BOSTON — A Massachusetts-based student recruiting firm and its principal have agreed to pay $1.3 million to resolve a lawsuit alleging that they knowingly caused United Kingdom schools to submit false claims to the U.S. Department of Education.
Study Across the Pond, LLC, and its principal, John Borhaug, have agreed to pay the amount to settle the allegations, U.S. Attorney Leah Foley said in a statement on Wednesday.
In April 2024, the United States filed a complaint against Study Across the Pond and Borhaug, alleging that they convinced foreign schools to enter arrangements that violated the federal ban on incentive-based compensation for student recruitment.
“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,” Foley said. “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.”
Study Across the Pond was organized in Massachusetts in 2009, with a business address in Beverly, according to the Secretary of State’s corporations database. The firm’s date of cancellation is listed as Jan. 31, 2024, the same year the government intervened in the case.
“Across the Pond is typically considered as one of the leading sources of expertise in the sector in our respective markets,” the business states on its website. “Across the Pond has advised thousands of international students and helped them achieve their dream of studying at some of the best universities in the UK.”
Title IV of the Higher Education Act prohibits any institution of higher education that receives federal student aid from compensating student recruiters with a commission, bonus, or other incentive payment based directly or indirectly on the recruiters’ 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, Foley said.
According to the settlement agreement, Study Across the Pond entered into contracts with UK schools that provided that Study Across the Pond received a percentage share of the American student’s tuition to the UK school in exchange for the firm’s recruitment of that student.
Meanwhile, federal student financial aid programs paid those American students’ tuition, of which Study Across the Pond received a share under the illegal agreement, prosecutors said
Sometimes, in response to questions from UK schools regarding whether such tuition-sharing agreements were permissible, Study Across the Pond entered into purported “flat fee” contracts with the schools instead, prosecutors said.
“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,” Assistant Attorney General Brett Shumate, Head of the Justice Department’s Civil Division, said in a statement.
“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,” Shumate said.
The claims resolved in Wednesday’s settlement include claims that were brought under the qui tam or whistleblower provisions of the False Claims Act.
Under the Act, a private party can file an action on behalf of the United States and receive a portion of any recovery.
The qui tam case is captioned United States ex rel. Hitrost LLC v. Study Across the Pond, LLC, et al., No. 21-CV-10274-ADB (D. Mass.).
As part of Wednesday’s resolution, the relator will receive a share of the settlement amount, Foley said.
This is a developing story. Check back for updates as more information becomes available.
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