United States Sues Student Recruiting Firm for Causing Fraudulent Claims to Federal Student Aid Programs

BOSTON - The United States has filed a complaint under the False Claims Act (FCA) against Study Across the Pond, LLC (SATP) and its principal, John Borhaug.

According to court documents SATP, which was organized under the laws of Massachusetts, and Borhaug, convinced foreign schools to enter into arrangements that violated the federal ban on incentive-based compensation for student recruitment. It is alleged that SATP and Borhaug paid their employees to recruit American students to attend foreign schools in the United Kingdom (UK), and then required the schools to pay a commission when recruited students enrolled in the UK schools. The complaint, filed in the District of Massachusetts, alleges that based on this conduct, SATP and Borhaug knowingly caused UK schools to submit false claims to the U.S. Department of Education.

"Today's complaint alleges that Study Across the Pond and John Borhaug used illegal incentives to influence American students to attend foreign schools," said Acting United States Attorney Joshua S. Levy for the District of Massachusetts. "With today's action, my office demonstrates its commitment to upholding the ban on incentive compensation, rooting out undue financial influence in student recruitment, and protecting the integrity of federal student financial aid programs."

"Third-party recruiters who demand illegal financial incentives for recruiting students to institutions of higher learning, no matter where those institutions are located, undermine the integrity of our system of higher education," said Principal Deputy Assistant Attorney General Brian M. Boynton, head of the Justice Department's Civil Division. "Prospective students are entitled to make their enrollment decisions without the improper influence of recruiters who pursue their own financial gain at the expense of students' best interests."

"The Office of Inspector General has a unique and special law enforcement mission - to protect public education funds for eligible students. Today's announcement is an example of our commitment to this mission," said Terry Harris, Special Agent in Charge of the U S. Department of Education Office of Inspector General's Eastern Regional Office. "The OIG will continue to work with our law enforcement partners and pursue allegations of violations of the False Claims Act in carrying out our important public service."

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.

The complaint alleges that SATP knowingly collaborated with at least 28 UK schools to violate the Incentive Compensation Ban while the schools were participating in federal student aid programs. More specifically, since at least 2015, SATP, under the direction of Borhaug, has allegedly recruited American students to attend UK schools and demanded payment of a "commission" for SATP's services. This commission was actually a share of the money the schools claimed from federal student financial aid programs for the benefit of American students. The government further alleges that SATP and Borhaug created sham records to hide these arrangements, and ultimately caused foreign schools to submit false claims to the Department of Education.

The government filed its complaint in a lawsuit filed under the qui tam, or whistleblower, provisions of the False Claims Act. Under the Act, a private citizen can sue on behalf of the government and share in any recovery. The government also is entitled to intervene in the lawsuit, as it has done in this case, which is captioned United States ex rel. Hitrost LLC v. Study Across the Pond, LLC, et al., No. 21-CV-10274-ADB (D. Mass.).

Acting U.S. Attorney Levy, Principal Deputy AAG Boynton and SAC Harris made the announcement today. Assistant U.S. Attorneys Brian LaMacchia and Alexandra Brazier of the Affirmative Civil Enforcement Unit are handling the matter along with Trial Attorney Allison Carroll of the Justice Department's Civil Division.

The claims in which the United States has intervened are allegations only. There has been no determination of liability.