School and Owner Pay Over $1 Million to Resolve Allegations of Attempts to Improperly Influence School’s Student Loan Default Rate | USAO-CT
Vanessa Roberts Avery, United States Attorney for the District of Connecticut, today announced that CAREER TRAINING SPECIALISTS, LLC, doing business as STONE ACADEMY, and its owner, MARK SCHEINBERG, have paid more than $1 million to resolve allegations that they violated the bogus federal Claims Act by covering up a series of warrant payments made by Scheinberg to prevent certain loans from being counted towards Stone Academy’s student loan default rate, and for failing to disclose Stone Academy’s actual and higher default rate to the US Department of Education.
Stone Academy is a for-profit school with campuses in East Hartford, Waterbury, and West Haven that awards career degrees in various medical fields, and it participates in federal student loan and grant programs under Title IV of the Higher Education Act of 1965. One metric that determines an institution’s eligibility to participate in Title IV programs is the institution’s “cohort default rate” (“CDR”), which is the percentage of Federal Institution Student Loan borrowers who default (or are deemed to default) within a specified time period after entering repayment status. If an institution’s CDR is too high – an indicator that too many of an institution’s graduates are unable to repay their student loans – the institution faces administrative consequences which may include termination of the eligibility to participate in certain Title IV programs. For purposes of calculating an institution’s CDR, a borrower is considered to be in default if an institution – or an institution’s owner, agent or affiliate – makes a payment to avoid default by a borrower on a loan included in a cohort.
This settlement resolves allegations that between February 2015 and March 2019, Scheinberg and Stone Academy sent 154 small direct payments to loan officers on behalf of 102 students in an effort to prevent these students from defaulting on their loans and be counted in the Stone Academy CDR. The payments were made with money orders purchased and filled by Scheinberg without the students’ knowledge or consent, and in a manner intended to conceal the fact that these payments were made by Scheinberg and Stone Academy. Stone Academy then failed to disclose to the Department of Education its actual and higher CDR reflecting the alleged default of many borrowers given Scheinberg’s concealed payments.
In addition to making the payment of $1,023,950, plus interest, under a civil settlement agreement, Stone Academy and Scheinberg also entered into an administrative agreement with the Department of Education in which Scheinberg agreed to ceasing to be involved in and participate in the operations of, and ceding direct ownership of, Stone Academy and another for-profit school, Creative Workforce LLC, doing business as Paier College of Art. The administrative agreement also governs Scheinberg’s agreed retirement from Goodwin University and the University of Bridgeport.
“The cohort default rate is an important metric that students can use to research whether a school is providing a worthwhile education, as it can show whether the degree they would earn will help them find jobs that will keep them in school.” day on their student loans,” U.S. Attorney Avery said. “Educational institutions – especially private, for-profit schools – that attempt to hide high student loan default rates from the Department of Education and their students not only risk losing their eligibility and that of their students to receive federal funds, but they risk federal enforcement by our office and investigative agency partners.
“Today’s settlement is the result of the work and efforts of the Office of Inspector General and the Department of Justice to protect and maintain the integrity of federal student assistance programs,” said Terry Harris. , special agent in charge of the office of the United States Department of Education. of the Eastern Regional Office of the Inspector General. “We will continue to work together to ensure that federal student aid funds are used according to law. American taxpayers and students deserve nothing less.
This investigation was conducted by the US Department of Education – Office of Inspector General and the US Postal Inspection Service. This case was prosecuted by Assistant U.S. Attorney Sarah Gruber with the assistance of Prosecutor Susan N. Spiegel, as well as assistance from the U.S. Department of Education and Health’s Office of the General Counsel. federal student aid.