September 4, 2012

Justice Dept. says for-profit college ATI engaged in “widespread” fraud

Justice Dept. says for-profit college ATI engaged in "widespread" fraudYou can fault the for-profit college trade association APSCU for many things, but not for loyalty. APSCU sticks by its members.

In May, the FBI raided FastTrain College amid allegations of fraudulent marketing practices. In June, 20 state attorneys general forced marketing company QuinStreet to shut down, a website that deceived countless veterans into believing they were on a government site that offered unbiased education advice, when in fact the site shilled for for-profit colleges. Both FastTrain and QuinStreet were and remain members of APSCU.

Now the Justice Department has filed a 47-page civil complaint in federal court in Texas charging the trade school ATI with defrauding the government. Dallas TV reporter Byron Harris has been exposing ATI’s fraudulent practices for several years now, but the new federal suit adds many new revelations about how ATI, which has campuses in Texas, Oklahoma, New Mexico, and Florida, has abused students, taxpayers, and authorities.

According to the federal complaint, from 2007 to 2010, ATI, which offers programs in fields including health care, information technology, and car repair, “engaged in a widespread scheme to defraud” federal and Texas authorities in order to receive federal funding to which it wasn’t entitled.  Some details:

  • Texas regulations require career training schools to have job placement rates of at least 60 percent in order to keep their state licenses, which are necessary for federal financial aid.  According to the complaint, ATI reached that target by lying: making up false jobs and false employers; inducing a worker at a trailer manufacturer to falsely tell authorities that ATI graduates worked there; creating fake business cards for students that the school couldn’t place; counting business administration graduates as placed in their field if they worked as cashiers; and employing graduates for a single day past graduation at ATI itself and then counting them as placed.
  • ATI allegedly lied to prospective students about jobs they could get and salaries they could earn through ATI programs.
  • ATI enrolled students with prior felony convictions in criminal justice  and health care programs without telling them that they likely would be barred from many jobs in those fields.  An ATI admissions staffer who warned students that their criminal records could present challenges was reprimanded and told to stop because she was ruining sales.
  • ATI created fake high school diplomas of prospective students to permit unqualified students to enroll.
  • ATI falsely told students who had previously dropped out of ATI that their current federal loans would be forgiven if they re-enrolled; ATI in fact had no intention of paying off such debt.
  • ATI employees reported false information about individual students, such as counseling students to falsely list relatives’ children as dependents, in order to obtain more student financial aid than was warranted.  Employees who complained about such practices were reprimanded by management.
  • ATI pressured reluctant students to attend classes for at least five days, which allowed ATI to bank a student’s financial aid. ATI regularly changed grades and attendance records for students who weren’t meeting minimum requirements.
  • Classes were overcrowded, teaching was poor, equipment was out of date, and facilities were badly-maintained. “For example, for months the air-conditioning in Campus 10 [in Dallas] was not functioning, despite the fact that air-conditioning repair was a program offered at that campus.”
  • ATI falsified and concealed documents in advance of audits by Texas regulators.

According to the complaint, top ATI officials, including ATI’s CEO and its Executive Vice President of Operations, “were aware of and / or encouraged the fraud.”

All of this brazen misconduct had one aim — to defraud federal taxpayers out of ATI’s share of the $32 billion dollars annually that flows to for-profit colleges. (About $236 million dollars in student aid has gone to ATI since 2005.) And it had one terrible outcome — leaving thousands of students deep in debt from ATI’s high-priced, low-quality programs.

ATI is, you guessed it, also an APSCU member. In fact, a tweet that came my way reminds me that ATI’s CEO Arthur Benjamin served until recently on APSCU’s board of directors.

Loyalty is terrific. But those honest and reasonably priced for-profit colleges that are part of APSCU might want to start asking why APSCU continues to fight against reasonable rules that would penalize the worst of the worst scam schools and thus make it easier for well-performing schools to compete. They might also want to ask why APSCU continues to include within its ranks schools that have been caught red-handed ripping people off and ruining their lives.