September 4, 2012

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

You 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.

  • Orrery24
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  • Ling Ling

    I went o ATI with no high school diploma, they knew when I came in that I was desperate for a change and wanted to better myself, they promised job placement for life. The school I went to in OKC was horrible, when taking finals people would fist fight and sing and dance, the teacher would let students touch her butt. I regret going there, even more now I owe money for a school who fraud me and many other people out of money we didn’t even have , money I borrowed to get higher education. Is there anything i could do about the loans I have with them since the school has gotten revoked?

    • pallen81

      I went to ATI as well the school is a scam. They cheated me and other people out of money and a career. I finish the course at the school three years ago and still cant find a job. What I learn at that school cant help me because it is useless and to hear what’s going with ATI makes me sick. I am looking into what can I do about the over priced student loan I have to pay back.

    • Javier Betancourt

      I went to ati also and lost my records. How can i replace my associates degree i received from them whether or not they are scammers i can show something i did to better myself. Can anyone help me in this

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  • Ashley Gebara

    I’m going to talk to the attorney general, hopefully something will be done. I shouldn’t have to pay almost 17,000 in loans for a school that ripped me off and did the bare minimum. I graduated in 2011 and since then NO JOB! I’m just in BIG DEBT! How could people like them sleep at night.

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  • Surfkay Aker Lacroix

    Actually ATI was accredited by the ACCSC. There was a lot more than what was on that list with problems. The lady who was the #2 person in the company’s husband worked for the ACCSC and the schools knew when inspections were coming.