19:03, August 29 167 0 abajournal.com

2017-08-29 19:03:06
Feds started criminal investigation of Charlotte School of Law, according to civil filing

A federal criminal investigation involving Charlotte School of Law was opened more than a year ago, according to recently unsealed court documents in a qui tam lawsuit. The Orlando U.S. attorney’s office recently opted not to intervene in the case.

The lawsuit was filed by Barbara Bernier, a former Charlotte School of Law professor, the Charlotte Observer reports. Her complaint (PDF)—which also names InfiLaw as a defendant and was filed in the U.S. District Court for the Middle District of Florida, claims that Charlotte School of Law manipulated bar exam and employment statistics by offering students who seemed unlikely to pass a $5,000 stipend to not take the test.

The law school earlier this month announced that it would close, after being placed on probation by the ABA’s Section of Legal Education and Admissions to the Bar, and losing both its state license and federal aid money.

Bernier’s lawsuit also alleges that Charlotte School of Law exploited veterans and active military personnel to take advantage of a loophole in federal regulation that requires for-profit colleges receiving Federal Student Aid to get at least 10 percent of annual revenues from sources other than the FSA program.

Six documents in the lawsuit remain sealed, according to court records. A February 2017 motion (PDF) the Middle District of Florida U.S. attorney’s office filed seeking a time extension states that Charlotte federal prosecutors had initiated a criminal investigation of Charlotte School of Law and InfiLaw.

A notice (PDF) the Florida agency filed on Aug. 14, 2017, states that it “is not intervening at this time and that the government’s investigation will continue.”

When contacted by the ABA Journal, the public information officer for the Charlotte U.S. attorney’s office said that her agency does not comment on the existence or status of any possible investigations.

Charlotte School of Law in a statement confirmed that as of February 2017, there was an ongoing investigation with the U.S. attorney’s office.

“We have cooperated fully in the investigation and provided information that we believe satisfactorily answered the questions raised. There has not been any follow-up request from the U.S. Attorney’s office since we last provided information in November 2016,” the statement reads, noting that the government has filed notice it will not intervene in the qui tam lawsuit. The statement also claims that Bernier’s lawsuit has no merit, and the law school will “defend itself vigorously” against the claims.

Coleman Watson, Bernier’s lawyer, told the ABA Journal that he doesn’t know whether the criminal investigation of Charlotte School of Law is still active. David J. Hickton, the former U.S. attorney for the Western District of Pennsylvania, doubts that it is.

“What would the point be? The school is now closed, and it’s closed for good reason,” says Hickton, a professor at the University of Pittsburgh School of Law, where he directs its Institute for Cyber Law, Policy and Security.

As a prosecutor, Hickton was involved in the False Claims Act lawsuit against the Education Management Corp, which settled for $95.5 million in 2015. EDMC schools include Argosy University and Brown-Mackie College.

It does seem odd that the federal government would not intervene in a qui tam case, but go forward with an investigation, says Barbara McQuade, the former U.S. attorney for the Eastern District of Michigan. Civil cases have a lower standard of proof, explains the University of Michigan law professor, and can often yield good evidence for a criminal case.

That being said, based on the Aug. 14 court filing by the Florida U.S. attorney’s office, McQuade said that it’s possible the criminal investigation remains ongoing.

“The statement is that the government’s investigation is continuing, I would take them at their word,” she said. “It’s either a criminal or civil investigation, but it’s probably a criminal investigation, since they said they would not intervene with the qui tam lawsuit.”

Nina Marino, a Beverly Hills criminal defense attorney, agrees. She co-chairs the Women in White Collar Subcommittee of the ABA’s Criminal Justice Section.

“Based on the tenor of the investigation, the case will likely continue. The complaint includes a number of violations that affect many government agencies, so it is not unusual that the U.S. Attorney needs time before clarifying their role,” Marino wrote in an email to the ABA Journal. “The political and media interest in requirements for financial aid at for-profit schools will likely bolster the case to continue regardless of whether the government joins.”

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