The Los Angeles Film School paid $1 million to resolve a federal audit in 2020, but avoided the stiffer penalties that have befallen other for-profit colleges accused of fraud.
The results of the Department of Education audit were not publicly disclosed at the time, but are included in a settlement agreement obtained by Variety.
LAFS is facing a federal whistleblower lawsuit that alleges a massive scheme to hire thousands of graduates for fake, two-day jobs. According to the complaint, the scheme was intended to inflate the school’s “job placement” figures — that is, the number of graduates who were able to find work — in order to continue receiving millions of dollars in federal student aid.
The Department of Education auditors reviewed the school’s job placement data, but the whistleblowers allege in the lawsuit that the school withheld critical evidence of the extent of the wide-ranging fraud. As part of the settlement with the government, the school agreed that it would not pay industry professionals to hire its graduates in the future.
The audit came as the federal government was investigating job placement rates at several other for-profit colleges and issuing severe penalties to those who falsified their numbers.
The two whistleblowers — Dave Phillips, a former VP of job placement, and Ben Chaib, a former VP of admissions — allege in the lawsuit that school leaders feared a significant loss of revenue if the auditors uncovered the fraud.
According to an email...
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