Citigroup & JPMorgan Sued for Student Loan Activity
Financial giants Citigroup and JPMorgan are being sued in U.S. District court for allegedly conspiring with education finance company Nelnet to illegally recruit student loan borrowers. The lawsuit charges that all three companies received federal student loan subsidies by making false claims.
The civil action suit was originally filed back in May 2008, but the website Wikileaks recently posted the lawsuit before it was unsealed by the District court in Omaha, Nebraska.
The suit says that Nelnet payed telemarketers to sell gvernment student loan products and used false advertising to boost the number of applications it received. These inducements were illegal and Nelnet then presented these false claims to the U.S. Department of Education to receive funding.
Citi and JPMorgan are included in the suit because they allegedly “ratified and/or authorized the wrongful acts of Nelnet and have benefitted from such conduct.” The lawsuit seeks damages in the amount of $5,500 to $11,000 for each loan application Netnet presented to the government between 2004 and 2007, though the total number of loans involved is not clear.
Both JPMorgan and Citigroup had previously lent Nelnet $500 million to help the company pay for its legal issues.