January 6, 2016

Ex-Congressman Solicits $80,000 From For-Profit Colleges for Court Paper Aimed At Shielding Fraud


The Republican ex-congressman who now works as the chief lobbyist for the troubled for-profit college industry has ushered in the new year with an email asking for-profit college owners to finance a legal brief aimed at limiting the legal risk of companies in fraud cases.  The amount that Steve Gunderson, CEO of the industry trade group APSCU, says he needs to pay for the single, short brief he proposes to file with the U.S. Supreme Court? $80,000.

The email, obtained by Republic Report, opens with a hearty “Happy New Year!” greeting but then gets down to business, with Gunderson describing what’s at stake in a case the Supreme Court will consider this term, Universal Health Services v. United States ex rel. Escobar: Basically, whether a company can be held liable for fraud under the federal False Claims Act whenever it submits a bill to the government while in violation of a legal condition for receiving payment.

For-profit colleges have reason to fear a bad result in this case: The industry has been receiving more than $30 billion a year in taxpayer funding to enroll students, and many of the big industry players are under investigation by law enforcement or already have paid fines to settle False Claims Act cases or other claims that they have deceived students and taxpayers. In the face of an adverse ruling, Gunderson warns, big for-profit colleges that violate the law could face “crippling liability.”

So Gunderson wants to file a friend-of-the-court (amicus) brief urging the Court to make it harder for government agencies and individuals who allege fraud to obtain damages from companies like those in his industry.

Thus, on the very same day — January 4 — that Gunderson sent a public letter to the new Acting U.S. Secretary of Education, John King, offering “new beginnings…. My hope is that together we can begin an era of constructive collaboration,” he was plotting, through his private email to for-profit college owners, an effort to try to undermine the ability of the Department of Education to recover taxpayer funds in cases where for-profit colleges engage in violations of law.

Amicus briefs in Supreme Court cases — which urge the Justices to back one of the parties to the dispute — are subject to a 9000-word limit and generally run 20 to 30 pages of a small (6″ x 9″) booklet. Gunderson does not say what law firm he wants to hire — he calls them “the law firm handling this case.” In separate litigation, including a case in which APSCU has been trying to strike down the Obama administration’s “gainful employment” rule, which aims to hold career training programs accountable for leaving students with insurmountable debt, APSCU’s lawyer is Douglas Cox of the ultra-expensive firm Gibson Dunn. Cox boasts on the firm website that he “played a principal role in the firm’s successful representation of the prevailing candidate before the Supreme Court of the United States in Bush v. Palm Beach County Canvassing Board and Bush v. Gore, stemming from the 2000 presidential election.”

An $80,000 price tag for a single short legal paper is a bit unsettling, especially given that us taxpayers would basically be paying for it, because many big for-profit colleges get 80 to 90 percent of their revenue from federal financial aid.

But what’s not surprising is that Gunderson is seeking to pass the hat to finance this brief; he writes in the email that he is “reaching out to every member of the sector — member and non-member of APSCU.”

APSCU’s take-no-prisoners approach, aided by outside lobbyists like former Senate Majority Leader Trent Lott, to fighting against Obama’s accountability rules has been a spectacular failure, his industry has now been exposed in public for its shameless abuses of students, enrollments and stock prices have plummeted, and industry giants have collapsed or are on the brink.  The big, wealthy for-profit college chains that pushed APSCU into its hyper-aggressive stance have recently fled the group. Industry titans EDMC, ITT Tech, DeVry, Kaplan, Career Education Corp., and Bridgepoint are now all gone from APSCU, along with their annual dues. (Disgraced Corinthian Colleges was also an APSCU member, but it collapsed amid multiple fraud investigations; industry leader University of Phoenix has stayed outside of ASPCU.)

With major budget cuts required by the loss of dues, high-priced APSCU staffers like former Bush Administration education official Sally Stroup have left.  That leaves few senior staff besides Gunderson, who has been pulling in $470,000 annually, and Michael Dakduk, formerly the head of Student Veterans of America, an organization that righted itself and started defending the interest of student vets again after Dakduk jumped ship to join APSCU. Gunderson’s email instructs potential donors for the legal brief to contact Dakduk.

Gunderson warns that unless APSCU raises the $80,000, “we will not be able to file the brief.”  So I guess we’ll be able to see whether he raises the $80,000.

This article also appears on Huffington Post

UPDATE 01-31-16: APSCU did a file a brief in the case, signed by Douglas Cox.

And it appears that at least a couple of rich non-APSCU members responded to Gunderson’s pitch. Parties filing briefs in the Supreme Court must disclose whether any outside party contributed money to preparing the brief.  APSCU tells the Court:

DeVry Education Group Inc. and Bridgepoint Education, Inc. have each made monetary contributions intended to fund the preparation and submission of this brief because each is a former member of amicus with first-hand experience defending against the implied certification theory of liability in the higher education context, and therefore each has significant interest in the questions presented.

DeVry and Bridgepoint indeed would seem to share an interest with some current APSCU members in making it harder for whistleblowers to sue for fraud.