Opinion ID: 616734
Heading Depth: 2
Heading Rank: 1

Heading: Batiste Complaint

Text: On June 13, 2008, Sheldon Batiste filed a complaint on behalf of the United States government against SLM Corporation (SLM, commonly called Sallie Mae) under the qui tam provisions of the FCA, 31 U.S.C. §§ 3729-3732. Batiste First Amended Complaint (Batiste Complaint) ¶ 1. The FCA allows a private person (a relator) to bring an action in the Government's name, 31 U.S.C. § 3730(b), and to recover a portion of the proceeds of the action, id. § 3730(d), subject to the requirements of the statute. According to the allegations in his complaint, from September 27, 2004, until April 28, 2006, Batiste worked as a senior loan associate at SLM Financial Corporation, a subsidiary of SLM, in Mount Laurel, New Jersey. Batiste Complaint ¶ 18. He alleges he has personal knowledge that SLM defrauded the U.S. government through its administration of student loans under the Federal Family Education Loan Program (FFELP). Id. ¶¶ 5-6. Batiste alleges that from October 5, 2004, to the time of filing, SLM defrauded the government by presenting claims for funds to the government, each of which included false certifications that the data SLM submitted with the claims were correct and conformed to federal law. Id. ¶¶ 9, 16, 26, 27, 33, 35. He further alleges that SLM accomplished this fraud by unlawfully putting student loans into forbearancethat is, allowing borrowers to cease payments temporarily, make payments over an extended period of time, or make smaller payments than previously scheduledin violation of the Higher Education Act's (Pub.L. No. 89-329, codified at 20 U.S.C. § 1001 et seq. ) forbearance regulations (codified at 34 C.F.R. § 682.211). Id. ¶¶ 14-16. Batiste posits SLM did this because interest continues to accrue and the Department of Education continues to pay special allowances to SLM while loans are in forbearance, thereby increasing SLM's return on each loan. He further alleges that the longer a loan stayed in forbearance, the longer SLM would postpone default, thereby artificially keeping SLM's default ratio low and helping SLM maintain its status as an eligible lender under Department of Education guidelines. Id. ¶ 17. Batiste alleges that SLM regularly granted forbearances to borrowers who paid SLM to bring their accounts current, in violation of regulations that mandate SLM only put loans into forbearance when borrowers intend, but cannot afford, to pay their loans. Id. Batiste alleges SLM systematically encouraged employees to grant forbearances unlawfully. Managers told loan officers to forget their formal training and to grant forbearances to anyone who is delinquent regardless of excuse or whether the borrower had any intention of ever repaying the loan. Id. ¶¶ 19-21. Batiste further alleges that SLM incentivized loan officers to grant unlawful forbearances by giving bonuses to individuals who reduced delinquencies by a certain amount, whether by bringing borrowers current on their loans or granting them forbearances. Id. ¶ 22-24.