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Lawsuit: National American University defrauded government

SIOUX FALLS -- A former National American University official alleges that the South Dakota-based for-profit system defrauded the federal government out of millions through student loans, according to a federal lawsuit.

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SIOUX FALLS - A former National American University official alleges that the South Dakota-based for-profit system defrauded the federal government out of millions through student loans, according to a federal lawsuit.

The system's website says it operates campuses in a number of other states including Colorado, Indiana, Kansas, Minnesota, Missouri, Nebraska, New Mexico, Oklahoma and Texas.

Former employee Brian Gravely alleges that National American University rigged accreditation for its medical assisting program and unlawfully paid bonuses to employees for recruiting students. The lawsuit alleges the university knowingly misrepresented student loan revenues to make it appear the system was complying with federal rules, the Argus Leader reported .

The lawsuit also alleges that the university required that students have an internship to complete the medical assisting program, but couldn't find enough placements for its students. The delay left many students in the program unable to graduate, though they had completed their required credit hours. Students could only qualify for federal aid if they were enrolled with credit hours, so some students had to take additional classes while awaiting a practicum placement.

"This meant that students had to take unnecessary courses to ensure receipt of financial aid in the quarter in which a practicum was available to them," the lawsuit says.

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The suit was filed in April under the False Claims Act, which allows private citizens to file lawsuits to recover money defrauded from the federal government. The lawsuit was unsealed Thursday. It was sealed while under review by the U.S. Attorney's Office in South Dakota.

University President and CEO Ronald Shape said the system is aware of the lawsuit but declined to comment further to the newspaper.

If found liable under the False Claims Act, for-profit schools can lose access to federal student aid programs.

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