June 27, 2016

Ex-Trump University Executives Run College That Gets $150 Million from Taxpayers




Two former high-ranking executives of Trump University are now two of the top executives at a Florida-based career college, Ultimate Medical Academy, that has 13,000 students enrolled, has been receiving more than $150 million annually in federal student aid, and is accredited by the imperiled agency ACICS. The school, previously a for-profit institution tied to a New York-based investment company, last year was acquired by a Denver-based tax-exempt non-profit organization that had little activity prior to the merger.

Ultimate and Trump

Presumptive GOP presidential nominee Donald Trump has faced scrutiny for his unlicensed real estate “university,” which has been sued by former students, as well as New York Attorney General Eric Schneiderman, who allege that Trump University was a scam that failed to deliver on its promises and left students with little to show for tuition payments as high as $34,995.

Documents produced in the lawsuits against Trump University reveal that David Highbloom, who is now the co-chief executive officer of Ultimate Medical Academy (UMA), was the chief operating officer of Trump University. The 2013 complaint filed by former students in federal court in San Diego asserts that, despite Trump University’s claims that instructors were hand-picked by Trump, “it was [Trump University president Michael] Sexton and COO David Highbloom who interviewed the instructors and was in charge of hiring instructors.”

Some former Trump University students and employees claim that some of the venture’s instructors had little actual real estate experience; some, instead, excelled at high-pressure recruiting of students, and coercive recruiting tactics are described in detail in depositions and documents produced in the litigation.

Highbloom also has been deposed in the students’ lawsuit.

In a separate case, a former Trump University employee, Iraq War veteran Corinne Sommer, sued the school after she was fired in 2007; the parties settled on confidential terms. In a 2012 deposition in that lawsuit, Sommer testified that Highbloom “complained when I would take days off to do my military service.”

April Neumann, meanwhile, was Trump University’s director of operations. The now-notorious Trump University “playbook” that provided detailed instructions to employees includes numerous references to her. The playbook advised, for example, “If an attorney general arrives on the scene, contact April Neumann immediately.”

Trump University shut down in 2010.

David Highbloom has been, since 2009, the co-CEO at Ultimate Medical Academy. Steven Kemler, UMA’s CEO since 2005, describes Highbloom as his “long-time friend.” April Neumann is the vice president for corporate alliance & career services at UMA, having joined the company in 2011.

Neither Highbloom nor Neumann currently mention their tenures at Trump University on their LinkedIn profiles or on their bios on the UMA website.

But there are more connections between the Trump school and the Florida college. Another LinkedIn profile, of one Jason Schauer, indicates that he worked at UMA in its online “learner services” division from 2010 to 2015. It also says, “Prior positions held with Trump University, allowed direct contact to key investors in the residential and commercial real estate industry.” Ben Roberts, now vice president and chief of staff at UMA, reports on LinkedIn that he was an intern with “the Trump organization.”

In response to an interview request and specific questions I submitted this morning, UMA’s vice president of marketing, Dan Soschin, provided me with a written statement “prepared by our senior administration team.” Regarding the former Trump University employees, the UMA statement says, “To the best of our knowledge, only three of our hundreds of employees have worked for Trump University and none have worked at any Trump entity in the last five years.”

Ultimate’s troubled record

UMA offers training programs for people seeking careers as medical and dental assistants, medical office assistants, pharmacy technicians, and related positions.

According to the school’s website, one of its two campuses, in Tampa, “is not currently enrolling students.” (UMA management told me, “We temporarily have paused enrollments at our Tampa campus, which represents approximately 350 current students, in order to evaluate student interest in that campus’ programs.”)  No such warning is indicated for the other campus, in Clearwater, Florida, and the school is still actively recruiting students. The vast majority of UMA’s students engage in their studies entirely online.

There are indications that Ultimate Medical Academy shares with Trump University more than just personnel. Some UMA employees have posted about the company’s recruiters engaging in high-pressure sales tactics directed at students and about management leaning hard on recruiters to enroll more students. Some prospective students have complained about repeated unwanted phone calls from Ultimate recruiters.

