November 9, 2017

Owner of Troubled, Closed Texas College Now Advises Another For-Profit School

Betsy DeVos has turned her back on students hurt by predatory colleges. Look what happens when accountability is weak.


When I called for-profit Quest College this week and asked to speak with Larry Earle, the receptionist insisted there was no one to reach there by that name. But that wasn’t true.

Lawrence Earle, the for-profit college owner whose San Antonio-based Career Point College closed in October 2016 after findings of serious misconduct, has been quietly helping to run Quest, another San Antonio school, according to current and former Quest employees. On Wednesday, Quest’s long-time owner acknowledged to me that Earle is involved with her school; she described him as a consultant. Texas officials say that, depending on Earle’s relationship with Quest, his role could raise questions under state law.

A year ago, Larry Earle was on local TV news, lamenting the demise of Career Point, which operated campuses in San Antonio and Austin, Texas, and Tulsa, Oklahoma. Faced with findings by the U.S. Department of Education that Career Point had engaged in financial aid fraud and mismanagement, and with lawsuits filed by a growing number of his former students, Earle told an interviewer, “None of my salesmen have ever been accused of lying to students.”

Calling people who are supposed to be college admissions staff “salesmen” raised additional concern about what kind of operation Earle was running, and complaints filed by former Career Point employees cast further doubt on Earle’s assurances about his school. Taken together, the allegations regarding Career Point raise questions about whether Earle should be helping to run any college.

Earle, who, according to government records and social media posts, owns a 72-foot yacht named Pappys Girl, admitted in testimony in Career Point’s bankruptcy case that he paid himself $1.5 to $1.8 million a year and that he took “a draw” from his companies’ coffers “probably a week before or two weeks before the school closed.”

Meanwhile, Earle’s decision to shutter his college left Career Point’s employees without paychecks, left the college’s 1400 students struggling to find new schools, and left Texas authorities scrambling to assist them.

Government data shows that about 87 percent of Career Point’s revenue came from taxpayer-funded federal student grants and loans from the Department of Education — perilously close to the 90 percent maximum allowed under federal law.

The plight of Career Point students underscores the need for strong rules to protect students and taxpayers against predatory and reckless practices by for-profit schools. Unfortunately, Trump Secretary of Education Betsy DeVos is abandoning such protections.

Aric J. Garza, a San Antonio attorney representing about 350 former students seeking redress from Earle and Career Point, told me, “The fact that these students were seeking to better their lives through education is what makes this especially upsetting. Through no fault of their own, they entrusted their futures to someone who, we believe, was dishonest and made numerous misrepresentations.”

Yet it appears that Larry Earle already is back in the lucrative for-profit college game.

The collapse of Career Point College

On October 13, 2016, the Department of Education wrote to Earle, recounting that Career Point had informed the Department that it illegally held on to $4.6 million that should have been returned to students or to the Department, and informing Earle that the Department was putting the school on “heightened cash monitoring” status and requiring Career Point to post a $10 million letter of credit.

In response, Career Point issued a “Closure press release” announcing that “the College’s management has been forced to discontinue operations.” The release defended the company’s record and blamed “this very hostile government climate against for-profit schools” — a standard charge leveled by for-profit schools against the Obama Administration as it worked to protect students and taxpayers against fraud and abuse. The Career Point press release concluded, “the Department of Education chose not to give the College a chance to fix its problems and instead chose to effectively terminate the College….  in light of the actions by the Department of Education, we had no choice.”

Career Point promptly emailed staffers as it was shuttering to say it was “not able to fund your payroll this week.”

screen-shot-2016-10-22-at-12-55-34-pm

Steve Gunderson, the former Republican congressman (R-WI) who runs CECU, the main lobbying group for for-profit colleges, also issued a dramatic statement ​attacking the Obama Administration for the closing of Career Point, which had been a member of Gunderson’s group. “When will this end? When will someone in this Department stop the incredible assault on career schools,” Gunderson asked, as he chalked up the decision to “bureaucratic hostility and arrogance.” (Similarly, Gunderson just yesterday  blamed the Obama Education Department for the “destruction of ITT Tech and Corinthian,” two enormous for-profit college chains that were revealed by numerous law enforcement and media investigations to have engaged in widespread fraud.)

