The officials of Lubbock-based American Commercial College were put on notice Wednesday that they were sued clear back in the summer of 2010. A judge sealed the lawsuit at the time it was first filed, and so it was not public record until now.
Former ACC employees Shawn Clark and Juan Delgado sued on behalf of themselves and on behalf of the U.S. government. If they win, they hope to get a percentage of the money that ACC would be ordered to pay back to the government.
The lawsuit says in order to qualify for Federal student aid, a college must follow the 90/10 rule. No more than 90% of the school's income can be federal student aid, and at least 10% of its income must be from private sources, such as students paying their own tuition.
Clark and Delgado claim that ACC would pressure students into taking out loans that they did not need. The loans were paid back with financial aid money and the transactions were recorded in a way that made it look like ACC was earning at least 10% of its income from private money.
ACC has campuses in several Texas cities. The lawsuit says each campus took federal money to which it was not entitled from 2003 through 2010.
The lawsuit says that as of the summer of 2010, ACC took $39 million of federal student aid that it did not qualify to have.
Federal agents raided the Lubbock campus back in November and were seen taking out boxes of documents. The federal government has indicated in court records that it might file its own lawsuit rather than just relying on Clark and Delgado.
ACC has not filed its side of the story in court records, and we will follow up as soon as the response is filed.
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