InfiLaw Corporation Target of Federal Whistle-Blower Suit

A former law professor at the recently shuttered Charlotte School of Law filed a federal whistle-blower suit against the law school’s owner, the InfiLaw Corporation, claiming the company “defrauded taxpayers of $285 million over a five-year period,” reported The New York Times.

According to the professor, Barbara Bernier, who taught constitutional law at the school from 2013 to 2016, the fraud practices included, one, breach of federal requirements that for-profit school operators may book no more than 90 percent of revenue from federal student loans; and two, “providing stipends to at-risk students to delay taking the bar exam” so not to tarnish the school’s reputation with a low passing rate.

Bernier filed the complaint in 2016, but it was only unsealed last month, reported the Times, “when the United States attorney’s office in Orlando, Fla.—where the lawsuit was filed, in InfiLaw’s state—filed a notice that it would not intervene.”

At the same time the complaint was unsealed, Charlotte School of Law closed its doors. In addition to Bernier’s suit, reported the Times, the school “faces several state and federal lawsuits from disgruntled law students who are saddled with tens of thousands of dollars in student debt. There is also a civil fraud inquiry on behalf of students being conducted by the North Carolina attorney general’s office.”

Regarding InfiLaw, it is based in Naples, Fla., and is owned in large part by Sterling Partners, a private equity firm based in Chicago. The firm’s portfolio also includes Arizona Summit Law School, in Phoenix; and Florida Coastal School of Law, in Jacksonville. Because of low rates of bar passage as well as declining enrollment in law schools in general, these schools  “have been on rocky ground in recent years,” according to the Times.

For more about for-profit law schools and their challenges, see the 2016 NCSPE working paper “Proprietary Law Schools and the Marketization of Access to Justice” by Riaz Tejani, a professor of legal studies at the University of Illinois. Tejani has since published Law Mart: Justice, Access, and For-Profit Law Schools (Stanford University Press, 2017).