This past December, the Manhattan US Attorney’s Office announced a settlement it reached with Education Holdings, Inc., the former owner of nationally renowned test preparation company Princeton Review. In May of 2012, Education Holdings sold Princeton Review to an uninvolved third party.
While it was doing business as Princeton Review, Education Holdings participated in a federally-funded program to provide Supplemental Educational Services (SES) in the form of after school tutoring to students who attended underperforming schools in New York City. The New York City Department of Education paid Princeton Review a fixed sum per hour for each student it tutored. The funds were provided to the NYC Department of Education by the federal government.
According to the False Claims Act complaint filed against Education Holdings, the company falsified student attendance records and submitted claims to the NYC Department of Education for tutoring services that it never provided. Education Holdings admitted to the allegations and acknowledged that it had an incentive compensation program that encouraged the falsification of the records.
As a part of the settlement, Education Holdings will pay the United States $200,000 within five days of the settlement being finalized. It will then pay $800,000 upon the sale of its sole remaining business asset. Finally, Education Holdings will pay up to $9 million more depending on the sale price of the remaining business asset.