False Claims Act Complaint Filed Against International Student Recruiting Firm for Federal Student Aid Programs Submissions

The Justice Department announced today that it has filed a complaint under the False Claims Act (FCA) against Study Across the Pond LLC (SATP) and its principal, John Borhaug. SATP, which is organized under the laws of Massachusetts, recruits American students to attend foreign schools in the U.K., as well as other countries. The complaint, filed in the District of Massachusetts, alleges that SATP and Borhaug knowingly caused UK schools to submit false claims to the Department of Education for federal student aid by demanding that the foreign schools enter into arrangements that violated the federal ban on incentive-based compensation.

“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.”

“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 U.S. 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.”

“The Office of Inspector General has a unique and special law enforcement mission – to protect public education funds for eligible students,” said Special Agent in Charge Terry Harris of the Department of Education Office of Inspector General (OIG)’s Eastern Regional Office. “Today’s announcement is an example of our commitment to this mission. 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 U.K. schools to violate the Incentive Compensation Ban while the schools were participating in a federal student aid program. Specifically, since at least 2015, SATP, under the direction of Borhaug, has recruited American students to attend U.K. schools and demanded payment of a commission for SATP’s services. This commission was actually a share of the money the schools claimed from a federal financial aid program, specifically the Federal Direct Loan Program, 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 is entitled to intervene in the lawsuit, as it has done in this case.

The lawsuit is captioned United States ex rel. Hitrost LLC v. Study Across the Pond, LLC, et al., No. 21-CV-10274-ADB (D. Mass.). The Civil Division’s Commercial Litigation Branch, Fraud Section and the U.S. Attorney’s Office for the District of Massachusetts are handling the case, with substantial assistance from the Department of Education.

The United States is represented in this matter by Trial Attorney Allison C. Carroll of the Civil Division and Assistant U.S. Attorneys Brian LaMacchia and Alexandra Brazier for the District of Massachusetts.

The claims asserted against defendants are only allegations. There has been no determination of liability.