January, 2019
Washington -- The 4th Circuit Court of Appeals has, as somewhat expected, denied our remand request in the last of the nine civil fraud cases we brought against student loan lenders. The last case took over eleven years of back-and-forth wins and losses.
The overall final score therefore remains at 7-2. Seven lenders settled, each paying back in the millions.* One lender was determined by the court to be an arm of a state government, thus immune from suit.** The last defendant escaped, but its litigation expenses exceeded what it could have settled for and it faces additional litigation from others because of the losses it incurred in fighting our case.
Our overall record with the 4th Circuit is now concluded at 3-1. Over the years, we won three important decisions from the Richmond court. We could have ended at 3-0 and not tried for a fourth victory, but I felt an obligation to students, families, and taxpayers to continue until the legal process was fully concluded.
One of our Circuit Court victories was affirmed by the U.S. Supreme Court, so our record there is 1-0. That case will remain an important precedent in Eleventh Amendment jurisprudence.
The baton is now passed to others whose own cases are well underway. Borrowers have filed class action lawsuits based on our 2017 victory stripping sovereign immunity from the last defendant. A state attorney general has likewise brought suit on behalf of borrowers and prevailed in the first round of litigation. More will follow. The baton has been passed with a good lead for the final legs.
I express again much gratitude to my legal teams. And settlement monies have been invested back into charities that protect students, veterans, families, and taxpayers from unscrupulous and predatory practices in higher education finance.
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* The paybacks did not cover the amounts illegally claimed, however. Although the Inspector General determined that all such funds should be returned to the U.S. Treasury, Secretary Margaret Spellings overruled the Inspector General and allowed the lenders to keep the proceeds of their false claims. Hence the lawsuit under the False Claims Act to recover the funds.
** The Arkansas lender conceded, however, that it had made improper claims and voluntarily returned approximately $6 million to the Treasury prior to the lawsuit. My own research determined that the amount at issue was closer to $12 million, so the outcome was more of a tie than a loss. Because of this 50-50 split, the overall outcome could also be described as 7-1-1.
