ITT Tech’s Death Knell

When it comes to educational loan fraud, one of the biggest players has been ITT Tech, which is now in bankruptcy and no longer operating as of September, 2016. ITT Technical Institute, one of the earliest of the for-profit schools, began operating independently in 1969. It made billions, perhaps trillions, from the federal loans its students took out in the hopes of learning job skills that would lead to gainful employment.

No one knows precisely how far back the fraud goes. What is known is that in January, 2016, a whistleblower suit against ITT Tech was unsealed. A former dean for academic affairs, Rodney Lipscomb, filed the qui tam suit in April, 2014. Lipscomb, who worked on ITT Tech’s Tallahassee campus for four years, claimed he noticed irregularities involving student loans a few short months after he began working there. He alleged that he was fired after reporting the problems to his superiors.

The Suit and the Whistleblower

What kinds of fraud does Lipscomb allege? Among many other claims, two stand out as especially egregious:

• A blind student was enrolled in a computer networking program that required students to have the sighted ability to read codes and identify colors on wires and cords.
• A student allegedly unable to write an understandable sentence was enrolled by ITT Tech for one of their programs.

The suit also asserts:

• Potential students were misled about program benefits and the kinds of jobs they could hope to land after they graduated, with opportunities exaggerated.
• Staffers would “help” students fill out financial aid paperwork by suggesting they use fraudulently-low income or increase their number of dependents.
• Staffers would hold weekly meetings showcasing their efforts to enroll prospective students and the steps they were taking to secure financial aid to ensure the enrollments.

Lipscomb, outraged by what he saw, filed the qui tam suit. Now employed by North Central Texas College as the dean of students, he commented in an interview, “You can only engage in the behavior that they engaged in so long and somewhere along the line it’s going to catch up to them. There was a final sense of justice, of ‘wow sometimes in our country we prevail and there’s justice.’”

Contributing Factors

Other factors likely hastened ITT Tech’s demise. Besides Lipscomb’s whistleblower suit, in February, 2016, the U.S. Department of Education created a new enforcement unit to investigate and prosecute federal student loan fraud. The Department of Education also cracked down specifically on ITT Tech, forbidding them from enrolling new students dependent on federal money and requiring the school to inform students of the shakiness of ITT Tech’s accreditation. On top of that, the Department of Education mandated an increase in the school’s cash reserves, a number impossible for it to meet. Some characterized the new investigative unit and the additional restrictions as a “death sentence” for ITT Tech, which obtained almost 70 percent of its revenue from federal student loans. Two months later, the school shut its doors after declaring bankruptcy.

Lipscomb’s qui tam suit is proceeding after the Department of Justice declined to intervene in the case.

Working with whistleblowers tirelessly to shed light on fraudulent practices.

If you think you have the facts needed to bring a whistleblower case, the experienced whistleblower attorneys at the Louthian Law Firm can review your case and help you file the appropriate disclosure statement. Under some circumstances, the government will intervene, or join in your lawsuit.

Your chances of succeeding are greater if your whistleblower claim is substantive, clear, and to the point. Because of this, meeting with a qualified whistleblower attorney can increase your chances of winning. The Louthian Law Firm can help you form your claim so that the government will be more inclined to intervene in your case; government intervention can sometimes increase the chances of recovering reward money. Even if the government decides not to intervene, it could still be a good idea to pursue your case without government involvement. Our strong support system can assist you through every step of the process.