UMA’s statement today responds, “We take concerns seriously and are committed to reviewing all reports that do not fit with our institutional policies, priorities and core values. Immediately upon learning of an issue, management, and when appropriate our team of trained compliance officers, initiates a review that includes obtaining the facts from the report, reviewing any related call(s) for review and, when appropriate, implementing additional training or employee discipline as necessary to correct any inappropriate behaviors.”

In 2011, a former Ultimate employee, Stephanie Onorati, filed a federal whistleblower lawsuit against the school, alleging that it fraudulently obtained federal student aid. The Justice Department declined to join the case on behalf of the government, and case was dismissed by agreement of the parties in 2012. UMA’s statement to me says, “The court dismissed the lawsuit claim in its entirety and the government declined to intervene. The parties agreed not to pursue further filings that would have prolonged the dismissal process.” (Onorati’s lawyer in the case has not returned my call.)

UMA has been “named” to Victory Media’s 2016 “Military Friendly Schools” list — a lead generation company’s product that seems like an honor roll but steers veterans and military service members to schools including for-profit colleges currently under law enforcement investigation.

UMA is also a member of the troubled for-profit college trade association APSCU (recently renamed CECU), which has included many schools investigated or shut down for fraud.

While Trump University was unaccredited and thus ineligible for taxpayer-funded student aid, UMA does have the necessary accreditation to allow federal aid to flow into its coffers. But that status is now tenuous.

UMA had for many years been accredited by the Accrediting Bureau of Health Education Schools (ABHES), but in August 2015 it switched its primary accreditation to the Accrediting Council for Independent Colleges and Schools (ACICS). That turned out to be bad timing.

This month, both the staff of the U.S. Department of Education and a Department advisory committee have recommended that ACICS have its recognition revoked because of its lax oversight of predatory colleges. If that decision is sustained by the Department, schools accredited by ACICS would no longer be eligible for federal student aid. To keep getting taxpayer dollars, UMA would have to be accepted by a new accreditor.

In its statement, UMA’s management says, “UMA only recently added ACICS as an accreditor – we are confident we will maintain uninterrupted accreditation. We have a strong and diverse leadership team committed to our core values, mission and helping our students excel every day.”

Ultimate’s tangled ownership

But the challenge of finding a new accreditor could be complicated by the school’s tangled connections to Trump University — and to other entities.

According to the school’s catalogue, Ultimate Medical Academy was founded in 1994 as a non-profit institution. In 2005, the school was acquired by Ultimate Medical Academy, LLC, which, according to a lawsuit filed against the school, is a “foreign” limited liability corporation.

Behind Ultimate Medical Academy, LLC, was New York-based Conversion Partners, describes on its website today as “a boutique consulting and advisory group primarily focused on supporting growing companies in the education sector.” A November 2014 IRS filing reported that UMA had the same Manhattan address as Conversion Partners. A number of Ultimate executives also worked at Conversion Partners. On his LinkedIn profile, UMA’s current chief financial officer, Thomas Rametta, indicates that he worked for Ultimate and Conversion simultaneously and explains that Conversion “acquires and manages middle market companies, primarily in the post-secondary educational sector…. with flagship locations in Florida.”

Lowell Lifschultz, a former partner at the national law firm Epstein Becker Green, was, according to federal campaign contribution filings, previously the chairman of both UMA and Conversion Partners. Today, UMA lists him as a senior advisor. According to the statement today from UMA, “Conversion Partners is no longer an existing entity. The website was left up inadvertently and is being removed.”

In March 2015, again according to the school catalogue, UMA was acquired by Clinical and Patient Educators Association (CPEA). CPEA is a Denver-based, tax-exempt nonprofit, formed in 2010, that reports its mission as “developing quality, innovative education for healthcare practitioners and the patient communities they serve.” That organization showed total revenue in 2013 of just $384,000 in 2013 and just $33,508 in 2012.

Meanwhile, for the 2013-14 academic year, UMA, the company that CPEA acquired, received $154 million in federal student grants and loans, which was about 87 percent of the school’s total revenue. (That is perilously close to the 90% ceiling that federal law prohibits for-profit colleges, and non-profits that convert from for-profits, from exceeding.)

