On the surface at least, Ernesto Perez seemed to be a most remarkable South Florida success story.
Perez grew up in Little Havana from a Cuban-American family of modest means. He dropped out of Coral Gables Senior High in the 10th grade, eager to chase a career as a heavy metal musician.
Though he never achieved rock ’n’ roll fame, Perez struck gold as an educational entrepreneur. He founded Dade Medical College in 1999, and in the lucrative world of for-profit colleges, Perez’s own lack of education wasn’t an obstacle. The college grew quickly to include multiple campuses, and the now-wealthy Perez became politically active and influential.
But Perez, 45, resigned as president/CEO last Tuesday, hoping to distance the school from a slew of recent problems. He faces criminal charges, lingering ethical questions about his political activities, and a backlash from angry students who describe his school as a rip-off. He remains the company’s majority owner.
Among the issues dogging Perez and his college:
• In August, Homestead Mayor Steve Bateman was arrested on corruption charges. The charges did not involve Perez, but the arrest highlighted Perez’s unusually close ties to Bateman. Perez hired the mayor’s wife as his real estate broker, and he did so at the same time that he was trying to push through a controversial land deal with the city. The transaction, which is still pending, would sell a cluster of downtown Homestead properties to Dade Medical at a huge discount — Perez would pay less than 40 cents on the dollar. The Miami-Dade state attorney’s office is scrutinizing Perez’s ties to the now-former mayor.
• On Oct. 1, a group of students had their lawyer send a letter to the college — blasting the school as an “improper scheme” that overcharges students while delivering a lousy education. The letter implied that a lawsuit might be filed.
• A week ago, Perez turned himself in to face criminal charges stemming from his repeated failure to disclose his prior arrests. Authorities say Perez twice lied and said he had no criminal record when filling out paperwork to be appointed to Florida’s Commission on Independent Education — an oversight body that monitors for-profit schools. Prosecutors say Perez did the same thing (checking the “no” box under criminal history) when he applied to have his second arrest — a 2002 aggravated battery charge — expunged. Perez should have disclosed to the court that he’d been convicted previously for a sex crime involving a minor. He now faces two counts of perjury, a misdemeanor, and one count of providing false information through a sworn statement, which is a third-degree felony.
In previous interviews, Perez has said he took a “nontraditional path” to achieve the title of corporate CEO.
Instead of attending college, Perez spent his early 20s touring the country with his rock band, the Young Turks. After a 1990 performance in a bar near Neenah, Wis., the band members and some fans headed back together to a local motel. One fan was a 15-year-old girl, identified in court records as Jennifer V., who later said she was sexually assaulted by Perez and at least two other band members.
Perez was accused of exposing himself to the teen, and asking her to perform oral sex. When she refused, court records say Perez lashed her buttocks with his belt — repeatedly.
He was sentenced to six months in jail, a punishment he appealed. In denying the appeal, a Wisconsin panel of judges cited Perez’s decision to strike the girl with a belt, which the court found to be a “debasing and degrading invasion of Jennifer’s person.”
Perez ran afoul of the law again in 2002 — about two and a half years after he started Dade Medical College.
Perez was performing with a band on the Hard Rock Cafe stage in Miami’s Bayside Marketplace. When a man in the crowd got up close for a better view, Perez apparently felt smothered, according to a police report from that day.
“What the f---?” Perez allegedly barked at Richard Halpern of North Miami, while getting in his face. “Do you want to finish singing this song for me or what?”
Halpern told police he responded “no,” but Perez, after resuming his performance, continued to mock him from on stage. Halpern said he called Perez a “maggot” and headed for the door.
“He ran swinging his guitar and smashed me in the head from behind,” Halpern said in his written statement to police. “I grabbed my head in pain and saw the blood.”
Halpern said Perez smacked him with the guitar again, and from there, a melee ensued. Halpern told police he was “bum rushed” by other band members and even some in the crowd. He was suddenly at the bottom of a human pile, absorbing punches and kicks. When he finally broke free, Halpern said he “was being choked from behind” by the band’s conga player.
Perez avoided jail through a pre-trial diversion program, and he later got the arrest expunged. But because he lied about his past on the expungement forms — leaving out the prior Wisconsin incident — that expungement is now invalidated. As a result, the details of the Miami arrest were made public.
Man of influence
The political links to Dade Medical are widespread. Close to a dozen local elected officials have either taken jobs at the college or benefited from Perez in some other way. Many more have accepted campaign contributions.
At the height of his influence, Perez was important enough to command a sit-down meeting with Gov. Rick Scott. In December, Perez chartered a private jet to fly to Tallahassee for a talk with the governor. Joining Perez on the flight were state Rep. Eduardo “Eddy” Gonzalez, R-Hialeah, and then-Homestead Mayor Bateman.
Florida ethics laws prohibit politicians from accepting gifts valued at more than $100 from lobbyists. A limousine ferried the group once they landed.
Both Gonzalez and Bateman did not return calls seeking comment.
Jonathan Janeiro, Dade Medical’s general counsel and new co-CEO, was also on that plane. Janeiro, who is a former aide to state Rep Erik Fresen, R-Miami, said questions about possible ethics violations would be “inappropriate” to comment about.
“I got on a plane and I flew to Tallahassee,” he said.
Most of Dade Medical’s growth has been fueled by taxpayers. According to the U.S. Department of Education, roughly 87 percent of the company’s revenues come from taxpayer-funded federal financial aid such as Pell grants and student loans. For the 2011-12 academic year, Dade Medical received nearly $33 million in federal dollars.
