May 6, 2019

Shielded By DeVos, But College Chain Faces Accreditor Sanctions

Months after a hushed-up dismissal of its lawsuit against the Betsy DeVos Department of Education, the college chains operated by the Center for Excellence in Higher Education face new sanctions from their accreditor, ACCSC.

By notice dated May 2, ACCSC renewed accreditation for two years for CEHE’s CollegeAmerica schools, but in a letter dated the same day, ACCSC kept CEHE schools on system-wide probation with extensive conditions. The probation covers not only CollegeAmerica, but also CEHE’s Stevens-Henager College, California College San Diego, and Independence University, the latter extensively advertised on TV these days.

Last September, ACCSC, the largest accreditor of for-profit schools, had issued a scathing letter placing all eleven CEHE campuses on probation, citing deceptive recruiting, weak academic quality, poor graduation rates, and, strikingly, efforts to blame Native American culture for the poor results at one campus. ACCSC found that CEHE’s “advertising and recruitment tactics coupled with a poorly documented admissions process has fostered the creation of a student population that the schools are ill-prepared to educate.”

The chain’s CEO, Eric Juhlin, charged at the time that ACCSC’s decision “may have been issued in reaction to external or other inappropriate influences.”

In the wake of ACCSC’s decision, Senators Dick Durbin (D-IL), Richard Blumenthal (D-CT), Sherrod Brown (D-OH), Elizabeth Warren (D-MA), and Maggie Hassan (D-NH) pressed DeVos to investigate ACCSC’s findings and take appropriate action. In a letter to DeVos, the senators noted that since ACCSC had first raised concerns about CEHE’s conduct, back in 2012, CEHE schools had received about $1 billion in taxpayer-funded student aid.

ACCSC says in its May 2 letter that while CEHE previously seemed dismissive of accreditor concerns, at the accreditor’s February 2019 meeting it saw the school operator take a “significant shift in tone and toward taking the action required to achieve and demonstrate compliance with the Standards of Accreditation. The record reflects that CEHE has begun the process of candid self-evaluation and is working to develop realistic solutions across the array of compliance issues.”

However, ACCSC concludes, “significant questions remain with regard to successful student achievement, reporting practices, admissions practices related to distance education students, and practices with regard to international students among others, which the Commission believes warrant further clarification and monitoring.”

Thus, in extending the probation last week, ACCSC added teeth to its probation order, directing the chain to halt enrollment in ten of its programs “due to a history and trends of below-benchmark rates of student graduation and/or graduate employment,” with enrollment not to resume “until the school demonstrates significant improvement in student achievement.” The programs include business administration programs at CollegeAmerica, with graduation rates as low as 19 percent, and a graphic arts program at Independence University with graduation rates consistently in the teens.

ACCSC also seeks improvements in a range of other CEHE programs that will continue enrolling students.

ACCSC requests from CEHE documentation for various claims the company makes to students, such as the assertion on various websites that “[e]ach year we award millions of dollars in grants, scholarships, and other financial aid to deserving students – just like you!”

And ACCSC expresses concern that one web page (now removed) maintained by New York state’s Clarkstown Central School District and promoting CEHE schools was titled “Military College” and including the statement “[t]he deployment is over. The time for employment has arrived,” suggesting that CEHE was offering employment, rather than education.

Asked for comment on ACCSC’s latest action, Juhlin sent me a statement that sharply contrasts with his response last fall. He tells me, “CEHE very much supports the collaborative and continuous quality improvement process that is the foundation of accreditation. CEHE is reviewing the latest response from the Commission [ACCSC] and will satisfactorily address the issues raised. We look forward to providing another comprehensive and thorough response and demonstrating our achievements to the Commission.”

In December, CEHE dismissed its lawsuit against the U.S. Department of Education, which had, in the final year of the Obama administration, refused to recognize the company’s schools as non-profit for purposes of federal regulations; the Department under Obama had concluded that the schools, although technically converted from for-profit to non-profit, were being run primarily for the benefit of the prior for-profit owner, Carl Barney, rather than students.

The Department still has not explained the basis of CollegeAmerica’s lawsuit dismissal, and whether there was a deal with DeVos’s team that will now give CEHE non-profit status, which would allow it to avoid some critical federal rules. I’ve asked the Department public affairs office multiple times for an explanation, and gotten no response; I’ve urged others, including reporters and lawmakers, to ask.

DeVos’s top higher education aide, Diane Auer Jones, was hired by CEHE to serve as an expert witness in 2017 in a lawsuit brought by the attorney general of Colorado — a case alleging that CEHE schools had engaged in fraud.

