October 4, 2023

Perdoceo Chairman In Legal Dispute Over Daughter-in-Law’s Death

Perdoceo Chairman In Legal Dispute Over Daughter-in-Law's Death

The executive chairman of Perdoceo, one of the nation’s largest taxpayer-funded for-profit college operations, has been sued by the parents of his daughter-in-law, two years after she was found dead from what authorities ruled a suicide. On August 8, Traci Phillips and Troy Pehrson, the parents of Tiffani Nelson, filed a civil complaint in District Court in Provo, Utah, against Perdoceo chairman Todd Nelson and his son, Justin Nelson, accusing them of wrongful death, infliction of emotional distress, and negligence. The complaint, seeking tens of millions in damages, also alleges that Justin Nelson, Tiffani’s husband, committed fraud and theft by taking assets that belonged to her.

Todd Nelson has frequently been featured on this website because of his outsized role in running major for-profit college chains. Before serving as executive chairman and, previously, CEO, of Perdoceo, he ran two of the other biggest for-profit colleges operations: the University of Phoenix and now-demised Education Management Corp. All three chains ran into major law enforcement issues because of deceptive recruiting practices and other abuses that occurred on Nelson’s watch.

Phillips and Pehrson allege that their daughter’s August 2021 death came “after years of abuse, neglect and finally abandonment at the hands of her estranged husband Justin Nelson.” The complaint details numerous claims by the parents that Justin physically and verbally abused Tiffani and sought to control many aspects of her life, including her career and the couple’s finances. The parents allege that the Nelsons took Tiffani’s few assets and left her entirely dependent on them — until they cut her off financially.

Among the allegations, the parents claim that in 2016, Justin abused Tiffani, and Todd Nelson “begged Tiffani not to call the police… and they needed to pray for Justin to control his temper and to not act out.” The complaint alleges that Todd Nelson told Tiffani “to never call the police because that could affect their parental rights” as well as Justin Nelson’s career plans as an attorney.

Tiffani’s parents also claim that in the weeks before her death, after Justin had filed for divorce, she pleaded in a letter to Todd Nelson to help save the marriage, to stop the alleged abuse by Justin, to protect the couple’s children, and to protect her financially. According to the complaint, Todd Nelson did not respond.

The claims in the complaint have not yet been brought to trial, and thus at this point are only allegations, not proven as facts.

In an interview, Traci Phillips said that the Nelson family has refused her requests to see her grandchildren, and that Todd Nelson and his wife have requested that she stop contacting them.

“All we can do is fight for justice, and that’s what I want,” Phillips says. “I want the children to know their mother’s side of the family.”

The lawyer representing Phillips in the new action, Brody Valerga, explained to me why he took the case: “At the heart of it, I feel bad for this woman, Tiffani Nelson, who faced her soon-to-be-ex-husband and his family – they’re rich, with endless resources.”

Valerga notes that many of the allegations in the complaint regarding Justin Nelson were made by Tiffani herself when she filed for a protective order against him in April 2021. Phillips’ complaint quotes extensively from the petition Tiffani Nelson filed then.

In response to our request to discuss the litigation, John Huber, an attorney for the Nelsons at the global law firm Greenberg Traurig (and a former United States Attorney for Utah), provided the following statement: “These matters are personal and private. Over two years ago, Todd Nelson’s daughter-in-law tragically took her own life. Amidst the grief, and despite the desire to honor her memory and to protect the privacy and wellbeing of their young children, a frivolous lawsuit was filed against her husband, Justin. The lawsuit, which also names his father, Todd, alleges without legal precedent that her death by suicide is a result of alleged contribution to her emotional distress.”

Huber added, “Todd is now obligated to take action to defend himself against these unfounded claims, fabricated evidence, and defamatory actions. We are confident that the facts will demonstrate that Todd was a supportive and loving father-in-law.”

Just days after the new complaint was filed, Todd and Justin Nelson petitioned the Utah trial court to have the record of the lawsuit be “classified as private.” On August 14, Judge James Brady granted that motion, blocking public access to the case file online or at the courthouse. We obtained the initial complaint filed in the case prior to the issuance of Judge Brady’s order. Tiffani Nelson’s parents have since filed an amended complaint. Todd and Justin Nelson have not yet filed an answer.

Another disclosure issue relates to the status of Perdoceo, whose stock is publicly traded, and its obligations under federal law to publicly share critical information for the benefit of investors and others.

