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United States v. Fast Train II Corp.

United States District Court, S.D. Florida

February 15, 2017

UNITED STATES OF AMERICA, et al., Plaintiffs,
v.
FASTTRAIN II CORP., d/b/a FASTTRAIN COLLEGE, an administratively dissolved for profit Florida corporation and ALEJANDRO AMOR, an individual, Defendants.

          OMNIBUS ORDER ON MOTIONS FOR SUMMARY JUDGMENT

          MARCIA G. COOKE United States District Judge.

         This is an action under the federal False Claims Act, 31 U.S.C. §§ 3729-3733 (“FCA”). Plaintiff, the United States of America, alleges Defendants FastTrain II Corp., d/b/a FastTrain College (“FastTrain”) and its President, Chief Executive Officer and co-owner, Alejandro Amor, [1] knowingly presented, or caused to be presented, false statements and claims to the United States and the United States Department of Education (“DOE”). Plaintiff seeks treble damages and civil penalties.

         I have jurisdiction under 28 U.S.C. § 1331 and 31 U.S.C. § 3732(a).

         Pending are: (1) the United States' Motion for Summary Judgment (ECF No. 131); and (2) Amor's Cross-Motion for Summary Judgment (ECF No. 141).[2] For the reasons that follow, I grant Plaintiff's Motion and deny Defendant's Motion.

         I. BACKGROUND

         This action arises from violations of the FCA and common law by FastTrain and its President, Chief Executive Officer, and co-owner Amor. From at least January 2010 through June 2012, when FastTrain closed, FastTrain and Amor knowingly presented, or caused to be presented, false claims and statements to the DOE and concealed material information in order to participate in the federal student aid programs authorized under Title IV of the Higher Education Act of 1965 (“HEA”), as amended, 20 U.S.C. §§ 1070 et seq. (“Title IV, HEA Programs”).

         At Amor's direction, FastTrain knowingly submitted and/or caused to be submitted false information relating to the eligibility of students to receive Title IV, HEA Programs funds - through the Federal Pell Grant Program (Pell Grant”), the Federal Family Educational Loan Program (“FFEL”), the Federal Direct Loan Program (“FDL”) and the Campus Based Programs - by providing false documentation that certain students had a high school diploma or its recognized equivalent when in fact they did not have such credentials. Also at Amor's direction, FastTrain admissions employees instructed and counseled ineligible prospective students to provide false high school completion attestations and further coached them to lie on their Free Application for Federal Student Aid (“FAFSA”), the document that students file to obtain Title IV, HEA funds. As a result of Amor's fraudulent scheme and false representations of Title IV eligibility, FastTrain received millions of dollars of Title IV financial aid that it otherwise would not have received.

         After a twenty-three day trial in United States of America v. Alejandro Amor, Case No. 1:14-cr-20750-JAL(s)-1 (S.D. Fla.) (“Amor Criminal Proceeding”), a jury convicted Amor of one count of conspiracy to steal Government funds, in violation of Title 18, United States Code, Section 371, and twelve counts of theft of Government funds, in violation of Title 18, United States Code, Section 641.[3] The United States now seeks to recover treble damages and civil penalties under the FCA for Amor's illegal acts.

         II. STANDARD OF REVIEW

         Summary judgment “shall be granted if the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to a judgment as a matter of law.” Allen v. Tyson Foods, Inc., 121 F.3d 642 (11th Cir. 1997) (quoting Fed.R.Civ.P. 56(c)) (internal quotations omitted); Damon v. Fleming Supermarkets of Florida, Inc., 196 F.3d 1354, 1358 (11th Cir. 1999). Thus, the entry of summary judgment is appropriate “against a party who fails to make a showing sufficient to establish the existence of an element essential to that party's case, and on which that party will bear the burden of proof at trial.” Celotex Corp. v. Catrett, 477 U.S. 317, 322 (1986).

