Dade Medical College has filed a court petition to sell its assets — setting in motion a process that could lead to paying some of the money owed to creditors and ex-employees.
It’s the equivalent of a bankruptcy filing, but in state court.
Students who attended the school may qualify for some money as well, though students who file a claim will likely end up in the back of the line, getting paid only after secured creditors, government agencies and ex-employees who are owed back wages.
Roughly 2,000 students were displaced by Dade Medical’s sudden closure on Oct. 30 — many left with tens of thousands of dollars in debt and credits that won’t transfer to traditional colleges.
Additionally, there are students who graduated or dropped out before the closure and say the college deceived them about the accreditation of its programs, or failed to deliver the quality of education that it promised.
A recent Miami Herald investigation, Higher-Ed Hustle, highlighted how Florida lawmakers have strongly encouraged the growth of for-profit colleges. The Legislature has weakened academic standards, allowed for-profits to access additional state money and stifled the growth of competing public community colleges, which charge much lower tuition.
Dade Medical had six Florida campuses, stretching from Homestead to Jacksonville, and also operated a smaller affiliate school, the University of Southernmost Florida. The college thrived in large part because of its political connections — putting state lawmakers on the company payroll and steering “consultant” work to other politicians or their relatives.
Carlos Sardi, a Coral Gables bankruptcy attorney representing some ex-Dade Medical employees, said students will be receiving a “notice of assignment” form in the mail, telling them that Dade Medical’s assets have now been assigned to Philip von Kahle, an executive vice president at Michael Moecker & Associates, a Hollywood firm that specializes in liquidating assets.
“They need to keep their eyes out for notices that they may be getting in the mail,” Sardi said. “They were certainly promised an education and they didn’t get that education, so you have a claim here.”
Students who don’t receive the one-page form can call von Kahle’s office to request one, Sardi said. Students may also want to contact their local legal aid office, he said.
Dade Medical College owner Ernesto Perez signed over the assets of his colleges on Nov. 12 in a bankruptcy-like process known as “assignment for the benefit of creditors.”
The documents submitted to the court list U.S. Century Bank as a secured creditor owed $4,784,293. Secured creditors get paid first once all the college’s assets are sold.
Other secured creditors are Homestead-based The Magic Circle Inc. (owed an estimated $672,369) and Historic Homestead Management Corp. (owed an estimated $1,486,892).
The college also owes $2,573,315 in “unsecured claims” — debts where there was no collateral put up.
Carlos Sardi, a bankruptcy attorney, said it is not unusual for a failed company to have empty bank accounts, but “it certainly raises an eyebrow as to what happened to the money.”
Dade Medical lists two bank accounts — one at U.S. Century Bank, another at Wells Fargo — but states both have a zero balance. Over the past three years, the college received more than $100 million in taxpayer-funded Pell grants and federal student loans
Sardi said it is not unusual for a failed company to have empty bank accounts, but “it certainly raises an eyebrow as to what happened to the money.”
For assets, Dade Medical lists several downtown Homestead properties with unknown values — part of an ambitious Homestead expansion that Dade Medical once planned. Dade Medical would have been the anchor of downtown Homestead, but city leaders ultimately backed out of the deal in late 2013.
Dade Medical also lists $347,358 worth of furniture, $385,620 in computers and equipment, and $807,175 in medical equipment.
In January, Perez is expected to begin serving two months of house arrest, after pleading guilty to illegally bundling more than $159,000 in campaign contributions to politicians. Bundled contributions are often given in the name of someone else and then reimbursed, in order to obscure the source and exceed legal caps. Perez’s arrest affidavit stated that, over the past several years, “over $750,000 in political contributions can be attributed to Perez through a mix of lawful and unlawful contributions.”