UMA’s long-time CEO, Steven Kemler, was already serving as the non-profit CPEA’s vice president and on it board of directors at the time of the November 2014 filings of CPEA’s 2012 and 2013 year IRS disclosure forms, prior to its takeover of UMA. Conversion Partners and UMA (along with “National Massage Therapy Institute LLC“) are listed on the same CPEA filings as “Related Organization Taxable as a Partnership.”

Lowell Lifschultz, the former UMA and Conversion Partners chairman, was designated on CPEA’s 2013 year IRS form as CPEA’s chairman and president. According to the 2013 year form, Kemler and Lifschultz each engaged in a “Business Transaction Involving Interested Persons” valued at $397,888. The form explains that in 2013 CPEA “won two grants that included Ultimate Medical Academy… as a participant in conjunction with such awards.” In connection with that transaction, according to the filing, Lifschultz and Kemler “disclosed to the organization that they collectively own more than more 50% of the membership interests of” UMA.

Lifshultz and Kemler were not listed as affiliated with CPEA in its initial 2011 year IRS filing; nor are they listed now as directors on the organization’s website, but another former Epstein Becker partner, Theodore Polin, is on. But Lifshultz and Kemler were listed on IRS forms as running the organization in the years between. Confusing, right?

In recent years, a number of for-profit schools have converted to non-profit status, including some on questionable terms that allowed the schools to evade certain legal obligations — and also resulted in major financial gains for the former owners of the for-profit.

UMA management’s statement to me says, “There are no ongoing financial relationships between the sellers and the ongoing business through service arms, real estate or like arrangements. This transaction was structured purposefully to preserve the UMA organization and operations in the best interest of students, with no adverse effects to student programs and services, faculty and/or staff. The transaction and the resulting assumption of nonprofit status conform to all appropriate regulatory and accreditation requirements.”

UMA did not answer my questions seeking the terms of the sale of UMA to CPEA and the details of the compensation that Lifschultz and Kemler receive from CPEA/UMA now.

Ultimate and recycled executives

Beyond the former Trump University officials, other current Ultimate Medical Academy executives come from familiar corners of the for-profit college world.

UMA’s president, Derek Apanovitch, worked for three years at Kaplan Higher Education, whose schools in recent years have been under federal and state law enforcement investigation.

UMA’s vice president of ground campus operations, Silvina Lamoureux, was from 2005 to 2011 the campus president at the Lakeland, Florida, campus of Everest College, part of the now-defunct poster child company for for-profit college abuses, Corinthian Colleges. Former UMA executives had previously worked for troubled for-profits ITT Tech and DeVry.

It’s all too common for executives of shut-down predatory colleges to pop up again at another school. For example, Arthur Benjamin was the CEO of ATI Career Training Center, which was shut down by the U.S. Justice Department in 2013 for systematic fraud after taking in some $236 million in federal aid over six years. Yet Benjamin remained for more than two years after that, and nearly two years after I pointed it out in an article, as vice chair of the three-member board of directors of another for profit college receiving more than $10 million annually in federal aid, American Institute.

So, to sum up this information (all readily available to anyone with a Google) about Ultimate Medical Academy: Staffed by former executives of predatory Trump University and other predatory for-profit colleges; accredited by endangered ACICS; member of troubled APSCU; converted from a for-profit into a non-profit that was, for a period, controlled by the for-profit owners and that made payments to the for-profit before the merger; and the subject of a pile of student and employee complaints. That is pretty ultimate, although there are many contenders.

Presumptive Democratic nominee Hillary Clinton, in her very first campaign event in 2015, pledged to crack down on shady for-profit colleges that rip off students. Her opponent Donald Trump has not explained what his policies will be regarding predatory colleges should he be elected. But Trump has defended the conduct of Trump University while attacking as biased the San Diego federal judge hearing the students’ case.

UPDATE: College Staffed by ex-Trump University Executives Tells Employees to Avoid the Media

This article also appears on Huffington Post.