For-profit colleges flex political muscle


For more than a decade, “accountability” has been the education buzzword in Florida.

Schools are assigned A-to-F letter grades, teachers are evaluated using a complicated mathematical formula and third-graders can be held back if they don’t pass a standardized reading test.

The rules are different at for-profit colleges. The Herald found that, despite fraud lawsuits and government investigations around the country, Florida’s Legislature continues to encourage the growth of the industry, which says it provides opportunities to disadvantaged students. Lawmakers have increased funding sources and reduced quality standards and oversight. The attorney general in Florida, meanwhile, has been less aggressive than those in some other states in pursuing schools when they skirt laws involving the hundreds of millions they receive in state and federal money.

In Homestead, a school owner gained enormous influence with the local government, working through the mayor, whose wife was secretly hired by the college owner as a $5,000-a-month consultant. Miami-Dade prosecutors looked into the connection but decided it was no crime.

“In other areas of our education system, we promote accountability,” said State Rep. José Javier Rodríguez, a Miami Democrat. “Why wouldn’t we do the same here?”

Rodríguez filed a bill this session that would rescind state grant funding and suspend the licenses of for-profit colleges where loan defaults exceed 40 percent — or 30 percent in back-to-back years. A legislative staff analysis predicted a “very small number” of schools would be at risk.

The bill struggled to gain traction, particularly in the Florida House, where it didn’t get a single hearing.

“The groups with the largest checkbooks tend to set the agenda,” Rodríguez said. “I don’t know if that’s what’s going on here, but I wouldn’t be surprised if it were.”

A Herald examination of campaign records since 2008 found that for-profit colleges have contributed more than $1.2 million to state lawmakers and political parties. The Legislature, in turn, passed 15 laws benefiting the industry.

Among the recent Florida laws helping the colleges:

▪ In 2009, State Sen. Denise Grimsley, a registered nurse who got her associate’s degree from a community college in Polk County, shepherded legislation that ended the Florida Board of Nursing’s authority to set quality standards for new nursing programs. That change made it easier to open nursing schools, and Florida’s total more than doubled, to 366.

Most of the new programs are at for-profit schools, and the number of poor-performing schools exploded. Currently, there are 39 nursing programs on state probation because of students’ poor performance on the state license test — 36 at for-profit schools. The other three are a nonprofit school that originally opened as a for-profit, a community college in Jacksonville and a Tampa-area high school that teaches college-level nursing courses.

Back in 2009, there were seven nursing programs on probation.

▪ Thanks to a series of bills passed in 2009, 2010 and 2014, Florida for-profit schools are now eligible for the National Guard’s “Dollars for Duty” program, Florida’s Prepaid College program, and, in some cases, Florida Vocational Rehabilitation — a program that helps people with physical or mental disabilities get a job.

▪ In 2013, State Rep. Carlos Trujillo, R-Miami, engineered an amendment to an unrelated healthcare bill allowing schools to offer unaccredited physical therapy assistant programs and have their graduates be eligible to take the Florida licensing exam.

In other states, students must attend a school recognized by the Commission on Accreditation in Physical Therapy Education in order to take the test. CAPTE is known for imposing strict standards on the schools it recognizes.

Trujillo’s measure benefited one institution in particular: Dade Medical College, which proceeded to heavily promote its training for physical therapy assistants, a curriculum that costs $40,050. Trujillo, personally, and his law firm have done legal work for college owner Ernesto Perez.

In an email, Perez denied that his program is “unaccredited,” citing three accreditors that have approved his school. None of them specializes in physical therapy.

As state lawmakers have turned the for-profit colleges’ wish lists into legislation, they also have passed at least three bills that hindered community colleges, which directly compete for many of the same students.

These restrictions included a moratorium on the traditional two-year schools adding more bachelor’s degree programs — even as Gov. Rick Scott has touted the affordability of those programs, which cost as little as $10,000.

