News Summary
The Los Angeles Film School has reached a $1 million settlement following a federal audit that raised concerns about its job placement practices. The audit revealed inaccuracies in student tracking and job placements, leading to scrutiny from the Department of Education. A whistleblower lawsuit alleged the school engaged in deceptive practices regarding job placements, impacting federal financial aid eligibility. As part of the settlement, LAFS agreed to change its hiring practices and has denied any wrongdoing, despite the serious allegations and implications for its financial practices.
Los Angeles
The Los Angeles Film School (LAFS) has settled a federal audit for $1 million, stemming from a 2020 investigation that raised concerns about the school’s job placement practices. The settlement agreement, revealed recently, indicated that LAFS faced scrutiny from the Department of Education regarding its compliance with federal regulations.
The audit centered on job placement data and uncovered several discrepancies, including LAFS’s failure to correctly track student academic progress. This oversight raised red flags about potential loan eligibility issues for students who were not properly accounted for in the records. Notably, auditors found that LAFS inaccurately recorded dropout dates, which allowed the institution to receive federal financial aid for students who were not actively attending classes. Additionally, the school allegedly permitted borrowed funds to cover its application fee, a violation of established regulations.
A significant aspect of the investigation involves a whistleblower lawsuit filed by former executives Dave Phillips, who was the VP of job placement, and Ben Chaib, who served as the VP of admissions. The lawsuit claims that LAFS engaged in deceptive practices by hiring graduates for fabricated, temporary positions to inflate job placement statistics, essential for maintaining eligibility for federal student aid worth millions. The lawsuit alleges that the school misled students about actual job availability, with only about 20% of graduates reportedly finding work, significantly lower than the 70% required for accreditation.
As part of the settlement with the U.S. government, LAFS agreed to cease payments to industry professionals for hiring graduates in the future, aiming to address the practices linked to inflated placement figures. The school accepted a settlement of $705,000 to resolve the audit findings and paid an additional $294,000 to close the review regarding job placement metrics. Importantly, LAFS has denied any wrongdoing in this settlement, which does not preclude civil fraud claims or criminal investigations that could arise from the allegations.
The audit did not investigate claims relating to admissions staff receiving improper compensation incentives, which were highlighted in the whistleblower suit. Furthermore, the lawsuit suggests that fraudulent activities may have persisted up until the present day, implicating at least one ongoing “pay for placement” arrangement within the school.
The ownership structure of LAFS, which includes James “Bill” Heavener and three partners who also own Full Sail University in Florida, has also come under scrutiny. At a federal court hearing regarding the whistleblower lawsuit, LAFS’ legal team argued for the case’s dismissal, while legal representatives for Phillips and Chaib countered that the allegations were not adequately investigated during the audit.
This matter gains significance as LAFS receives approximately $85 million annually in federal financial aid, comprising $60 million from student loans and $19 million from veterans’ education funds. With potential implications for clawback of funds acquired illegally, the Department of Justice opted not to participate in the whistleblower case, facilitating the unsealing of the lawsuit filed against LAFS.
Despite the serious claims and federal audit findings, LAFS has had its accreditations renewed recently and maintains that it upholds a commitment to student excellence and satisfaction. The outcome of both the audit and whistleblower lawsuit could carry significant consequences for the institution, especially with regards to its financial practices and compliance with federal student aid guidelines.
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Additional Resources
- Variety: Los Angeles Film School Audit Settlement
- The Guardian: Los Angeles Film School Lawsuit Unsealed
- LA Times: LA Film School Sued for Alleged Accreditation Scheme
- Wikipedia: Student Loans in the United States
- Google Search: Los Angeles Film School lawsuit
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