For-profit Charlotte School of Law and its parent company, InfiLaw, were under criminal investigation as they sought to negotiate restoration of federal student aid for Charlotte students, according to recently unsealed court filings from a whistle-blower lawsuit filed against the school.
Politico and the Charlotte Observer first reported the criminal probe. The lawsuit, which was brought by a former Charlotte Law professor, and the court filings were unsealed this month after the Department of Justice said it would not intervene in the lawsuit for now.
The Department of Justice was looking into allegations in that lawsuit that Charlotte Law defrauded the federal government to receive Title IV federal aid funds by, among other actions, admitting unqualified students and conspiring to avoid compliance with its accreditor's standards.
The law school closed its doors earlier this month after it lost its license to operate in North Carolina. The closure followed several months of negotiations with the Department of Education to restore access to the federal student loan programs, which the Obama administration shut off in December. Charlotte Law's state license expired, however, before it could agree to conditions with the department for renewing Title IV funds.
A spokesman for the department did not comment directly on whether it was aware of the criminal probe while negotiations with Charlotte took place.
"ED works closely with our partners at the Department of Justice on cases of mutual interest," the spokesman said. "We do not comment on pending cases."
The American Bar Association's Section of Legal Education and Admissions, which serves as the accreditor for law school programs, said it was not informed of any criminal investigation. Two other for-profit law programs operated by InfiLaw — Arizona Summit Law School and Florida Coastal Law School — remain accredited by ABA. Arizona Summit, however, was placed on probation in March.
Two other related federal whistle-blower lawsuits have been filed against InfiLaw in Florida, where the company is based.
In a statement, a spokeswoman for Charlotte Law confirmed that as of February 2017 there was an ongoing investigation by the U.S. Attorney for the Western District of North Carolina but said there had not been any follow-up requests for information since November 2016.
"We have cooperated fully in the investigation and provided information that we believe satisfactorily answered the questions raised," said Victoria Taylor, the Charlotte spokeswoman.
It's not clear if the criminal investigation is ongoing. But Taylor said Charlotte officials were pleased that the Department of Justice had filed notice that it would not intervene in the lawsuit brought by the former professor.
"The allegations in the lawsuit are without merit, and Charlotte School of Law will defend itself vigorously against these claims," she said.