In fact, the Department of Education did not “terminate” Career Point College. In light of the company’s admission that it had kept nearly five million dollars that belonged to students and taxpayers, the Department took the prudent and appropriate step of requiring the company to post a letter of credit equal to 25 percent of the school’s annual take of federal student aid of $40 million — so money might be available to pay the school’s obligations in the event of further financial mismanagement or abuse.

Larry Earle and Quest College

But with Career Point shut down and in bankruptcy, Larry Earle seemed to jump back quickly into the career college business.

Current and former Quest College employees have been telling me that Earle has been a regular presence in the Quest offices for almost a year. They heard the school’s long-time owner, Jeanne Martin, say that she was thinking about selling the school, which focuses on health care training programs, to Earle. Quest employees have referred to Earle as the new owner of the school, or have said that a relative of Earle is now the owner, but I haven’t seen evidence of any such change in ownership. Another employee heard a manager refer to Earle as a consultant to Martin.

On Tuesday, I called the main number for Quest College, and asked for Larry Earle. The receptionist who answered the phone responded that Earle “is not employed at Quest College” and repeated that sentence when I asked additional questions. When I pressed, she acknowledged knowing Earle, but when I asked how she knew him, she said because “he’s in our industry.” I asked if Earle had an office at Quest, and she said no. When I asked if Earle was an investor in Quest, she said she wouldn’t know the answer.

Soon after I called, according to a Quest employee, senior managers at Quest held a meeting. After that, staff were instructed to say, if anyone asked, the same sentence the receptionist told me: Larry Earle is not employed at Quest College.

This Quest employee told me that Earle, in fact, has been coming into the office every day, although he was conspicuously absent on a day two weeks ago when an official of the Texas Workforce Commission, which oversees career colleges in the state, came for an inspection. The employee said that Earle works out of a conference room in Quest’s corporate office, which is in the same building as the school campus.

Responding to my request Tuesday for an interview about Larry Earle, Jeanne Martin emailed me the following statement: “Mr. Earle is not an owner, investor or employee of our college. He has done some consulting for us.” I followed up with some specific questions that Martin later answered. She wrote that Earle is presently a consultant for Quest “at times” and elsewhere referred to him as a “marketing consultant.” She also told me, “I am the sole owner. I am not related to Mr. Earle.”

Responding to my question “Does Mr. Earle regularly work out of the Quest office, such as in a conference room?” Ms. Martin responded on Wednesday,  “No. He has been in the building and in a conference room.”

Later on Wednesday, unprompted, Martin sent me an additional email stating, “Larry and I have decided he Work [sic] completely off campus.”

Larry Earle did not respond to my efforts to reach him to discuss his role at Quest and allegations regarding Career Point.

While Earle’s role at Quest, which gets about 81 percent of its revenue from federal taxpayers, remains somewhat unclear, it is apparent that he is helping to bring in a new team: Employees told me, and Martin confirmed, that five or six of Earle’s former employees at Career Point are now working at Quest. Meanwhile, several long-time Quest employees have been fired since Earle’s arrival.

And on the website Glassdoor, there are currently advertisements for 20 jobs at “Career Point College,” even though that school is no longer operating. Former Quest and Career Point employees told me they believe these listings are actually for jobs at Quest, but Martin denied that, writing to me, “We run our own advertisements when we need to hire people.” I don’t have any basis to question Martin’s statement. At the same, I sure wonder why someone keeps posting fresh ads for a college, owned by Larry Earle, that shut down last year.

Quest is “being shameless about” the fact that Earle is now helping to operate the school, says a former Quest employee. This former Quest employee, as well as two current Quest employees, and one former Career Point employee who spoke with me, asked that their names not be used, out of concerns about their careers.

One former Quest employee, Sharon Allen, who directed education programs at the school from February to September 2016, was willing to talk on the record. Allen says that around the time she was leaving, and just a few weeks before Career Point shut down, Larry Earle made several visits to Quest and met with Jeanne Martin. Allen says that Martin was talking openly about retiring and selling the school. Allen reports that current employees have told her that by the end of 2016, Earle was showing up in the Quest offices full time. Martin, meanwhile, told an employee that it was nobody’s business who now owned Quest.

