When Atlanta attorney Joseph Wargo and partner David Pernini first filed a federal whistleblower case against a private, for-profit university with campuses in Atlanta’s northern suburbs, they had no idea the litigation would last more than eight years.
But Wargo said this week that the partners’ belief in the case against American InterContinental University and parent company Career Education Corp. prompted them to hold the course on behalf of four whistleblowers from the university’s Dunwoody campus, even after federal prosecutors declined to intervene on the whistleblowers’ behalf and U.S. District Judge Richard Story tossed out the case in 2011.
Their persistence finally paid off. In March, after a successful appeal to the U.S. Court of Appeals for the Eleventh Circuit that led to a new ruling by Story—this time in the whistleblowers’ favor—the university and its parent company quietly settled the long-running federal case for $32 million.
That settlement was consummated just weeks after U.S. News and World Report listed American InterContinental among the top 10 percent of online universities in its annual compendium of colleges and universities. The settlement amount appeared nowhere in the federal court file. But Career Education Corp. did notify its shareholders in a subsequent filing with the U.S. Securities and Exchange Commission that it had agreed to pay the federal government $10 million to settle claims that for years it had defrauded the U.S. Education Department of millions of dollars in student aid funds. It also agreed to pay the lawyers $22 million.
“These were people who really believed in the case and wanted to pursue it,” Wargo said of his clients. “A lot of these cases fail for lack of attention or persistence either by counsel or the relators [whistleblowers]. “It took eight-and-a-half years, a trip up to the Eleventh Circuit and to the U.S. Supreme Court and back to get the positive outcome for the whistleblowers. … But we kept at it. We had clients who believed in the case. We believed in the case.”