November 14, 2017

DeVos Department Stacks Negotiations Deck With For-Profit College Lawyers

When Betsy DeVos announced she would repeal and replace the Obama administration’s rules to protect students and taxpayers against predatory for-profit colleges, one of the signs that she was stacking the deck was the announcement that her Department of Education would select not the traditional two, but instead four, representatives of for-profit colleges to be on the panels of stakeholders charged with trying to negotiate new rules. But as the rulemaking process began this week in Washington — featuring a determined effort by the Department to prevent the public from watching the proceedings live — it was apparent that there are, in fact, more than four for-profit college industry representatives around the table, and some are associated with schools that have troubling records.

On the Department’s published roster of negotiators to remake the “borrower defense” rule — establishing standards and procedures for students injured by their schools to obtain debt relief — are “Aaron Lacey Partner Thompson Coburn LLP” and  “Bryan Black Attorney.” They are the two negotiators in the category of “General counsels/attorneys and compliance officers.” While the borrower rule would apply to all of higher education, from the Ivy League to community colleges, both men selected for the panel role of education lawyer are deeply connected to the for-profit college industry.

Lacey’s law firm Thompson Coburn represents the collapsed, disgraced ITT Tech for-profit college chain on a number of matters, including a case in which a former employee alleges a breathtaking series of frauds and abuses against students. Thompson Coburn also lobbied for ITT in Washington DC, and it has been subpoenaed by the trustee in the ITT Tech bankruptcy. In addition, Thompson Coburn lobbies for giant for-profit chain Adtalem (DeVry), which has faced multiple federal and state law enforcement investigations. Aaron Lacey also spoke the past two years about the Obama rules at the annual meeting of the for-profit colleges’ discredited trade association, CECU.

But Lacey’s connection to predatory schools is more extensive: From 2010 to 2014 he worked as senior vice president of regulatory affairs and strategic development at Vatterott College, a for-profit college with a disturbing record.

In 2013, a jury in Jackson County, MO, awarded Jennifer Kerr $27,676 in actual damages and $13 million in punitive damages from Vatterrot. (The trial judge cut the punitive award to about $2 million because state law caps punitive damages; in 2014, a Missouri appeals court upheld the verdict.)  Kerr, a single mother from Lee’s Summit, Missouri, saw Vatterott’s TV ads and visited the campus in 2009 to pursue her dream of becoming a nurse.  A Vatterott recruiter told Kerr that the school didn’t have a nursing program, but it did offer a medical assistant’s degree. With that credential, the recruiter said, Kerr could make $15 to $17 an hour, and her Vatterott credits would transfer to a nursing program and put her on the “fast track” to being a nurse.

But after signing for more than $27,000 in loans and being in the program for over a year, Kerr discovered that her program wasn’t a medical assistant program at all — it was a medical office assistant program. You might not need college for that. Vatterott staff then told her that a medical assistant’s degree would require more classes and another $10,000.

Kerr told the Kansas City Star that, after leaving Vatterott, “for a long time, I was just devastated and depressed. The diploma I got was worthless.” But she was pleased that her case exposed Vatterott’s misconduct: “The truth finally came out. Not just for me, but for everyone like me who was fooled…. I feel like in doing this, maybe others will have the courage to do the same. Maybe they’ll see that they have a recourse.”

Jennifer Kerr was not the first student to be deceived by Vatterott College.

The Senate HELP Committee obtained internal training documents from Vatterott that seemed to instruct recruiters  to use exploitative tactics: “We deal with people that live in the moment and for the moment. Their decision to start, stay in school or quit school is based more on emotion than logic. Pain is the greater motivator in the short term.”  Another Vatterott document described the target market for recruiters: “We serve the UN-DER world, Unemployed, Underpaid, Unsatisfied, Unskilled, Unprepared, Unsupported, Unmotivated, Unhappy, Underserved!”

Vatterott’s recruiting abuses have led to bad outcomes for many enrolled students. As of 2014, the year that Lacey left Vatterott, the percentage of Vatterott students defaulting on their student loans within three years of dropping out or graduating was a very-high 26.6%. In 2012, eight of Vatterott’s 39 programs failed all three tests of the Obama Administration’s initial “gainful employment” rule, which established bare minimum standards to penalize schools that consistently leave their students with insurmountable debt. Gainful employment is the other rule that DeVos is preparing to override.

Student bulletin boards are full of complaints about the quality of a Vatterott education.

In 2009 and 2010, three top Vatterott executives pleaded guilty to a criminal conspiracy to fraudulently obtain federal student grants and loans for ineligible students in 2005-06 by providing false general equivalency diplomas (GEDs) and doctoring financial aid forms.

As to the other legal compliance lawyer picked for the panel, Bryan Black’s law practice, based on his website, focuses on matters including personal injury, dog bites, slip and fall, criminal defense, divorce, “liquor accidents,” and “Bryan’s latest verdict ‘NOT GUILTY’ in $14,000,000 cocaine trial.” He promises “no fee until you win.” There’s no mention of college compliance, although it’s clear from Black’s writings and comments already in the rulemaking that he is well-versed in relevant issues.

That is likely because, in fact, Bryan Black is more than simply an “attorney.” In a July 2016 comment Brown submitted to the Department, extensively criticizing the Obama administration’s proposed borrower defense rule — the very rule he is now charged with helping to remake — Black identifies himself as “Owner 4 Paul Mitchell Schools, Michigan – Florida.”  Paul Mitchell is a franchise for-profit beauty school.  Unlike many for-profits, there are no pending law enforcement investigations of the schools of which I’m aware, although, as with many schools, there are numerous student complaints posted online. Black and his wife Tina are for-profit college owners. Black appropriately acknowledged his connection to Paul Mitchell schools in introducing himself as the rulemaking meetings began, even if DeVos’s Department failed to note it in publishing its negotiator roster.

As to the official for-profit college representatives on the panel, attorney Linda Rawles, who this morning at the rulemaking session complained that other negotiators were “retweeting folks who say the whole for-profit industry is evil” and suggested that Secretary DeVos should remove from the panel negotiators who use social media, posts on her website rave reviews of her work from people working at Bridgepoint Education, Kaplan, the University of Phoenix, and InfiLaw — all for-profit higher education companies with troubling records and multiple law enforcement investigations.

While the Department’s list of negotiators references Rawles simply as working at “Rawles Law,” her LinkedIn profile indicates that she is concurrently “Regulatory Counsel” at Bridgepoint Education, with dates listed as June 2013 to the present.  Bridgepoint has a remarkably bad record of abusing students and taxpayers, and a long trail of law enforcement investigations; the school’s recent shady maneuvering to keep receiving veterans’ educational benefits being only the latest example.

Bridgepoint is also the company where Robert Eitel worked as chief compliance officer before he joined the Department of Education as senior advisor to DeVos.

If the presence of all these for-profit college lawyers on the negotiating panel isn’t enough, the DeVos Department has already slanted the entire discussion, with one-sided issue papers that read like for-profit college industry attacks on the Obama rule, and an announcement by the Department’s chief negotiator that the talks would start from a baseline of the 1994 law, rather than the 2016 final rule — a lawless position.

This article also appears on HuffPost.