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

Heading: Zahara Complaint

Text: On November 9, 2005, over two years before Batiste filed his complaint, Michael Zahara filed a qui tam case against, inter alia, SLM and his employer, Student Assistance Corporation (SAC), a wholly-owned SLM subsidiary. Complaint, United States ex rel. Zahara v. SLM Corp., No. 2:05-cv-8020 (C.D.Cal. Nov. 9, 2005) (later transferred to the Southern District of Indiana) (Zahara Complaint). From November 29, 2004, until August 16, 2005, Zahara worked as a Default Prevention Specialist for SAC, a division of SLM's Debt Management Operations department, in Las Vegas, Nevada. Zahara Complaint ¶¶ 18, 31, 162. Zahara alleged that throughout his employment, SLM knowingly allowed their employees and agents to falsify loan records pertaining to delinquent FFELP loans held by Sallie Mae. Id. ¶ 3. Specifically, he focused his complaint on employees falsifying forbearance records, alleging that SLM employees would represent that borrowers orally agreed to forbearances when, in fact, the SAC employees had never actually spoken with the borrowers. Id. ¶¶ 3-4. He alleged that SLM and SAC encouraged such fabrications by imposing a delinquency quota system and a bonus system under which employees would receive bonuses based on team performance in bringing loans current. Id. ¶¶ 24-27. Zahara alleged SLM did this to increase its revenue, meet its performance goals, and maintain its Exceptional Performer designation, id. ¶ 30, a now-repealed status that allowed SLM to receive higher-guarantee payments than other lenders on its defaulted loans under the Higher Education Act. See 20 U.S.C. § 1078-79 (repealed 2007). Zahara also alleged SLM defrauded the government through other practices, including failing to conduct minimal due diligence on federal loans it originated, Zahara Complaint ¶¶ 144-146; improperly consolidating loans, id. ¶¶ 147-152; failing to bill borrowers in a timely manner, id. ¶¶ 153-154; improperly crediting borrowers' payments, id. ¶¶ 155-156; and concealing defaulted loans, id. ¶¶ 157-159. The Southern District of Indiana dismissed Zahara's complaint without prejudice after he was unable to obtain counsel by a set deadline. Entry Dismissing Action at 1, United States ex rel. Zahara v. SLM Corp., No. 1:06-cv-088 (S.D.Ind. Mar. 12, 2009), ECF No. 42.