Under Texas law, an owner or administrator of a school that was deemed by the Texas Workforce Commission (TWC) to have “closed with violations” of law is prohibited from owning, or serving as a representative, director, or instructor, or having a “management agreement,” at another career college operating in Texas, because the TWC deems such former owners to lack the required “good character” to take on such roles at another school.

Milan George, the TWC’s Director of Career Schools and Colleges, confirmed to me that Career Point was deemed closed with violations by the Commission on January 17, 2017. The TWC listed Lawrence Earle, who owns Edudyne, Inc., the company that operated Career Point, as Career Point’s owner for purposes of the law. As a result, in order to own or serve in those other capacities at another Texas career school, Earle would have to file an appeal and be deemed by the Commission to once again be “of good character.”

A TWC official confirmed to me that because Earle “owned Career Point College that we considered closed in violation, he would be barred from working in any administrative capacity at a licensed Career School without approval by the Commission.”

Earle has filed no such request for approval.

Responding to a question regarding Quest’s compliance with TWC rules, Jeanne Martin wrote me, “Mr. Earle is not a representative, director, instructor or employee nor is there a management agreement with him. He has assisted us solely as a marketing consultant.”

The TWC also told me, “Quest College has not requested nor received a change of ownership nor has there been any known change in their approved structure.” Under the law, a potential new owner must apply to the TWC before completing the purchase of a college.

Allegations of abusing students

Much of the debt that Career Point reported in its bankruptcy is owed to media companies like Cox ($591,625), which owns seven radio stations in the San Antonio area, and KABB-TV ($210,307). That likely reflects extensive spending by the college on advertising to recruit new students.

Career Point also owed $80,775 to the Normandy Group, a Washington, D.C., lobbying firm. Federal disclosure forms show that Career Point paid Normandy a total of $1.25 million from 2010 to 2017, largely for the services of its DC lobbyist Henry Bonilla, a former Republican congressman from Texas. Among the issues on which Normandy lobbied Congress was the Obama administration’s gainful employment rule and, according to one form, to “Advocate against Department of Education effort to negatively impact proprietary colleges.”

Career Point had a troubling record, well beyond the matter of the improperly-retained $4.6 million that arose last year.

The lawsuits filed by former Career Point students allege a range of disturbing practices, including failing to apply federal aid to student accounts, pushing students into expensive private loans,  and even charging students for meetings with the school’s financial aid office.

The suits also alleges that Career Point staff shredded company documents, and last October a Texas state judge granted a temporary restraining order directing Career Point not to destroy documents linked to the students who sued.

A 2010 Government Accountability Office investigation of for-profit colleges revealed that Career Point had questionable academic standards, bending over backwards to prevent students from flunking classes and losing access to federal aid. Example: “a Career Point College written exam required the student to submit written answers to four questions. The GAO employee instead submitted photographs of political figures and celebrities, but nevertheless got a passing grade of “C-” for the exam.” And “at Career Point, it is extremely difficult for students to fail a course because if a student does fail a test, they are required to re-take the same test. For example, after failing a few assignments, an undercover agent was told by a Career Point teacher: ‘Those assignments you did not pass, I’ve opened them up so you can retake them. They are open book so there should not be any failure. All answers are right in the book and there is no time limit.'”

A former Career Point admissions employee, Fina Hernandez, complained to Texas authorities in 2013 that she was laid off after four and a half years after she raised concerns about misconduct at the school. (Hernandez provided me with a copy of the complaint that same year.)  Among the bad behavior Hernandez alleged in her written complaint to the Texas Workforce Commission: that the school “would input grades that did not exist to ensure the student had enough credits to validate collecting more money”; that Career Point “is aware of the Federal Financial Aid Fraud that has taken place in the form of Admissions Reps. instructing students to electronically sign Parent Plus Loans for parents who would not sign”; that “Fraudulent Tax Advisor Id Numbers were being used by Admissions to get students through the Federal Financial Aid process when they did not have the adequate documentation”; and that “the school allowed enrolling mentally ill students who do not have support groups and whom Admissions had them randomly acquire numbers from phone books to get them through Financial Aid (FA) since the Financial Aid form has to have six support group numbers listed.”