Florida community colleges have historically gotten below-average funding when compared to colleges in other Southern states. Florida’s per-student funding in 2012-13 was $2,930. Georgia spent $3,187, Alabama spent $3,988, and North Carolina spent $5,339.

Miami Dade College President Eduardo Padrón has tried for several years to get a half-cent sales tax increase to benefit the college on the local ballot, but he has been repeatedly thwarted by the Legislature. Opponents of the ballot measure said he has plenty of money.

The for-profit colleges have made their voice heard in Washington as well, while passing out nearly $400,000 in campaign contributions to Florida-based candidates, according to a Herald examination of campaign records.

The goal has been to block Obama administration efforts to advance a “gainful employment” rule, aimed directly at for-profit colleges. Under that rule, schools are punished if their graduates have to spend more than 8 percent of their post-graduation earnings on loan repayments. The schools can lose access to federal loans, the industry’s lifeblood.

The administration estimates that 1,400 programs nationwide currently are not meeting that standard — and that 99 percent of them are at for-profit colleges.

In May, seven Florida members of Congress signed a letter to U.S. Education Secretary Arne Duncan urging him not to go through with the gainful employment rule. Those who signed were Republican U.S. Sen. Marco Rubio, Democratic U.S. Reps. Alcee Hastings, Ted Deutch, Lois Frankel, Alan Grayson, Patrick Murphy, and then-Democratic Rep. Joe Garcia, who lost his November reelection bid. No other state had so many lawmakers sign the letter.

Bloomberg recently reported that Rubio also wrote a separate letter last summer on behalf of scandal-plagued Corinthian Colleges, a large for-profit chain that has ceased operations amid fraud allegations. When the U.S. Department of Education last summer slowed down the flow of money to Corinthian because of suspected fraud, Rubio wrote a letter asking the department to “demonstrate leniency” with the company because it was cooperating with the government’s information requests.

A Rubio spokeswoman told Bloomberg that the senator was trying to protect “the thousands of students” at Corinthian’s Florida campuses from having their education disrupted.

Help from their friends

Florida’s for-profit colleges are represented in Tallahassee by the Florida Association of Postsecondary Schools and Colleges, or FAPSC. The FAPSC schools are mostly for-profit, but also include some nonprofit “career colleges” that have a similar sales-driven business model.

Since 2008, FAPSC has given more than $530,000 to Florida politicians and state political parties — most of which went to the Republican Party of Florida or directly to GOP lawmakers.

The contributions helped FAPSC cement relationships with legislators on the rise.

The lobbying group gives a “friend of FAPSC” award to politicians who support its agenda. Those who received one in 2009 included Rep. Will Weatherford, who served as House speaker from 2012 to 2014, and Mike Haridopolos, who became Senate president in 2011-12.

By 2013, FAPSC was boasting to its members that the Legislature’s “transparency and accountability” push in higher education was limited to public institutions.

“The hard work of past years has paid off,” FAPSC wrote in a March 2013 email newsletter. “So far, there have not been any pieces of legislation or any amendments that have targeted our industry. ... There is significant attention to transparency and accountability of higher education, but the focus has been on making the taxpayer supported schools more open and efficient.”

A former executive director of FAPSC, Kathy Mizereck, is now staff director for the Education Committee of the Florida House. Mizereck signs off on the staff analysis of bills affecting the same schools that she lobbied for 2 1/2 years ago.

Reached by phone, Mizereck declined to comment.

A day later, House Speaker Steve Crisafulli released a statement saying, “Kathy’s previous employment is not a conflict of interest. It is valuable experience and knowledge that helps her assist the House in crafting good public policy regarding higher education.”

Career colleges and their operators give generously on their own to Florida politicians.

Some of the biggest donors include Keiser University, which through associated businesses and individuals gave at least $260,078 over the three most recent election cycles; Full Sail University, whose executives donated at least $173,222; and Dade Medical College, which gave at least $172,635 through various related entities.

