Student Recruiting Firm and Its Principal Agree to Pay $1.3 Million for Fraud on Federal Student Aid Programs

BOSTON - Study Across the Pond, LLC (SATP) and its principal, John Borhaug, have agreed to pay $1.3 million to resolve a lawsuit alleging that they knowingly caused United Kingdom (UK) schools to submit false claims to the U.S. Department of Education. In April 2024, the United States filed a complaint against SATP and Borhaug, alleging that they convinced foreign schools to enter arrangements that violated the federal ban on incentive-based compensation for student recruitment.

"Today's settlement resolves the United States' lawsuit against Study Across the Pond and Mr. Borhaug, who used improper incentives in an attempt to influence American students to attend foreign schools," said United States Attorney Leah B. Foley. "My office is committed to ensuring American students are not taken advantage of for financial gain and protecting the integrity of federal student financial aid programs."

"American students deserve to make enrollment decisions free of the improper influence of third-party recruiters who pursue their own financial gain rather than the students' best interests," said Assistant Attorney General Brett Shumate, Head of the Justice Department's Civil Division. "Today's settlement demonstrates the Department's commitment to holding accountable individuals and corporate entities who violate the Incentive Compensation Ban and to protect the integrity of the federal student aid programs like the Direct Loan Program."

"Today's settlement is a result of the hard work and effort of the Office of Inspector General, the U.S Department of Education, and the U.S. Department of Justice to protect and maintain the integrity of the Federal student aid programs by enforcing applicable laws, including the incentive compensation ban," said Jason Williams, Assistant Inspector General for Investigation Services, U.S. Department of Education Office of Inspector General. "We will continue to work together to ensure that Federal student aid funds are used as required by law."

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.

According to facts admitted in the settlement agreement, SATP entered into contracts with UK schools that provided that SATP received a percentage share of the American student's tuition to the UK school in exchange for SATP's recruitment of that student. Meanwhile, federal student financial aid programs paid those American students' tuition, of which SATP received a share under the illegal agreement. Sometimes, in response to questions from UK schools regarding whether such tuition-sharing agreements were permissible, SATP entered into purported "flat fee" contracts with the schools instead.

The claims resolved in today's settlement include claims that were brought under the qui tam or whistleblower provisions of the False Claims Act. Under the Act, a private party can file an action on behalf of the United States and receive a portion of any recovery. The qui tam case is captioned United States ex rel. Hitrost LLC v. Study Across the Pond, LLC, et al., No. 21-CV-10274-ADB (D. Mass.). The government intervened in this case in April 2024. As part of today's resolution, the relator will receive a share of the settlement amount.

U.S. Attorney Foley, AAG Shumate and DOE-OIG Assistant IG Williams 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.