Hernandez’s complaint further claimed, “In Admissions, we were trained about the sales practice of ‘making a friend’ to get the students to trust us and then we were supposed to make them ‘feel the pain’ of how lousy their lives were so that we could then get them to think Career Point could save them. We were trained that good sales reps. could make the prospective students cry. We were trained that once we broke them down, we could build them back up with the concept that we were there to change their meaningless lives…. If a student came in and completed FA but decided that they wanted to go home to think about it, team leads would be called to do their ‘hard sales’ pitch. If they were not successful, the prospective student was then taken to the Director of Admissions to be even pressured further. The tactic of making them feel worthless was reiterated until they signed up for school. This was done to mentally ill prospects as well.”

The Hernandez complaint also alleged that the school concealed the felony convictions of new students to ensure their eligibility for financial aid. When one graduate complained to the school that she then couldn’t get the job she sought because her felony conviction was deemed disqualifying, and then learned that a school official had apparently forged her signature on documents, she filed a police report. According to Hernandez’s TWC complaint, the school then covered that student’s loans in exchange for her dropping the charge.

Hernandez further claimed that Career Point hired its own graduates on campus to increase reported job placement rates; but, “As soon as those students are accounted for as being ‘placed’, they are laid off.”

Another former Career Point admissions representative, Melanie Martin, who worked at the school from 2009 to 2011, filed a public comment with the U.S. Department of Education in May 2013 when the department was seeking input on new rules to prevent predatory college behavior. She wrote of Career Point, “managers in place allow fraud to take place” and that she “had never seen this type of deceit at a workplace or anywhere.” Martin reported that the school’s admissions trainer “would teach us how important it was to make the prospective students cry…. She said that the more ‘pain’ they felt, the more likely they would want to enroll and change their lives. We were basically, supposed to make them hate their own lives so that they felt we were the answer. It was appalling.”

Melanie Martin backed up allegations also made by Hernandez: that the school told students to omit criminal convictions on their applications; that it “notarized statements of students having high school diplomas without asking for proof, to get them to enroll”; that it forged parent names on federal Parent Plus loans when parents didn’t sign.

Martin further alleged that at staff meetings, staff “were threatened constantly with the loss of our jobs if we did not make our numbers” of enrolled students; “we were instructed to not let any student leave without enrolling.” And she alleged that the school would change students’ financial aid status from “dependent” to “independent” in order “to get students through Financial Aid when they did not want to call their parents knowing the parents would say ‘no’.” School staff, Martin alleged, also would use phony tax identification numbers for students who did not immediately provide one.

Melanie Martin concluded that many former Career Point students ended up “in a hole they can never dig themselves out of. Many will never be able to pay off their loans and they will never be able to get funding to go to a state school to actually better themselves.” She added, “The Department of Education needs to create more regulations to protect students from these schools.”

Patty May, a former dean at Career Point, also filed a comment with the Department of Education in May 2013. She wrote, “In the short time frame that I was employed at Career Point College, I witnessed many occurrences that I felt were unethical, to say the least. It is my ethical obligation to share some of these things with you so that you can prevent these types of things from happening to students at For-Profit Title IV funded schools.”

May reported to the Department that she was directed by superiors to track down at home students who were not attending class: “we were told to try to get them to come in to school, even if just for an hour and to make sure we told them to ‘clock in’ for just an hour if that is all they wanted to do. This would ensure that they had attendance to avoid being dropped. This seemed highly unethical since the school calculates refunds based on days of attendance. … Deans were told we could not take more than 2 – 3 ‘drops’ per week or we could lose our jobs.” The Career Point deans were pushed to get students to the midpoint of a term “so the school could collect the money. The talk always seemed to center around the monetary value of students as opposed to their academic well-being.”

May discussed a student “who was mentally challenged” and wanted to re-enroll at Career Point to study information security. The student disclosed that he had a California felony conviction, but his admissions representative advised him to exclude it on his enrollment form. But a felony conviction, plus a mental disability, would make it difficult to say the least for the student to obtain his chosen job; as May wrote, “It seemed as if no one cared that [the student] had just spent about $17,000 on a PC Tech program he could not get placed in.” May also confirmed Hernandez’s account that Career Point staff had forged an admission documents for another student, affirming, falsely, that she didn’t have a felony conviction.

In his TV interview last year, Larry Earle said about Career Point, “The college, except for a few employees, did nothing wrong.” He appeared to be referencing only the “few employees” he blamed for not refunding the $4.6 million owed back to students and the Department of Education.

This article also appears on HuffPost