Federal student aid funds are used as required by law.” Under Title IV of the Higher Education Act of 1965, institutions of higher education that want to participate in federal student aid programs, including the Direct Loan Program, must agree not to provide any commission, bonus, or other incentive payment to student recruiters based directly or indirectly on success in securing student enrollments. This is referred to as the Incentive Compensation Ban. The Incentive Compensation Ban protects students against aggressive recruitment practices that serve the financial interest of the recruiter rather than the educational needs of the student. Since 2013, SATP has recruited American students to attend foreign schools in the UK. The United States alleged that SATP knew of the Incentive Compensation Ban and nevertheless collaborated with at least 28 schools in the UK to violate the Ban while those schools were participating in the Direct Loan Program. Specifically, the United States alleged that SATP demanded a commission for its recruitment services, which was a share of the tuition paid by any students the company recruited for the schools. In many cases, this was money the schools had claimed from the Direct Loan Program for the education of American students. The United States further alleged that SATP created sham records to hide these tuition-sharing arrangements from the Department of Education and ultimately caused foreign schools to submit false claims to the Direct Loan Program. The case is captioned United States ex rel. Hitrost, LLC v. Study Across the Pond, LLC, et al., No. 21-CV-10274-ADB (D. Mass.)