Perdoceo, which operates two entirely online schools, American Intercontinental University (AIU) and Colorado Technical University (CTU), and gets hundreds of millions annually from taxpayer dollars, has not filed with the Securities and Exchange Commission a disclosure of the troubling allegations and potential legal liabilities regarding Nelson. That’s not surprising: The consensus of securities lawyers seems to be that SEC rules generally do not require companies to publicly disclose outside-the-workplace personal issues, such as health problems or divorce. But some experts argue that issues related to a top executive’s personal life might require disclosure if the issue could spur the company board of directors to consider firing the executive.

Maybe there is nothing that would convince Perdoceo’s board to fire Todd Nelson, who has presided over predatory abuses, and resulting legal problems, at each of the three giant for-profit college companies he has run. Given the persistent failures of government overseers to curb waste, fraud, and abuse in the for-profit college industry, the kind of deceptive practices that have occurred at Perdoceo have continued to make money, keeping shareholders, and board members, generally happy.

But the latest allegations in the Utah lawsuit would seem to add fuel to the fire at troubled Perdoceo.

Perhaps Nelson himself is concerned. SEC filings show that he sold hundreds of thousands of shares of Perdoceo stock in August, starting on August 9, the day after Tiffani Nelson’s parents filed their lawsuit.

We reported in November 2022 that Nelson, as well as other top Perdoceo executives, were then selling heavy amounts of company stock, as Perdoceo, which has repeatedly faced scrutiny from law enforcement agencies for predatory practices, potentially faced new risks because the Biden administration was increasing its oversight of the for-profit college industry, and Perdoceo in particular. Moves by the Biden Department of Education to crack down on college misconduct, impose penalties for poor performance, and recoup from schools losses from student loan cancellations, are creating more risk for the Perdoceo schools.

Perdoceo, which in 2020 changed its name from Career Education Corp., has faced major law enforcement actions for predatory conduct. In 2019, the company entered into a $494 million settlement with 48 state attorneys general, plus the District of Columbia, over allegations that it engaged in widespread deceptive practices against students. Later that same year, Perdoceo agreed to pay $30 million to settle charges brought by the Federal Trade Commission that its schools have recruited students through deceptive third-party lead generation operations. In each case, the company did not admit guilt.

Recent Perdoceo employees have told media outlets USA Today and Capitol Forum, as well as Republic Report, that company recruiters continue to feel pressure to make misleading sales pitches and to enroll low-income people into programs that aren’t strong enough to help them succeed. Some of those former employees also have spoken with federal investigators.

USA Today reported last year that the U.S. Department of Education, in December 2021, requested information from Perdoceo; the Department also asked Perdoceo to retain records regarding student recruiting, marketing, financial aid practices, and more. Perdoceo confirmed the probe, while seeming to minimize its significance, in a February 2022 SEC filing. Perdoceo also acknowledged in May 2022 that it received a request for CTU documents and information from the U.S. Justice Department.

The Department of Education provided AIU and CTU with more than $570 million in student grants and loans in the 2020-21 school year, the most recent year reported. But data released this spring by the Department show that Perdoceo’s two schools, AIU and CTU, deliver poor results for students, with low graduation rates and graduate incomes and high levels of student debt.

Perdoceo did not respond to a request for comment.

The wrongful death lawsuit against Todd and Justin Nelson is, in fact, at least the third in a series of litigation matters stemming from this family tragedy.

In September 2021, Justin Nelson sued Phillips, Pehrson, and, eventually, more than 20 other people in state court in St. George, Utah, for defamation. Nelson alleges that Philips and others have, in public, falsely accused him of misconduct with respect to Tiffani. The case is still pending; the Utah Supreme Court is now reviewing a series of pre-trial rulings by the trial judge addressing whether the Utah courts have personal jurisdiction over some out-of-state defendants.

In a third legal action, the city of Lehi, Utah, prosecuted Tiffani’s sister Ashley for a misdemeanor harassment charge after she contacted Nelson family members in an effort to see Tiffani’s children. In that matter, after the government presented its case, Ashley Phillips’ lawyer moved for a directed verdict, and the judge granted the motion. The city then pursued a separate criminal complaint, but did not respond to a motion by Ashley Phillips charging that the new action violated double jeopardy rules. After that, the judge dismissed the new case.