Student Lender Nelnet Settles Lawsuit

Although student lender Nelnet did not admit any wrongdoing, they said Friday it agreed to pay $55 million to settle a whistle-blower lawsuit accusing the company and nine other lenders of defrauding the U.S. government out of $1 billion.  Before it becomes final, the U.S. Department of Justice must approve the settlement. Jon Oberg, former Education Department researcher, helped discover the overpayments that were found during a government audit in September 2006.  The audit found several student lenders had received an artificially high rate of return for sever years through a program that was to be phased out in 1993.  Netnet says it was accused of receiving $407 million in improperly high returns and damages could have tripled if they had lost at trial. Oberg filed his lawsuit in Virginia in September 2007 on behalf of the U.S. government as a whistle-blower. It was unsealed last fall after the government declined to pursue the case. Under the whistle-blower law, Oberg will be allowed to keep a portion of the damages collected because he brought the lawsuit. Nelnet officials have defended their actions in the past and said they never attempted to defraud the government and federal officials knew what the company was doing. Nelnet spokesman Ben Kiser said Friday the Lincoln, Neb.-based company was pleased to resolve the lawsuit. “While we believe the case brought by Mr. Oberg was without merit and that we would have prevailed at trial, a settlement eliminates the uncertainty, distraction, and expense of a trial,” Kiser said.

Short URL: http://newsplethora.org/?p=2523

Posted by newsplet on Aug 13 2010. Filed under Featured News, Finance. You can follow any responses to this entry through the RSS 2.0. You can leave a response or trackback to this entry

13 Comments for “Student Lender Nelnet Settles Lawsuit”

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