On December 27, 2012, the United States Attorney for the Southern District of New York announced a settlement in a lawsuit brought against New York Institute of Technology ("NYIT") and Cardean Learning Group, LLC ("Cardean"). NYIT is a private, non-profit school, which operated an online program in conjunction with Cardean. Under this arrangement, Cardean provided NYIT with graduate business and management programs, including an online MBA program. Cardean was also responsible for student recruitment services for these programs.
The original qui tam complaint, which was filed in October 2007, alleged violations of the False Claims Act premised on improper incentive compensation. DOJ subsequently intervened in the action. The settlement was reached before the relator's complaint or the United States' complaint in intervention had been unsealed.
In the settlement, NYIT and Cardean admitted violating the incentive compensation ban. The total settlement was for $4 million, with Cardean paying $1.5 million and NYIT paying $2.5 million. The settlement was approved by the United States District Court for the Southern District of New York on December 26, 2012.