Dade Medical, as do many schools, contributes to both parties. In 2012, it gave $16,500 to Democrat Joe Garcia and $17,500 to Republican David Rivera, bitter rivals for the same U.S. House seat.

Some schools have politicians on staff or retainer. Jim Waldman, a Coconut Creek Democrat and former lawmaker, was general counsel for Keiser before he was elected — and stayed on Keiser’s payroll while serving as a state representative. Waldman was criticized for sending a letter to Florida community colleges, on state representative letterhead, asking for information that was mostly relevant to Keiser’s interests.

In 2010, the Sun Sentinel reported that Waldman and Keiser Chancellor Arthur Keiser had called Florida’s vice chancellor of community colleges, Judith Bilsky, to demand that she intervene to stop a Jacksonville college from lobbying for the Obama administration’s gainful employment rule. Bilsky told the Sun Sentinel that he “made sure I understood he was Rep. Waldman.” Bilsky refused to back off.

In addition to his ties with Rep. Trujillo, Dade Medical College owner Perez tapped a former Coral Gables mayor to work at the Gables campus of the Dade Medical-affiliated University of Southernmost Florida. Perez chose a sitting state senator from Hialeah as his vice president of external affairs. The hires the schools make and the money they spend on municipal elections can give schools leverage in dealing with local impediments like zoning and other hurdles.

Senator on the payroll

Hialeah Sen. Rene Garcia was working late on the night of April 18, 2012 — and he was a good 30 miles outside of his district.

Garcia was at a Homestead City Council meeting, speaking about an issue that Dade Medical, his for-profit employer, cared very much about: building a bypass that would get trucks off downtown Homestead’s Krome Avenue.

Dade Medical College had big development plans for Homestead, and the bypass was something the college — located on Krome — wanted badly. When Garcia stepped to the microphone, representatives from the Florida Department of Transportation were present to hear the pitch. FDOT had expressed reservations.

“Maybe you may ask what is a senator from Northwest Dade County doing here?” Garcia said. “But I sit on the [Senate] transportation committee.”

Garcia never mentioned he was getting paid nearly $115,000 as vice president of external affairs for Dade Medical College.

The road project was such a priority for the college that Perez would later charter a private plane and fly Homestead Mayor Steve Bateman and then-state lawmaker Eddy Gonzalez, R-Hialeah, to Tallahassee for a private session with Gov. Rick Scott.

Garcia didn’t register as a lobbyist for the Homestead meeting because, he says, he wasn’t lobbying for Dade Medical but was doing his job as a lawmaker who cares about Homestead. The fact that his employer was situated on Krome Avenue wasn’t the point, he said.

It was not the only time he intervened in Homestead on behalf of his employer. During a state attorney investigation that was closed last year with no criminal charges, City Manager George Gretsas gave a sworn statement in which he described how Garcia and other college officials had joined him at a July 13, 2011, dinner at Christy’s, an upscale Coral Gables steakhouse. Perez was pushing the city to sell land at a steep discount to Florida Education Center, a company he runs, so the college could expand.

Gretsas, in a sworn statement, referred to the meeting as a “lobbying effort for the most part.”

Garcia, whose job at Dade Medical is to line up clinical training sites at local hospitals, told the Herald that he could “vaguely remember” the dinner and that he wasn’t acting as a lobbyist for Perez’s interests that time, either.

“To say that I was there lobbying, I just can’t believe that that’s what happened there ... I know that I would never do that,” he said.

Rep. Trujillo also advocated for issues that benefited Dade Medical College without disclosing a connection.

The Herald learned that Trujillo, who opened the door to unaccredited assistant physical therapy programs at Dade Medical College, had a sister-in-law receiving free tuition at the college, a benefit potentially worth tens of thousands of dollars. When a reporter contacted Trujillo in 2013 to ask about the arrangement, he initially said that he was unaware of any such thing.

