UEI Lawsuit: DOE Settlement, Fresno Fraud Suit, and Closures

UEI College, a for-profit career school chain owned by International Education Corporation (IEC), has been the subject of a UEI College lawsuit and enforcement track that includes a February 2024 settlement with the U.S. Department of Education over testing and recruitment fraud, a 2023 fraud suit brought by former HVAC students in Fresno that settled in June 2025, and a 2012 California class action that resolved out of court in 2016. The federal settlement forced out IEC’s CEO and CFO, closed sister school Florida Career College, and put UEI on provisional certification for three years.

The 2024 Department of Education Settlement

The Department of Education investigated IEC and its subsidiaries for years over misuse of the “ability-to-benefit” (ATB) program, which lets students without a high school diploma or GED qualify for federal aid by passing an approved exam. Investigators found that proctors at Florida Career College, an IEC subsidiary, had helped students with answers, allowed calculators where they were prohibited, changed student responses, and sometimes took the tests for students. The Department concluded that senior IEC leaders, including CEO Fardad Fateri, knew about the cheating and encouraged it to inflate enrollment and federal aid revenue.¹

The investigation reached UEI College and United Education Institute, where the Department found similar ATB irregularities, falsified attendance records used to keep federal aid, and misrepresentations to prospective students about employment prospects and the nature of federal loans.²

The February 2024 settlement required IEC to fire Fateri and CFO Sanjay Sardana within 60 days and prove their departures to the Department. Florida Career College lost Title IV eligibility as of January 31, 2024. UEI College and United Education Institute kept their federal aid but were placed on provisional certification for three years and barred from using ATB exams to qualify students for federal funding during that period.³⁴

IEC also had to post a $6,015,824 letter of credit the Department could draw on for loan discharges and related liabilities, preserve all recruiting materials and student complaints, and record every admissions phone call with prospective students. Expansion was frozen except for three campuses already under construction in Houston, Dallas, and Albuquerque. IEC did not admit or deny wrongdoing.³¹

Why the Federal Stakes Were So High

IEC was an outlier in its use of ATB testing. In the 2021–2022 academic year, IEC schools disbursed about $91.2 million in Title IV funds to students who had qualified through ATB exams alone. The next-largest ATB user in the country that year disbursed $3.7 million. From 2017 to 2022, IEC schools handed out roughly $386.8 million in Title IV funds tied to about 46,000 ATB-based enrollments.³

At UEI College and United Education Institute campuses, about one-third of Title IV recipients had qualified through ATB testing. In 2021–2022, those campuses took in roughly $95 million in Pell Grants and $165 million in federal student loans.⁴

Florida Career College Shutdown

Florida Career College operated 11 campuses (ten in Florida and one in Houston) and closed in mid-February 2024 after losing Title IV eligibility. Federal aid had been about 87 percent of its revenue, roughly $86 million in fiscal 2021. The Department pushed FCC’s cutoff date to the end of January 2024 to give students time to finish. An IEC compliance official described “an orderly closure” with a teach-out for remaining students. Federal data showed about 12,000 students enrolled at FCC as of 2021, with more than 40 percent entering through ATB testing; over half of those ATB students left without completing.⁵

The Fresno Students’ Fraud Lawsuit

In July 2023, Joshua Jones and eleven other former HVAC students at UEI’s Fresno campus sued IEC in California Superior Court (Case No. 23CECG02897), alleging fraud, breach of contract, deceptive practices, false advertising, unfair competition, and negligent and intentional misrepresentation.⁶

The complaint described “emotionally manipulative” recruiting tactics, with admissions staff fabricating urgency about limited spots to push same-day enrollment and roughly $22,000 in loans. Students said the promised hands-on HVAC training never materialized. Equipment was broken or outdated, and students were sometimes told not to use working equipment for fear of damage. Jones said that for three of his nine months in the program there was no instructor at all, and students were left to watch YouTube videos. The suit also alleged UEI inflated job placement statistics by pressuring graduates to sign forms claiming full-time work in the field, sometimes offering gift cards as incentive. Graduates who did find work reported feeling unprepared and earning wages similar to their pre-enrollment pay.⁶

IEC called the allegations “completely false” and “baseless.” On June 6, 2025, plaintiffs’ attorney Annette Clark filed a notice of settlement for the entire case. Terms were not disclosed.⁷

The Earlier California Class Action

The Fresno case was the second time Clark and UEI’s defense counsel, Courtney Baird of Duane Morris, resolved similar litigation. Clark filed a class-action suit against UEI in 2012 alleging comparable California consumer law violations. That case resolved out of court in 2016, also under undisclosed terms.⁷

Accreditor Actions

The federal probe rippled through UEI’s accreditors. In May 2023, the Accrediting Commission of Career Schools and Colleges (ACCSC) placed the entire IEC system on a “System-Wide Warning,” citing the Department of Education’s findings. The warning covered UEI campuses in Fresno, Gardena, Riverside, Bakersfield, Sacramento, and Tacoma, plus United Education Institute locations in Las Vegas, Stone Mountain, Dallas, and Albuquerque. ACCSC continued the warning in September 2023 and March 2024.⁸

After the federal settlement took effect, ACCSC lifted the warning in May 2024, finding the schools compliant with accreditation standards.⁹ By November 2024, ACCSC renewed accreditation for three UEI College locations and one United Education Institute location for five years.¹⁰

A separate accreditor, the Accrediting Council for Continuing Education and Training (ACCET), deferred reaccreditation in April 2023. ACCET cited administrative oversight problems across locations, financial stability documentation gaps, deficient job placement and completion rate data, inaccurate attendance tracking, and misleading catalog claims about certification preparation. HVAC students, for example, were graduating without required EPA certifications, and the school was not consistently tracking pass rates on third-party exams.²

Other Pending Matters

A 2023 ACCSC document indicated that the California Attorney General’s office had issued an investigative subpoena to IEC’s schools. The outcome and current status of that investigation have not been publicly reported.²

Separately, a ransomware group called “Termite” claimed responsibility for a cyberattack on UEI College on or around May 29, 2026. The group, which security researchers have linked to a modified version of the Babuk ransomware, posted the claim to a data leak site and threatened to release sensitive information if the school did not negotiate.¹¹ As of mid-June 2026, UEI College had not publicly confirmed the attack or disclosed what data may have been compromised. Attorneys were investigating whether a class action could be filed on behalf of affected individuals, but no suit had been brought.¹²

1
Higher Ed Dive. For-Profit International Education Department Settlement
2
Veterans Education Success. Letter to VA Regarding Florida Career College, UEI College, and United Education Institute
3
U.S. Department of Education. Final Settlement Agreement – IEC
4
Inside Higher Ed. U.S. Forces For-Profit Chain’s CEO, CFO to Step Down
5
Higher Ed Dive. Florida Career College Closes
6
Fresno Bee. UEI College Fresno Lawsuit
7
Republic Report. Disgraced For-Profit College Chain IEC Settling Another Fraud Case Brought by Students
8
Accrediting Commission of Career Schools and Colleges. ACCSC Public Notice
9
Accrediting Commission of Career Schools and Colleges. ACCSC Public Notice
10
Veterans Education Success. Letter to the Department of Education Re ACCSC
11
Broadcom. Termite Ransomware
12
ClassAction.org. UEI College Data Breach