September 15, 2006

Federal Appeals Court Reinstates False-Claims Lawsuit Against U. of Phoenix

By MARTIN VAN DER WERF and GOLDIE BLUMENSTYK

In a ruling whose consequences could eventually strike a staggering financial blow to the University of Phoenix, the Ninth U.S. Circuit Court of Appeals has reinstated a lawsuit that alleges that the nation's largest university obtained federal funds under false pretenses.

The complaint, filed in 2003 under the federal False Claims Act, alleges that the university wrongfully obtained a minimum of $3-billion in federal funds during the six years before the lawsuit was filed. Of that,