         “The moving party bears the initial burden to show the district court, by reference to materials on file, that there are no genuine issues of material fact that should be decided at trial.” Clark v. Coats & Clark, Inc., 929 F.2d 604, 608 (11th Cir. 1991). “Only when that burden has been met does the burden shift to the non-moving party to demonstrate that there is indeed a material issue of fact that precludes summary judgment.” Id.

         Rule 56 “requires the nonmoving party to go beyond the pleadings and by her own affidavits, or by the ‘depositions, answers to interrogatories, and admissions on file, ' designate ‘specific facts showing that there is a genuine issue for trial.” Celotex, 477 U.S. at 324. Thus, the nonmoving party “may not rest upon the mere allegations or denials of his pleadings, but must set forth specific facts showing that there is a genuine issue for trial.” Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986) (internal quotation marks omitted).

         “A factual dispute is genuine if the evidence is such that a reasonable jury could return a verdict for the non-moving party.” Damon, 196 F.3d at 1358. “A mere ‘scintilla' of evidence supporting the opposing party's position will not suffice; there must be enough of a showing that the jury could reasonably find for that party.” Abbes v. Embraer Servs., Inc., 195 F. App'x 898, 899-900 (11th Cir. 2006) (quoting Walker v. Darby, 911 F.2d 1573, 1577 (11th Cir. 1990)).

         When deciding whether summary judgment is appropriate, “the evidence, and all inferences drawn from the facts, must be viewed in the light most favorable to the non-moving party.” Bush v. Houston County Commission, 414 F. App'x 264, 266 (11th Cir. 2011).

         III. THE FALSE CLAIMS ACT

         The FCA provides that:

(1) [A]ny person who -
(A) knowingly presents, or causes to be presented, a false or fraudulent claim for payment or approval; [or]
(B) knowingly makes, uses, or causes to be made or used, a false record or statement material to a false or fraudulent claim;
is liable to the United States Government for a civil penalty of not less than $[5, 500] and not more than $[11, 000], as adjusted by the Federal Civil Penalties Inflation Adjustment Act of 1990 (28 U.S.C. 2461 note; Public Law 104-41), plus 3 times the amount of damages which the Government sustains because of the act of that person.

31 U.S.C. § 3729(a)(1)(A)-(B); see 28 C.F.R. § 85.3(a)(9) (adjusting penalties for inflation).

         As used in the FCA, a “claim”

(A) means any request or demand, whether under a contract or otherwise, for money or property and whether or not the United States has title to the money or property, that -
(i) is presented to an officer, employee, or agent of the United States . . .

31 U.S.C. § 3729(b)(2), as amended.

         While Congress did not define what makes a claim “false” or “fraudulent, ” the “phrase ‘false or fraudulent claim' in the [FCA] should be construed broadly.” United States ex rel. Sanchez v. Abuabara, 2012 WL 254764, at *6 (S.D. Fla. 2012) (quoting Harrison v. Westinghouse Savannah River Co., 176 F.3d 776, 788 (4th Cir. 1999); see S. Rep. No. 99-345, at 9 (1986). The FCA does not require specific intent to defraud, only knowledge of the false information or deliberate ignorance or reckless disregard of its falsity. 31 U.S.C. § 3729(b)(1).

         The FCA further provides that:

Notwithstanding any other provision of law, the Federal Rules of Criminal Procedure, or the Federal Rules of Evidence, a final judgment rendered in favor of the United States in any criminal proceeding charging fraud or false statements, whether upon a verdict after trial or upon a plea of guilty or nolo contendere, shall estop the defendant from denying the essential elements of the offense in any action which involves the same transaction as in the criminal proceeding and which is brought under subsection (a) or (b) of section 3730.

31 U.S.C. § 3731(e).

         IV. DISCUSSION

         Before I turn to the merits of the parties' Motions, I first address two procedural arguments Amor raises. He asserts: (1) this Court lacks subject matter jurisdiction because the Government is a party to a civil administrative money penalty proceeding involving Amor; and (2) the Second Amended Complaint (“SAC”) ...


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