Full Sail University Lawsuit Fraud, $377 Million Question What You Need to Know About the “Fake Jobs” Whistleblower Case

Quick Answer: Full Sail University faces serious federal fraud allegations in a recently unsealed whistleblower lawsuit claiming the school created temporary “fake jobs” for graduates to inflate employment statistics and maintain its $377 million annual federal funding.

The $377 Million Question: What’s Really Happening at Full Sail?

Here’s a number that should make any prospective student pause: Full Sail University receives over $377 million in federal financial assistance annually. That’s taxpayer money flowing into a for-profit institution now accused of gaming the system through an elaborate employment fraud scheme.

The complaint, initially filed in 2024, claims the Los Angeles Film School and Full Sail University “self-financed thousands of temporary employment opportunities for their graduates through schemes with non-profits and paid off vendors.”

But this isn’t just another higher education controversy. This case could reshape how for-profit universities operate and how the federal government monitors billions in student aid.

Background: What Makes Full Sail University Different?

Full Sail University, based in Orlando, Florida, markets itself as a premier destination for students pursuing careers in entertainment, media, and technology industries. The school offers programs in:

• Audio engineering
• Film production
• Game design
• Computer animation
• Music business
• Entertainment business

As a for-profit institution, Full Sail operates differently from traditional universities. It must demonstrate that graduates achieve “gainful employment” to maintain accreditation and federal funding eligibility.

That requirement sits at the heart of this lawsuit.

The Whistleblower Lawsuit: Timeline and Key Details

Who Filed the Lawsuit?

The plaintiffs include LAFS’s former vice president of career development David Phillips and former vice president of admissions Ben Chaib. Both worked at the Los Angeles Film School, which shares leadership with Full Sail.

James Heavener is the co-chairman at both the Los Angeles Film School and Full Sail University. Heavener is also CEO at Full Sail.

When Was It Filed?

The whistleblower complaint was initially filed in 2024 but only recently unsealed to the public. Phillips and Chaib filed the whistleblower lawsuit in June 2024, seeking to recover fraudulently obtained student aid funds on behalf of the U.S. government.

What Happened to Federal Involvement?

The U.S. Department of Justice opted not to join the case initially. However, the whistleblowers can still pursue the case independently under the False Claims Act.

Under whistleblower law, private individuals who help bring such misconduct to light can reap 25-30% of any recovery if the case succeeds.

The “Fake Jobs” Allegations: How the Scheme Allegedly Worked

The lawsuit paints a troubling picture of how Full Sail allegedly manipulated employment statistics. Here’s the alleged playbook:

Step 1: Offer Production Companies Sweet Deals

“The way the trade has worked in L.A. and we believe it worked in Florida was to tell the production companies, come on in, you can use our facilities for free or really way, way below cost,” according to Mark Kleiman, the attorney representing the whistleblowers.

Step 2: Require Hiring as Payment

“We just want you to hire a couple of our graduates. We’ll tell you which ones, this isn’t a real job for just long enough so we can claim they’re employed and tell the accrediting agencies, look, this one got a job. Even though the job is like three or four days long.”

Step 3: Report as “Employment Success”

The school would allegedly count these temporary positions as legitimate employment placements, using them to demonstrate compliance with federal “gainful employment” standards.

Understanding “Gainful Employment” Standards

Why does this matter so much? Because for-profit universities like Full Sail must prove their graduates achieve gainful employment to keep their doors open.

What Are Gainful Employment Requirements?

Federal gainful employment regulations measure whether educational programs lead to debt burdens graduates can reasonably repay with their incomes.

Programs must meet certain debt-to-earnings thresholds:

• Annual loan payment shouldn’t exceed 8% of total earnings
• Or 20% of discretionary earnings

The Stakes

For profit universities like Full Sail risk losing accreditation and federal financial aid if it fails to meet “gainful employment standards.”

Without federal aid, enrollment at for-profit schools typically plummets. Students can’t afford tuition without loans, and schools can’t survive without students.

What Full Sail University Says: The Defense

Full Sail vigorously denies all allegations in the lawsuit.

Full Sail University says it emphatically denies the claims.

The university’s official statement emphasizes several key points:

Never Employed the Whistleblowers

Full Sail University noted that these two executives who filed the lawsuit never worked for or was employed by Full Sail. The employees only worked for the Los Angeles Film School.

Alumni Success Stories

The university also noted many of its alumni have worked on award-winning projects and have been recognized with Oscars, Emmys, and Grammys.

Commitment to Compliance

In their full statement, Full Sail asserted: “We are committed to compliance with all regulatory requirements. Our services department does an exceptional job supporting students and alumni, and the outcomes are regularly reviewed by regulators to confirm compliance.”

The Broader Impact: What This Means for Higher Education

This case touches on several critical issues facing American higher education:

For-Profit University Scrutiny

For-profit colleges have faced increasing scrutiny over the past decade. High-profile closures like Corinthian Colleges and ITT Technical Institute followed investigations into misleading practices.

The Full Sail lawsuit represents the latest chapter in ongoing questions about accountability in the for-profit education sector.

Taxpayer Money at Risk

With $377 million in annual federal funding at stake, this case matters to every American taxpayer. If the allegations prove true, it means taxpayer dollars funded a scheme that harmed students while enriching the institution.

Employment Data Integrity

Universities regularly tout employment rates and graduate outcomes in marketing materials. This case raises questions about how schools calculate and report these critical statistics.

What Students and Parents Should Know

If you’re considering Full Sail University or already enrolled, here’s what you need to understand:

The Lawsuit Doesn’t Prove Guilt

Important reminder: allegations in a lawsuit are not proven facts. Full Sail maintains its innocence, and the legal process will determine the truth.