In addition to employing politicians, Perez has been a big political donor. He has contributed at least $170,000 to various local, state, and national races — including writing checks to multiple candidates in the same race, according to campaign finance records.
At local city halls and in the power corridors of Tallahassee, Perez received the star treatment. Fresen, the Miami lawmaker, personally introduced him to Homestead city officials — even though Fresen’s district doesn’t include Homestead. The town of Miami Lakes granted a zoning approval for a new campus, and a month later Perez hired then-Miami Lakes Councilman Nelson Hernandez as a “financial analyst.”
On Nov. 13, 2012, Miami-Dade County leaders issued a proclamation declaring it “Dade Medical College Day.”
A month later, County Commissioner Esteban “Steve” Bovo received word back from the county’s ethics commission that it was OK for him to take an $18,000 contract with Dade Medical to assist them with state and federal “legislative strategies” for six months. Bovo had asked for and received the blessing of the county’s ethics attorneys with the stipulation that he not act as a lobbyist himself and avoid Miami-Dade County issues.
In light of Perez’s recent arrest, the fate of pending projects in Coral Gables and Homestead are now uncertain. Perez had pitched the expansion of his Homestead campus as the revitalization engine that would finally breathe life into the city’s forlorn downtown. But the city would have to sell land to Dade Medical at a deep discount.
Former Homestead Councilman Steve Losner said it’s time to reject that sales pitch, lest his city become forever identified with a “shady for-profit college.”
“Maybe Homestead needs to see the writing on the wall,” Losner said. “This may be a house of cards that’s about to fall in.”
Perez ran into unexpected resistance to his plans in Coral Gables. He had bought a Jacksonville school, Southern Career College, and renamed it the University of Southernmost Florida. Perez wanted to establish a campus in Coral Gables, but the city staff rejected the plan because he lacked the required number of parking spaces. Frustrated, he lashed out at a City Commission meeting last month.
“Now some of you know me personally,” Perez began. “I’m involved in the process in and around the great state of Florida. Some of you up here I‘ve supported. Some of you up here I’ve supported and now I find myself, I wonder why I supported you and stood up for you at the time.”
In Perez’s current criminal case, the former CEO considered hiring the law firm of state Rep. Carlos Trujillo, R-Miami. Though Perez ultimately decided against it, Trujillo has represented Dade Medical in previous non-criminal cases.
At the same time, Trujillo championed legislation favorable to Dade Medical. The state representative denies any conflict of interest — arguing that other colleges will benefit as well.
Earlier this year, Trujillo engineered a new state law that gutted the regulatory oversight of physical therapy assistant programs. Dade Medical offers a $35,050 physical therapy assistant associate degree.
Under the law change, which Trujillo achieved by tacking on a last-minute amendment to an unrelated bill, for-profit colleges such as Dade Medical will no longer have to get their programs accredited by the Commission on Accreditation in Physical Therapy Education, or CAPTE. For decades, CAPTE has been the gold standard of quality in the industry. Until Florida changed the rules, CAPTE was the only accreditor in this field, and it is recognized in all 50 states.
But CAPTE has a go-slow philosophy when it comes to approving programs, so under the old rules Dade Medical would have to start off with one campus, and then wait months (or even years) to add a second location.
Thanks to Trujillo’s law, Dade Medical doesn’t have to wait at all. The school now offers physical therapy assistant programs at five different campuses.
But while Dade Medical could profit handsomely under less regulation, others worry that students will be on the losing end. It’s unclear if those who graduate from a non-CAPTE program will be able to sit for their licensing exam. And even if they do, their degrees won’t meet federal requirements. That means graduates won’t be able to bill for Medicare services, which may seriously impair their ability to land a job.
Tad Fisher, the head of the Florida Physical Therapy Association, said students could end up spending tens of thousands on a degree that “may not be worth anything.”
Fisher was also troubled by the 11th-hour passage of Trujillo’s bill.
“That doesn’t happen by accident,” Fisher said. “Somebody’s involved. There’s a special interest out there.”
Trujillo insisted his legislation was a good thing, and he blasted accrediting agencies as “almost monopolies” that slow down the pipeline of graduating healthcare professionals.
Asked about graduates not being able to bill Medicare, he responded, “I’m not sure about the federal requirements. That’s something that I would have to look into.”
Beyond his legal and public relations problems, Perez also faces the wrath of his own students.
Some complain that the college’s high-priced degree programs are of questionable quality. They say classes are taught by unqualified faculty; recruiters promise certain training equipment that never gets provided; and that administrators care only about extracting money from students, even if it means tacking on unjustified charges or arbitrarily changing graduation requirements.
Saddled with debt
The vast majority of Dade Medical students must borrow to afford the high tuition, which is dramatically higher than Miami Dade College and Florida International University. About a quarter of students default on their loans after three years. That default rate is considerably higher than the 15 percent national average among all colleges and is higher than the 22 percent default rate among similar for-profit colleges.
Former Dade Medical nursing student Lourd Valcourt said the teachers at the Hollywood campus were poorly trained and ineffective — often they would simply read from a textbook or PowerPoint presentation
“We were like self-taught, basically,” said Valcourt, who graduated from her program but advises others to stay far away from the school.
“The students are being exploited, and saddled with unnecessary debt,” she said.
But Hialeah state Sen. Rene Garcia, who earns nearly $115,000 as Dade Medical’s vice president of external affairs, said the school’s ever-increasing enrollment is proof that students are getting a solid education. The college now serves more than 2,000 students on six campuses stretching from Homestead to Jacksonville.
“You have to have quality to grow,” Garcia said. “You have to.”