Former employees of a for-profit college with campuses across the nation filed a federal lawsuit claiming that the school defrauded federal grant and loan programs and duped the agency that approved its accreditation.
The lawsuit also claims that American InterContinental University enrolled students who couldn’t read and some who had no high school diploma to pad its numbers. And it says that the school violated federal law by rewarding recruiters based on how many students they enrolled.
The complaint was filed in federal court in Atlanta in July 2008 and unsealed by a judge last month. Atlanta attorney Joseph Wargo, who represents the former employees, says the alleged fraud amounts to more than $100 million in grant money.
The university was founded in 1970 and now has a network of campuses across the country and an online program. It was acquired in 2001 by Career Education Corp.
Company spokesman Jeff Leshay said he will not comment on the specifics of the litigation, but he said the case “is without merit” and the company intends to mount a vigorous defense.
The lawsuit was filed by four former AIU employees, including Joseph Plumley Jr., who was a vice president for academic affairs and acting president of the school’s campus in Dunwoody, Ga. and Glenn Dobson, the campus’s director of human resources.
The lawsuit contends that Southern Association of Colleges and Schools put the university on probation in 2006 and 2007 for violations including awarding incentives to recruiters and failing to ensure all students have high school diplomas or the equivalent.
But the complaint said the college continued to violate the agency’s policies, setting quotas that counselors had to meet to raise the number of enrolled students. It also said the school instructed Dobson to remove documents from counselors’ files that mentioned quotas.
When the probation was lifted, the complaint said, the university went back to many of the same practices. The school’s leaders instructed counselors that the top priority “is the quantity — not the quality — of the student,” the lawsuit said.
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