Responding to an Education Fraud Civil Investigative Demand (CID)
So your probably holding this Civil Investigative Demand from DOJ or DOE about education fraud and your entire institution is collapsing. Maybe you had issues with the 90/10 rule. Maybe there’s problems with recruiter compensation. Or maybe your just caught up in there latest Title IV enforcement sweep. Look, we get it. Your ABSOLUTELY TERRIFIED. And you should be! Because for-profit colleges have paid $95.5 MILLION settlements and executives face federal prison for Title IV violations!
What Makes Education Fraud Investigations So Devastating?
Let me explain the academic nightmare your facing. DOE discovered $90 MILLION in fraudulent disbursements and there desperate to destroy “bad actors” in higher education!
The False Claims Act applies to ANY false certification for Title IV funds! Every FAFSA certification, every 90/10 calculation, every enrollment report becomes a potential false claim! We’ve seen legitimate schools destroyed over technical violations of impossibly complex regulations!
Here’s what’s really scary – treble damages apply to the ENTIRE amount of federal aid received! Got $10 million in student loans last year? That’s $30 million in damages! Plus up to $28,000 per false claim! Each student is a separate claim!
How Crushing Are Education Fraud Penalties?
Hold onto your accreditation because these numbers will bankrupt entire colleges!
EDMC paid $95.5 million for incentive compensation violations! American Commercial College paid $2.5 million for 90/10 manipulation! These aren’t fly-by-night schools – there established institutions destroyed by DOJ!
Criminal penalties are CATASTROPHIC – wire fraud carries 20 years prison! False statements to DOE adds 5 years! Conspiracy another 5 years! School officials are going to federal prison! One executive got 3 years for falsifying enrollment!
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(212) 300-5196What About the 90/10 Rule?
The 90/10 rule is a DEATH TRAP for schools! For-profit schools must get at least 10% revenue from non-federal sources!
But DOE interprets this impossibly strictly! Veterans benefits now count as federal! State grants might count as federal! Private loans guaranteed by school? FEDERAL! We’ve seen schools fail 90/10 because they helped students get private financing!
Prospect College got caught manipulating institutional payments – counting school money given to students as “private” revenue! Now there destroyed! One accounting trick triggers False Claims Act liability for YEARS of aid!
Todd Spodek
Lead Attorney & Founder
Featured on Netflix's "Inventing Anna," Todd Spodek brings decades of high-stakes criminal defense experience. His aggressive approach has secured dismissals and acquittals in cases others deemed unwinnable.
What Triggers Education Fraud Investigations?
Your probably wondering “Who reported us?” Let me tell you what puts schools in DOJ’s crosshairs:
Your for-profit college just received a Civil Investigative Demand from the Department of Justice requesting six years of enrollment records, recruiter compensation agreements, and all communications related to your institution's compliance with the 90/10 rule. The CID arrived on a Friday afternoon with a 30-day response deadline, and your compliance officer is already talking about shredding documents.
How should we respond to this CID without making things worse, and can we really be forced to turn over all of these records?
First and most critically, do not destroy, alter, or conceal any documents — doing so can transform a civil investigation into criminal obstruction charges under 18 U.S.C. § 1519. A CID issued under the False Claims Act (31 U.S.C. § 3733) carries legal force similar to a subpoena, but you do have the right to petition the court to modify or set aside unreasonable demands within 20 days of service. Your legal team should immediately implement a litigation hold across all departments, then work to negotiate the scope of production with the assigned DOJ attorney — requests for six years of records across every department are often narrowed substantially through good-faith discussions. We would also evaluate whether any voluntary disclosures under DOJ's guidelines could position your institution more favorably if the investigation escalates to a qui tam action under the False Claims Act.
This is general information only. Contact us for advice specific to your situation.
Whistleblowers get 15-30% of recoveries! Fired admissions rep? They’re calling lawyers! Former financial aid officer? Filing qui tam lawsuit! Even current employees report violations for million-dollar rewards!
Compliance audits trigger investigations! A-133 audit findings get referred! Program reviews find discrepancies! Change in ownership reviews expose past violations! We’ve seen routine audits explode into criminal prosecutions!
