December 7, 2018

Students Sue Dream Center Over False Claim That School Was Accredited

Students Sue Dream Center Over False Claim That School Was Accredited

With Dream Center Education Holdings (DCEH) staff members reporting signs that their non-profit operation may be on the verge of declaring bankruptcy or entering receivership, and perhaps that CEO Brent Richardson is moving on, a group of students from DCEH’s Illinois Institute of Art have just sued over the school’s false public statements that it is an accredited institution.

As Republic Report was the first to report, back in May, the Illinois Institute of Art and another DCEH school, the Art Institute of Colorado, falsely stated on their website for months that they “remain accredited” even though the schools’ accreditor, Higher Learning Commission (HLC), had written the company a letter indicating that the schools were presently “not accredited.” Only after a group of U.S. senators pursued this matter did DCEH correct this falsehood. Subsequently, we reported that a source close to DCEH claimed that DCEH posted the false statement at the direction of senior officials of the Betsy DeVos Department of Education, another matter that senators now have raised with DeVos.

Back in January, DCEH, a new non-profit affiliate of the Los Angeles-headquartered charity the Dream Center, bought the chains the Art Institutes, Argosy University, and South University from for-profit Education Management Corporation (EDMC). Under a series of cynical Wall Street owners, EDMC had taken a once proud and solid career education operation, the Art Institutes, and turned it into a predatory, overpriced institution that left many former students with overwhelming debt.

Although the Dream Center promised a new start, as we previously reported, it appears that the DCEH management team under Richardson has been seeking to leverage the operations of the newly non-profit schools to provide revenue opportunities for for-profit companies controlled by Richardson, family members, and long-time associates.

Last night, the National Student Legal Defense Network (NSLDN) and law firm Edelman Combs Latturner & Goodwin filed a class action lawsuit on behalf of Illinois Institute of Art students who say they were injured by DCEH’s misrepresentation of the school’s accreditation. As the complaint notes, HLC informed DCEH in January 2018 that it was placing the Illinois and Colorado schools on “candidate” status, yet for six months the schools continued to recruit new students and accept tuition payments from students while falsely claiming they were accredited institutions. Annual tuition at the Illinois campus was about $30,000. Students were shocked to eventually learn that they were attending an unaccredited school, a status that sharply diminishes the value of their degrees and credits for employers and others.

On July 2, DCEH announced it would, by the end of this year, close some 30 of its schools nationwide, including the Illinois and Colorado Art Institutes, but indicated that other campuses would continue to operate. DCEH announced at the time a major push to move its programs and students online. But that plan remains imperiled because last month another accreditor, Middle States Commission on Higher Education delayed a final decision on maintaining accreditation for the Art Institute of Pittsburgh, which is the hub for the Art Institutes’ online courses. Middle States has raised concerns about “relationships involving the related entities, Dream Center Foundation and Dream Center Education Holdings (DCEH), including the identification of contractual relationships, employment, and family or financial interests that could pose or be perceived as conflicts of interest.”

Now multiple Dream Center staff tell me that DCEH may be preparing to restructure and seek protection from creditors. Some employees there believe DCEH may be seeking to sell the Art Institutes chain to the Los Angeles-based Studio School, a branch of for-profit Hussian College.

Given their track record, it’s conceivable that DCEH or people associated with it plan to pursue the new lucrative business of providing for-profit services — education, recruiting, management — to non-profit or other schools, a la the recent transformations of Kaplan University/Purdue Global, Bridgepoint Education, and the operation that Richardson previously ran, Grand Canyon University.

DCEH has not responded to a request for comment.