For-profit college that ripped off Florida students implodes

08/30/2013 6:23 PM

08/31/2013 6:33 AM

ATI Career Training Center looked like dozens of other private career colleges that dot South Florida’s educational landscape. It offered hope of a new career, a path into prosperity, an escape from poverty.

According to a whistleblower suit filed by Dulce M. Ramirez-Damon, a former assistant director of education at the Fort Lauderdale campus, the school was an elaborate fraud.

Settlement of the lawsuit was announced last week. As a result of the litigation:

• ATI has agreed to pay $3.7 million, while acknowledging no wrongdoing.
• The company is being liquidated under the auspices of a crisis management firm.

The suit alleged ATI recruited its students from homeless shelters and strip clubs. It allowed non-English speakers to fill slots in English-only classes, where they comprehended nothing. It doctored transcripts, fudged grades, ignored non-attendance and set rigid recruitment quotas, all with one goal — so students, some of whom never set foot on campus after the first week, could qualify for federal loans grants that were paid directly to ATI. The students were saddled with the debt.

“It was a real bad deal for everybody, except for the people at the top making money,” said Miami attorney John Hickey, who represented Ramirez Damon in the lawsuit, along with associate Bjorg Eikeland. “It was a bad deal for the students because they didn’t get a useful education. It was a bad deal for the U.S. government and the American taxpayer, who really got ripped off.”

Ramirez-Damon’s False Claims Act complaint was filed in secret in July 2011 — the secrecy being standard until the government had decided whether to take up the cause, which it did this past Aug. 7 for the purpose of achieving a settlement.

The suit alleged that ATI had engaged in a “systematic and nationwide fraudulent practice of forging documents and records to create an appearance of student eligibility in order to receive federal funds.” A similar whistleblower action was filed in federal court in northern Texas in 2009. Both suits have now been made public.

A Department of Justice news release said ATI’s payment would resolve allegations it “falsely certified compliance with federal student aid programs’ eligibility requirements and submitted claims for ineligible students.”

ATI also allegedly misrepresented its job placement statistics to authorities in Texas in order to maintain its licensing and accreditation, the release said.

Federal prosecutors in Miami, Washington, and Texas investigated, along with the Department of Education’s Inspector General.

“Federal financial aid is there to help students attain their dreams and goals, and misuse of these funds to increase corporate profits is unacceptable,” said Miami U.S. Attorney Wifredo Ferrer in a news release. “We are committed to ensuring that federal student aid is used for the benefit of students.”

ATI has changed hands a couple of times in recent years, with the current owner being Texas-based Ancora Holdings.

But according to interim CEO Michael Gries, “all of these allegations” engulfing ATI occurred under the leadership of former ATI Chief Executive and Chairman Arthur E. Benjamin, a resident of Delray Beach.

Benjamin, who now runs Salt Lake City-based Stone Mountain Investments, did not return a phone message left with his office.

Benjamin worked at ATI from 2005 to 2011. While there, he contributed tens of thousands of dollars to a bipartisan array of congressional candidates, according to federal election records.

Florida recipients of Benjamin’s largess include: Rep. Debbie Wasserman Schultz, D-Weston; Rep. Alcee Hastings, D-Miramar; ex-Reps. E. Clay Shaw, R-Fort Lauderdale and Ron Klein, D-Boca Raton; and Charlie Crist, the ex-Republican and ex-governor and presumed frontrunner for the Democratic nomination to challenge Republican Gov. Rick Scott.

The Florida whistleblower lawsuit alleged that within a month of Ramirez-Damon’s hiring in October 2009, it became apparent to her that ATI was engaged in active Pell Grant fraud. She said she notified her superiors, but that company management chose “to look the other way.”

Ramirez-Damon claimed she was abruptly demoted in April 2011 and transferred off the Fort Lauderdale campus at 2890 NW 62nd St. to a job as an instructor in Doral. The reason: “to keep her silent” and deny her access to school records, the lawsuit said.

She is no longer employed by ATI.

Pell Grants provide government aid to students from low-income families. At ATI, students could take courses to train them for jobs in automotive, healthcare, business, information technology and other fields.

According to the suit, ATI falsified documents to enroll “as many students as possible” in programs with tuitions ranging from $13,741 to $46,744 per program. One former ATI employee is quoted as saying “the ATI culture…was to recruit anyone with a pulse.”

The numbers could add up quickly.

“With a student mass of over 750 [in Fort Lauderdale] alone, and 18,000 countrywide, federal subsidy of tuition is a very lucrative scam for ATI,” the suit said.

To find students, the suit said, ATI admission representatives targeted “the ‘down and out’ at homeless shelters, strip clubs and poor neighborhoods.” The “bait” to entice them to sign up was the promise of financial aid and low-interest loans. ATI distributed flyers promising lucrative salaries and guarantees of job placement.

ATI would also “re-circulate” poorly achieving students who faced dismissal, letting them know that they could transfer into another career training program. “This way the old grades no longer count and the student is again eligible to receive financial aid,” the Florida suit said.

Some students who failed would fail again because they did not have the academic ability or background to take the courses they were in, according to the lawsuit.

“As a result, the students incurred more debt without graduating. ATI, on the other hand, has made more money,” the suit said.

The Justice Department’s news release noted that $2 million of ATI’s settlement payout would be used to refund student loans involving separate litigation filed in Texas “and other related arbitrations.” Ramirez-Damon, the Florida whistleblower, is entitled to a cut of the rest.

The Justice Department release did not say how much taxpayers lost on government loans to ATI students.

Miami Herald staff writer Casey Frank contributed to this report.

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