Do Your Research

Regardless of this lawsuit, prospective students should:

• Research employment outcomes independently
• Contact alumni directly about their experiences
• Compare reported statistics with third-party data
• Understand the total cost of attendance and expected debt load

Know Your Rights

Current and former students may have legal options if they believe they were misled about employment prospects. Consider consulting with an education law attorney if you have concerns.

Check Accreditation Status

Monitor Full Sail’s accreditation status with the Accrediting Commission of Career Schools and Colleges (ACCSC). Any changes could affect your degree’s value and eligibility for federal loans.

Legal Implications: What Could Happen Next?

Potential Outcomes

If Full Sail Loses:

• Massive financial penalties under the False Claims Act
• Potential loss of federal funding eligibility
• Increased regulatory oversight
• Possible criminal referrals

If Full Sail Wins:

• Vindication of their practices
• Continued operations without disruption
• Potential counter-claims against whistleblowers

Timeline Expectations

Whistleblower cases under the False Claims Act often take years to resolve. Expect:

• Extensive discovery process
• Multiple motions and hearings
• Possible settlement negotiations
• Trial if parties can’t reach agreement

Regulatory Investigations

Beyond the lawsuit, Full Sail could face investigations from:

• Department of Education
• Accrediting bodies
• State education regulators
• Consumer protection agencies

Similar Cases: Historical Context

This isn’t the first time for-profit education institutions have faced such allegations.

Corinthian Colleges (2015)

Corinthian faced similar allegations of inflating job placement rates. The company ultimately filed for bankruptcy, leaving thousands of students with worthless credits and crushing debt.

The federal government eventually forgave billions in student loans from Corinthian victims.

ITT Technical Institute (2016)

ITT Tech shut down after the Department of Education found evidence of misleading students about job placement rates and program costs.

What Makes This Case Different

The Full Sail case involves whistleblowers with direct knowledge of alleged practices rather than just regulatory investigation. This insider perspective could prove powerful in court.

Frequently Asked Questions

What exactly is Full Sail accused of?

Full Sail is accused of self-financing thousands of temporary employment opportunities for their graduates through schemes with non-profits and paid off vendors to violate gainful employment requirements set by the federal government and violate accrediting standards.

How long has this allegedly been happening?

“For at least the last ten years, nearly all federal funds bestowed upon and taken in resulted from fraud with the institution using taxpayer funds to finance and facilitate multiple, temporary employment positions for LAFS graduates and through incentive payments to LAFS sales representatives,” the lawsuit reads.

Will my Full Sail degree be worthless?

Not necessarily. Even if the allegations prove true, your degree remains a credential that demonstrates completed coursework. However, the school’s reputation could be damaged, potentially affecting how employers view the degree.

Can I get my money back if I attended Full Sail?

It depends. If the school loses the lawsuit or admits wrongdoing, former students might have claims for loan forgiveness or damages. Consult with an attorney about your specific situation.

Should I still attend Full Sail?

That’s a personal decision requiring careful consideration. Research alternatives, understand the risks, and make an informed choice based on your career goals and financial situation.

How can I verify employment statistics?

Check the Department of Education’s College Scorecard for independent data. Also review the school’s required disclosures and compare them with alumni you can contact directly.

What Experts Are Saying

Attorney Perspective

“Our clients believe very strongly that the students have been terribly disadvantaged, and along with them, taxpayers,” said Mark Kleiman, attorney for the whistleblowers.

This statement highlights the dual harm alleged: students misled about job prospects and taxpayers funding the scheme.

Education Policy Implications

The case raises fundamental questions about oversight of for-profit education. How can regulators verify employment data? What penalties deter fraudulent practices? Should for-profit schools face stricter scrutiny?

Taking Action: Resources for Affected Students

If You’re Currently Enrolled:

• Document all promises made during recruitment
• Save marketing materials and communications
• Connect with other students to compare experiences
• Consider filing complaints with accrediting bodies
• Monitor the lawsuit’s progress

If You’re an Alum:

• Report any misrepresentation to the Department of Education
• Join alumni groups discussing these issues
• Consider consulting an attorney if you believe you were harmed
• Share honest feedback with prospective students

Key Resources:

• Department of Education Borrower Defense: studentaid.gov/borrower-defense
• Federal Student Aid Ombudsman: 877-557-2575
• Consumer Financial Protection Bureau: consumerfinance.gov
• National Consumer Law Center: nclc.org

The Bottom Line: What This Case Really Means

The Full Sail University lawsuit represents more than allegations against one school. It’s a test case for accountability in for-profit higher education.

At its core, the case asks: Can schools manipulate employment data to maintain federal funding? What safeguards protect students and taxpayers? How should regulators respond?

Full Sail fundamentally disagrees with the allegations in the complaint, and says it looks forward to defeating the claims in court.

The truth will emerge through the legal process. Until then, students, parents, and policymakers should watch closely as this case unfolds.

Stay Informed: Following This Case

This is a developing story. The legal process will take time, but key developments to watch include:

• Court rulings on motions to dismiss
• Discovery revelations
• Regulatory agency responses
• Settlement negotiations
• Trial proceedings if the case doesn’t settle

Check back regularly for updates as this important case progresses through the courts.

This article provides general information and should not be considered legal advice. If you need specific guidance regarding your situation with Full Sail University or any educational institution, consult with a qualified attorney

About the Author

Sarah Klein, JD, is a licensed attorney and legal content strategist with over 12 years of experience across civil, criminal, family, and regulatory law. At All About Lawyer, she covers a wide range of legal topics — from high-profile lawsuits and courtroom stories to state traffic laws and everyday legal questions — all with a focus on accuracy, clarity, and public understanding.
Her writing blends real legal insight with plain-English explanations, helping readers stay informed and legally aware.
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