California-based for-profit college operation International Education Corporation (IEC) agreed last year to shut down one of its school brands and terminate its CEO after the U.S. Department of Education found extensive, illegal abuses of students and ended financial aid eligibility. Now, IEC is settling a lawsuit brought in Fresno, California, by other students who say the company deceived them into enrolling with false claims about the quality of training programs and placement services, the value of degrees, and the urgency of signing up.

The lawsuit, filed in California Superior Court in 2023, alleges fraud and breach of contract as well as violations of state laws banning deceptive practices and advertising and unfair business practices at United Education Institute (UEI), operating as UEI College, another school chain run by IEC.

IEC’s Florida Career College (FCC) shut down in February 2024 after the Department of Education cut off federal student aid based on extensive evidence that FCC had been facilitating cheating on student entrance “ability-to-benefit” (ATB) exams for non-high school graduates — unlawful conduct that was first reported here at Republic Report.

The Department’s 2024 settlement agreement with IEC indicates that the Department had been investigating UEI for potential violations of the same ATB rules that FCC had been flouting. The Department’s settlement prohibited UEI from administering ATB tests going forward. However, the Department agreed as part of the deal to end its probe of IEC and allow UEI to keep getting taxpayer dollars.

But the current California lawsuit charges broad abuses at UEI, which mostly offers nine-month programs in career fields including health care, business, criminal justice, welding, and HVAC.

The students’ complaint highlights the experience of Joshua Jones, who says he was struggling to support his family at an Olive Garden job when he saw an ad on Facebook for UEI in January 2022. After Jones entered his contact information online, a UEI recruiter called and pressed him to visit the Fresno campus, located in a shopping mall, to see the school’s HVAC program. The recruiter, identified as “Sal,”allegedly showed Jones advanced, modern HVAC equipment that he said Jones would be training on, and he guaranteed a high-paying job, saying that employers were desperate to hire UEI graduates. Sal also allegedly told Jones that he shouldn’t wait to enroll, because there was only one spot left in the program.

Jones did enroll. The program cost $21,000, which he financed through student loans. But he says he found mostly older and broken equipment and minimal hands-on instruction. Instead, he and his classmates were directed to watch HVAC videos on YouTube. The touted career services office was frequently closed or unstaffed. Even though UEI failed to provide Jones with any assistance finding him an HVAC job, the school allegedly pressured him to sign documents stating that it did, threatening to withhold his diploma if he refused.

Jones says he did find work in the HVAC field, but without any placement help from UEI, and he soon discovered that the UEI program had not prepared him for even an entry-level HVAC job. He struggled to succeed in the position and has been unable to advance past a minimum-wage role. Jones told the Fresno Bee, which reported on the lawsuit in February, that he actually was earning more at the Olive Garden.

Jones also told the Bee that he wished he had instead enrolled in the HVAC certificate program at public Fresno City College, which costs $1,288.

In the legal complaint, eleven other former UEI Fresno HVAC students allege similar experiences at the school. The students say UEI used a high-pressure “emotionally manipulative pitch” that focused on their financial hardships.

In its own court filings, UEI denied the claims. An IEC spokesperson told the Bee that the allegations in the students’ lawsuit were “completely false” and that the company would “vigorously defend ourselves against these baseless accusations.”

But the court docket in the case reveals that on June 6, Annette Clark, a lawyer representing the students, filed a notice of settlement of the entire case.

Neither Clark nor the lead lawyer for IEC, Courtney Baird, from the firm Duane Morris (which frequently represents for-profit colleges), responded to a request for comment.

But, notably, Clark and her law firm filed a similar lawsuit, presented as a class action and alleging violations of the same California consumer laws, on behalf of students against UEI in 2012, and Baird and Duane Morris represented UEI in that case as well.  (Also, Aaron Mortensen has been the in-house general counsel at IEC and involved in court matters like this one since 2013.) That lawsuit also was resolved out of court, in 2016, on terms not made public in the court docket.

It’s admirable if, in fact, Clark and her firm have now obtained through settlement financial relief for Joshua Jones and eleven other students who say they were ripped off by UEI. But it’s regrettable if UEI is able to quietly pay compensation to at most a dozen students, as it apparently paid compensation previously to Clark’s clients in the 2012 case, and avoid a trial, public accountability, or any penalty for abusing a broader group of students.

IEC, whose murky ownership structure includes an employee ownership plan but apparently a majority interest held by American-German billionaire Nicolas Berggruen, has received hundreds of millions of dollars from taxpayers for student financial aid over decades. IEC’s disgraced Florida Career College chain got $57 million in student aid from the U.S. Department of Education in 2022-23, and the UEI schools got another $220 million. UEI Fresno alone got $35 million from federal taxpayers, out of $44 million total revenue, that year.

Compensation paid in the Fresno case for a dozen students won’t divert much from IEC’s huge revenue stream. Fraud will continue to pay.

Unfortunately, we can’t expect that the second Donald Trump administration, which has rapidly reversed federal rules and enforcement efforts aimed at protecting students from predatory colleges, will do anything to dissuade IEC/UEI and other predatory college operations from continuing to deceive and abuse students.

Nor can we expect much from the private accrediting agencies that are supposed to oversee school quality and integrity.

One of UEI’s accreditors, the Accrediting Council for Continuing Education and Training (ACCET), apparently did nothing at all to address concerns after the Department of Education, under President Biden, took action against Florida Career College and indicated it was investigating similar allegations of cheating at UEI schools.

The other, the Accrediting Commission of Career Schools and Colleges (ACCSC), initially did place UEI College and IEC on “System-Wide Warning” status. But last November, ACCSC granted four UEI schools it oversees a five-year renewal of accreditation, the maximum renewal period available for even the best-behaving schools. In May, ACCSC gave five-year renewals to three more UEI campuses.

Will anyone do anything about a for-profit college chain that gets tens of millions from students and taxpayers every year and engages in egregious deceptive behavior? A 2023 ACCSC document indicated that the California attorney general’s office was probing the UEI/IEC schools. But we don’t know where that investigation stands. California’s regulatory agency for non-state schools, the Bureau for Private Postsecondary Education, which has the power to revoke a school’s operating license, should also be looking.