Ruling upheld in fraud case between Career Point College, student-loan company – San Antonio Business Journal
An entity accused of defrauding a now defunct for-profit San Antonio college was ordered Thursday to pay $8 million to the college’s bankruptcy trustee.
A lawsuit filed in 2018 by the trustee for Career Point College alleged that American Student Financial Group engaged in a scheme to bypass federal student aid rules and defraud the college and the government. The trustee alleged that ASFG funded loans to nursing students at Career Point in part by using the school’s own money.
ASFG is alleged to have set up transactions through another company — Cottingham Apex Texas Fund, which it controlled — to hold collateral securing ASFG’s loans to Career Point students. According to the lawsuit, Cottingham turned over its assets to ASFG in order to finance the loans made to Career Point students.
In May 2019, the trustee was awarded more than $8.2 million in damages against Cottingham. That judgement has now been upheld on appeal.