Former Students File Class Action Against Charlotte School of Law Owners Over Alleged Pattern of Fraud, Deception

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The entities that owned and controlled the now-shuttered Charlotte School of Law have been hit with a lawsuit filed by more than two dozen former students looking to recover damages and tuition reimbursement stemming from an alleged “years-long campaign of misrepresentations and other deceptive and abusive behavior.”

Private-equity firm Sterling Capital Partners and Sterling Capital Partners GmbH & Co., along with non-party holding company InfiLaw, owned and controlled the Charlotte School of Law (CSL), a private for-profit institution that the proposed class action says was created and established in 2006 in order for the defendants to “take advantage of the Federal Student Loans Direct PLUS loan program for graduate and professional students.” According to the case, the American Bar Association (ABA) granted CSL full accreditation in June 2011. Following its ABA accreditation, CSL’s acceptance rates allegedly skyrocketed from 65 to 75 percent.

From that time, the plaintiffs allege, the defendants, through their InfiLaw and CSL subsidiaries, “recklessly” aimed to increase the law school’s enrollment, revenue and profit by “slashing standards for admission and curricular quality.” This was to be accomplished through the installation of officers in the CSL admissions office who were instructed to “increase enrollment without any regard for successful outcomes of students” either at the school or on the bar exam, the case claims. 

“The Defendant Sterling Entities fuelled [sic] this growth by establishing revenue and profit goals for InfiLaw and CSL that Sterling knew to be attainable only by slashing CSL’s admissions standards to among the very lowest of U.S. law schools,” the complaint states.

The lawsuit goes on to state that as a result of the defendants’ “deliberately misleading rhetoric” with regard to CSL’s purported focus as “student outcome centered,” the Council of the ABA’s Section of Legal Education and Admissions to the Bar placed the school on probation in November 2016. Probation notwithstanding, the defendants and CSL, from the school’s initial accreditation through November 2017, marketed and represented the institution as being fully ABA accredited, as well as in full compliance with the association’s standards, the case says.

Unbeknownst to CSL students at the time, the ABA from 2015 to 2016 issued a series of what the lawsuit describes as “increasingly sharp decisions” with regard to the school’s juris doctor (JD) program. The case states that even though the ABA found that the JD program was “out of compliance with several core, fundamental standards,” Sterling Fund Management directed its subsidiaries and agents to “not disclose the decisions” to the student body, and took steps to conceal the ABA’s rulings.

As the case tells it, in addition to the aforementioned concealment from students of the ABA’s reprimands, Sterling Fund Management during the same time caused CSL to violate a number of U.S. Department of Education (DOE) regulations for schools that participate in loan programs under Title IV of the Higher Education Act. What followed, the suit states, was the DOE’s denial of CSL’s recertification application in December 2016 to participate in federal student financial assistance programs.

According to the lawsuit, the hits continued for CSL, as the University of North Carolina System, the licensing body for institutions of higher education in the state, found the law school was “noncompliant with several licensure standards,” including those pertaining to financial stability and solvency. The Charlotte School of Law closed around August 11, 2017, shortly after its license expired, the lawsuit says. Around that time, the North Carolina attorney general began looking into the institution for alleged impropriety.

While the school imploded, the plaintiffs and other students “targeted” by the defendants were, as the case tells it, relegated “to indentured servitude,” saddled with hundreds of thousands in debt. The plaintiffs stress in the suit that as a result of CSL’s closure and the defendants’ actions, former students have been forced to turn to the judicial system. From the complaint: 

Charlotte Law School, InfiLaw Corporation and several other defendants agreed to a $2.65 million settlement to end previous litigation filed over allegations of fraudulence with regard to the school’s disclosure of its ABA accreditation status. That settlement was under appeal as of February 1, 2019, which has halted the claims process until the appeal is resolved.