Concealed, cynical, and inept efforts by DeVos’s lieutenants to make deals with owners of troubled college chains have led to debacles like the Dream Center collapse.

Meanwhile, CEHE continues to face trouble with various oversight bodies and court proceedings. That’s the case, I believe, because CEHE has run its schools in a predatory manner that abuses students and rips off taxpayers.

CollegeAmerica has faced repeated reviews and expressions of concern from Colorado’s state oversight body, the Board of Private Occupational Schools.

Meanwhile, CollegeAmerica is pursuing a lawsuit, set for trial next week in a Colorado state court, against Debbi Potts, a former campus director of the school’s Cheyenne, Wyoming. Potts says she resigned after supervisors asked her to participate in and conceal various frauds and other violations of law. After she quit, Potts made a claim against CollegeAmerica for $7000 in unpaid bonuses.  She then made an agreement with CollegeAmerica under which the school would pay her $7,000, and she agreed not to make false statements about CollegeAmerica with “malicious intent.” Now, CollegeAmerica wants its $7000 back, it says, because Potts made disparaging statements about the school to another former CollegeAmerica employee.

The agreement with CollegeAmerica also purported to prohibit Potts from contacting law enforcement and other government agencies about violations of law, a provision that CollegeAmerica eventually conceded was illegal. The United States Equal Employment Opportunity Commission (EEOC) has sued CollegeAmerica in Colorado federal court over the severance agreement because of this provision. It was only after Potts filed an age discrimination complaint with the EEOC — a complaint that led to the EEOC lawsuit — that CollegeAmerica sued Potts for the $7000 back. EEOC charges that CollegeAmerica’s push to have a trial soon on its $7000 claim against Potts is inappropriate because the federal court has not decided its claim the severance deal was illegal; the EEOC trial is set for November.

Potts also provided information to the Colorado attorney general, which was investigating CollegeAmerica for fraud. In late 2017, the Colorado took CEHE to trial on claims that CollegeAmerica engaged in the systematic fleecing of students and taxpayers — that CollegeAmerica staff consistently misled and lied to students about the selectivity of the school, the transferability of credits, the jobs they could obtain, the salaries they could earn, and more. (This was the case where CEHE hired Diane Auer Jones, now DeVos’s key aide, as an expert witness.) Almost a year and a half later, the two sides still await a decision in the case from Colorado state judge Ross Buchanan.

In 2014 the U.S. Justice Department joined a separate employee whistleblower lawsuit charging that CollegeAmerica paid its recruiters bonuses, commissions, and other forms of incentive compensation in violation of the federal ban on such payments. The suit further claims that CollegeAmerica employed faculty members who lacked the minimum qualifications required by the school’s accrediting agency, and that CollegeAmerica officials falsified student attendance records and grades. In 2016, a federal judge refused to dismiss that case. As the lawsuit’s endless docket sheet reveals, the Barney chain has been fighting in court ever since to conceal documents relevant to the case, even though the judge keeps ruling against it. The chain is claiming that, in paying the bonuses, it was relying on legal advice from its attorney.

UPDATE 05-17-19:

CollegeAmerica took its $7000 breach of contract lawsuit against former employee Debbi Potts to trial earlier this week in Colorado state court. On Tuesday, the jury delivered its verdict. The jurors concluded that Potts did breach her contract with CollegeAmerica intentionally, with malicious intent, thus disparaging the reputation of the school.  Then it awarded the damages it concluded CollegeAmerica deserved: one dollar.

Logan Martin, one of Potts’s attorneys, told me, “CollegeAmerica spent six years and paid five to six figures in attorney fees for a high-priced Denver law firm to pursue a single individual in state court because she cooperated with the state attorney general and encouraged another former employee to do the same. And the jury awarded CollegeAmerica one buck.”

CollegeAmerica’s case focused on LinkedIn messages that Potts sent to a former CollegeAmerica co-worker, in which she sought to persuade the colleague to assist the Colorado AG’s office with its fraud case against the school. In the messages, Potts referred to one CollegeAmerica executive as “an old hag” and to Carl Barney, the wealthy operator of the schools, as “crazy.”

But, Martin says, CollegeAmerica’s theory as to why it was entitled to damages for this alleged breach “didn’t make any sense.”

Although the trial judge mostly rejected efforts by Potts’s lawyers to present evidence about predatory practices at the school, Potts, in her testimony, was able to provide some context about her concerns.