I’ve just learned that the lawyers for Michael Zahara, the ex-Sally Mae employee who has filed a Federal False Claims Act against the company alleging “a pattern and practice of fraudulent conduct” in connection with the Federal Family Education Loan Program (FFELP) have withdrawn from the case.
The lawyers, Larry Zoglin of Phillips & Cohen, LLP and Kathleen Sweeney of Schembs Sweeney Law, argued that there was “an irremediable breakdown in the trust necessary to sustain the attorney client relationship” with Zahara in their motion to United States Magistrate Judge Jane Magnus-Stinson. The motion was granted on October 29, 2008, and it’s not yet clear what the implications will be for Zahara’s case.
Here’s the official Entry on the Motion to Withdraw
The Chronicle of Higher Education recently reported that a former Sallie Mae employee has filed a federal False Claims Act against the company alleging that Sallie Mae “had been using the practice of granting forbearances to systematically balloon student-loan debts.” From the article:
In the system of government-guaranteed student loans, the tactic was part of a strategy to grow student debts as large as possible, increasing Sallie Mae’s profits, before taxpayers and debtors were stuck with the final bill, said the former Sallie Mae employee, Michael Zahara.
For the legal geeks out there, I’ve attached a copy of the complaint. Zahara v. SLM Corporation