Two whistle blowers sued the University of Phoenix (UOP), alleging that it knowingly violated the Higher Education Act incentive compensation ban, 20 U.S.C. §1094(a) and (a)(20), by paying its counselors based on enrollments. The lawsuit alleged UOP boasted of its deceptions to the Education Department, as executives bragged UOP created “smoke and mirrors” to “fly under the radar” of the Education Department.

In 2004, the Education Department issued a 45-page report confirming the whistle blower allegations, following an investigation consisting of site visits, review of compensation documentation from UOP, and interviews with enrollment directors, managers and 60 enrollment counselors.

In late 2009 the University of Phoenix paid the United States Government 78.5 million dollars in settling the lawsuit. The settlement is among the largest ever of a False Claims Act fraud case where the government declined to intervene.

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Co-counsel

Cliff Palefsky
McGuinn, Hillsman & Palefsky, LLP
www.mhpsf.com
Daniel Robert Bartley
Bartley Law Offices
Robert J. Nelson
Lieff, Cabraser, Heimann & Bernstein, LLP
www.lieffcabraser.com
Michael Rubin
Altshuler Berzon LLP
www.altshulerberzon.com
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Published Opinions
Document Download
9th Circuit Opinion
United States ex rel. Hendow v. University of Phoenix
9th.Circuit.Opinion
PDF file 92 KB
7th Circuit Opinion
United States ex rel. Main v. Oakland City University
7th.Circuit.Opinion
PDF file 91 KB

 

Documents of Note
Document Download
United States Department of Education
Program Review Report

University of Phoenix
Site visit of 8/18/2003 - 8/22/2003
DOE.report.on.UOP
PDF file 6,467 KB
National Consumer Law Center
National Consumer Law Center Report
Making the Numbers Count: Why Proprietary School Performance Data doesn't Add Up and What Can Be Done About It
June 2005
Natl.Consumer.Law.Ctr.Rprt
PDF file 646 KB

 

Court Documents
Document Download
United States Department of Justice
Amicus Brief
Brief of the United States in support of the whistleblowers.
DOJ.amicus
PDF file 141 KB
Relators' Appellate Brief Filed with the 9th Circuit
Appeal to the Ninth Circuit.
Case No. 04 16247
Opening.Brief
PDF file 264 KB
Second Amended Complaint for Damages
Whistleblower Lawsuit Complaint against University of Phoenix regarding Incentive Compensation Ban Violations.
Case No. CIV.S-03-0457 GEB DAD
Second.Amended.Complaint
PDF file 119 KB
U.S. Supreme Court
Supplemental Brief For Respondents
On petition for a writ of certiorari to the United States Court of Appeals for the Ninth Circuit.
Case No. 06-1006.
Supplemental Brief For Respondents
PDF file 172 KB

 

News
Document Download
Consumers Digest
Degrees of Difficulty
The Truth About Online Universities
April 2009.
Consumers.Digest.2009.march
PDF file 6,934 KB
BusinessWeek
For-Profit Colleges: Scooping Up the Stimulus
March 12, 2009.
For-Profit Colleges: Scooping Up the Stimulus
HTML link
Los Angeles Times
Case against University of Phoenix stands
The Supreme Court refuses to throw out a False Claims Act lawsuit alleging loan fraud.
April 24, 2007.
Case against University of Phoenix stands
HTML link
KTVU-TV
Jim Vargas Reports On Lawsuit That Could Financially Ruin Private University
April 24, 2007.
(video) Jim Vargas Report -- April 23, 2007 HTML link.
New York Times
Troubles Grow For a University Built on Profits
The University of Phoenix became the nation's largest private university by delivering high profits to investors and a solid, albeit low-overhead, education to midcareer workers seeking college degrees. But its reputation is fraying as prominent educators, students and some of its own former administrators say the relentless pressure for higher profits, at a university that gets more federal student financial aid than any other, has eroded academic quality.
February 11, 2007.
(Abstract) Troubles Grow For a University Built on Profits
HTML link
The Chronicle of Higher Education
U. of Phoenix Loses Bid for Review of Decision That Reinstated High-Stakes Lawsuit
The University of Phoenix has lost another legal round in its attempt to derail a whistle-blower lawsuit that seeks billions of dollars in damages from the for-profit institution and its parent company, the Apollo Group Inc.
Oct. 26, 2006.
U. of Phoenix Loses Bid for Review of Decision That Reinstated High-Stakes Lawsuit
HTML link
The Arizona Republic
Court revives U. of Phoenix fraud lawsuit
A whistle-blower lawsuit alleging financial-aid fraud at the University of Phoenix has been reinstated by a federal appeals court.
Sep. 6, 2006.
Court revives U. of Phoenix fraud lawsuit
HTML link
Los Angeles Times
University of Phoenix Faces Fraud Suit
The school is accused of improperly compensating recruiters for signing up unqualified students to get federal funds.
Sep. 6, 2006.
University of Phoenix Faces Fraud Suit
HTML link
Inside Higher Ed
U. of Phoenix Loses in U.S. Court
The University of Phoenix must defend itself against charges that it violated federal law by paying its recruiters based on how many students they enrolled, the U.S. Court of Appeals for the Ninth Circuit ruled Tuesday.
Sep. 6, 2006.
Inside.Higher.Ed.9.5.2006.pdf
PDF file 116 KB
MarketWatch
Court revives whistleblower suit vs. University of Phoenix
A federal appeals court in San Francisco Tuesday revived a lawsuit that claims Apollo Group Inc.'s (APOL) University of Phoenix defrauded the federal government out of hundreds of millions of dollars.
Sep. 5, 2006.
Court revives whistleblower suit vs. University of Phoenix
HTML link
The Chronicle of Higher Education
Promises and Profits
A for-profit college is under investigation for pumping up enrollment while skimping on education
Jan. 13, 2006.
Promises and Profits
HTML link
CBSNEWS.COM
For-Profit College: Costly Lesson
Jan. 30, 2005.
60.MINUTES.SEGMENT1.1.2005
PDF file 49 KB
The Arizona Republic
Apollo told feds: Inquiry news would cause harm
Oct. 19, 2004.
Arizona.Republic.041019
PDF file 49 KB
The Chronicle of Higher Education
U. of Phoenix Uses Pressure in Recruiting, Report Says
Institution disputes charges that it pumps up enrollment through illegal tactics
Oct. 10, 2004.
U. of Phoenix Uses Pressure in Recruiting, Report Says
HTML link
The Arizona Republic
Student-Recruitment Tactics Blasted By Feds
And related stories Sept. 14, 2004.
Arizona.Republic.040914
PDF file 67 KB
The Chronicle of Higher Education
Selling Out Higher-Education Policy?
Led by Sallie Mae and the Apollo Group, the loan industry and for-profit colleges use political donations to try to get their way on Capitol Hill
Jul. 30, 2004.
Selling Out Higher-Education Policy?
HTML link
The Dallas Morning News
Dealing in diplomas
For the University of Phoenix, college is a big business - and getting bigger
Feb. 28, 2004.
DallasMorningNews.040228
PDF file 62 KB

 

Press Releases
Document Download
The Law Office of Nancy G. Krop
U.S. Department of Justice Files Amicus Brief in Support of Lawsuit Against University of Phoenix
May 11, 2005.
LONGK.Press.Release.050511
PDF file 44 KB