US recruiter settles in court after allegedly violating incentive ban

The court case, which settled on February 20, claimed Study Across the Pond LLC (SATP) and its principal John Borhaug had “knowingly caused” UK universities to submit false claims for federal student aid that violated the US False Claims Act (FCA).  

The firm, which has ceased operations in the US, has until March 6, 2026 to pay the agreed amount, with the settlement terms expected to be made public in the coming days. Study Across the Pond did not respond to The PIE News’ request for comment.

In May 2024, the Department of Justice filed a complaint in the case initially brought by a whistleblower, alleging SATP demanded UK universities participating in federal student aid programs pay the firm “incentive compensation” for its recruitment services, which is banned in the US. 

The government said SATP “encouraged foreign schools to make false statements to the Department of Education” and hid the arrangements “by executing sham contracts and withholding information from independent auditors”.  

It said the defendants had received “at least tens of thousands of dollars” for its recruitment of American students taking part in full time degree programs at least 28 UK universities since 2015. 

Poppy Alexander, partner at Whistleblower Partners law firm, who led the case, said it was a “notoriously difficult area to enforce” due to difficulties in proving recruiters are paying on a per-student basis.

Title IV of the Higher Education Act prohibits any institution that receives federal student aid from paying recruiters with a commission, bonus or other direct or indirect incentive – a regulation known as the Incentive Compensation Ban.

“Our client took a big risk and it’s really wonderful to see it rewarded,” said Alexander, adding that the whistleblower was compelled to come forward due to concern about students who had been put in bad circumstances due to the recruitment practices.

“I’m fairly confident in saying there’s never been an Incentive Compensation Ban case brought about recruitment of American students at foreign universities – it’s the first of kind in this respect,” she said.

The ban is intended to “protect students against aggressive recruitment practices that serve the financial interest of the recruiter rather than the educational needs of the student”. 

Students are entitled to make their enrolment decisions without the improper influence of recruiters who pursue their own financial gain at the expense of students’ best interests

Brian Boynton, US Justice Department

“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 Boynton in May 2024.  

“Prospective students are entitled to make their enrolment decisions without the improper influence of recruiters who pursue their own financial gain at the expense of students’ best interests,” Boynton continued.  

According to the Department of Justice, SATP’s clients were receiving money from the Federal Direct Loan Program, some of which was paid as commission to the recruitment firm. 

Lawyers acting for the government at the time said the case demonstrated its commitment to “rooting out undue influence in student recruitment and protecting the integrity of federal student financial aid programs”. 

The complaint names almost 30 UK universities that used SATP’s recruitment services, including the Universities of Exeter, York, Leeds, Sheffield and Southampton, and Loughborough University. The PIE reached out to the institutions for comment but did not receive a reply.

As previously reported in The PIE, the case alleges the agency knew of the Incentive Compensation Ban but consistently advised its clients the ban did not apply to their situation. 

It cites an instance in 2013 when the University of Exeter asked an SATP employee if it was “illegal for us to pay commission on any student in receipt of a US federal loan”, to which it was advised the rule did not apply to Study Across the Pond. 

The firm nevertheless offered to convert the existing commission contract to a flat fee contract – an offer overseen by the Borhaug – so long as it was “the equivalent of what commission would have been”. 

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