The next day, Trujillo sought a legal opinion from the Florida House of Representatives’ general counsel, Daniel Nordby. Afterward, he emailed the reporter.

“I take my ethical obligations very seriously and want to ensure that I am always compliant with our conflict and reporting laws,” he wrote. “Mr. Nordby confirmed to me that which I knew, namely that neither my sister-in-law’s attendance at Dade Medical College, nor her financial aid package, create any voting conflicts for me as she is [not] an immediate family member as defined by the relevant Florida Statutes.”

He added: “I have no knowledge about her financial-aid status. Therefore, there is no voting conflict nor improper gift in this instance.”

The first students from Dade Medical’s physical therapy assistant program are beginning to graduate.

Their job prospects may not be bright, as federal healthcare regulations say Medicare can’t be billed for the work they perform.

Last year, Florida International University physical therapy instructor Thomas Eberle told the state Board of Physical Therapy at a public meeting that he had spoken with directors at six of South Florida’s largest hospital chains, including Baptist, Memorial, Jackson and Tenet. Eberle said that he also had spoken to two large private clinic operators, who together operate hundreds of physical therapy clinics.

“One-hundred percent of these entities will not hire these graduates,” said Eberle, who was speaking for himself, not for FIU.

Memorial, Jackson and Broward Health confirmed to the Herald that they would not be hiring non-CAPTE graduates. Holy Cross Hospital said it was unlikely it would hire them.

In Homestead, where Dade Medical planned its major campus expansion, then-mayor Bateman was one of the college’s biggest allies. Florida Education Center, Perez’s company, wanted to buy two square blocks of city-owned land — at 60 percent below the appraised value. Three city staffers gave sworn statements to prosecutors that they were pressured by the mayor to move the deal forward without delay.

What Bateman never disclosed: Dade Medical funneled just under $100,000 to the mayor’s real estate agent wife, Donna, including $60,000 for work as a consultant. She had no formal contract.

During questioning from investigators, Perez struggled to provide examples of what work the mayor’s wife performed. In the room representing Perez during questioning: an attorney from Rep. Trujillo’s law firm.

The Homestead City Commission, acting in its role as the local community redevelopment agency, voted to sell the land to Perez. Bateman didn’t participate in the vote, walking off the dais without comment when the discussion occurred.

At that point, Donna Bateman had been paid a $36,187 real estate commission as Dade Medical’s sales agent for another Homestead property, records show. Six months after the city vote, Dade Medical began paying the mayor’s wife $5,000 a month for her role as a “consultant.”

But the college’s Homestead expansion fell apart after Dade Medical took too long to submit plans. The city’s approval expired.

In 2014, Bateman was sentenced to 22 months in state prison for corruption charges unrelated to Dade Medical.

Gainful employment fight

The Obama administration first introduced the idea of “gainful employment” — regulations that would, in theory, disqualify for-profit schools from getting federal student aid if graduates are spending too much of their income paying back student loans — in 2010.

Congress wasn’t pleased.

In February 2011, a bipartisan majority of the U.S. House joined the for-profit colleges in blasting the proposed rule as federal overreach that would unfairly limit students’ educational options. In a vote that was symbolic but sent a message, 58 Democrats joined all but four Republicans in demanding that President Barack Obama back down.

One of those 58 Democrats was Rep. Debbie Wasserman Schultz of Weston, who received $21,750 from the industry during the most recent three election cycles. That included $5,000 from Dade Medical College and smaller amounts from two now-defunct schools accused of widespread fraud, FastTrain and ATI Career Training Center. Asked about her vote, Wasserman Schultz told the Herald that she could support some regulation of the industry, but that she was worried the administration’s rules would harm some well-performing for-profit schools.

She said the donations “have absolutely nothing to do with the policy decisions that I make.”

Hastings, a Miramar Democrat, received at least $81,250 from for-profit schools, and had particularly close ties to FastTrain, the school whose CEO, Alejandro Amor, was later indicted.

He got $6,500 from Amor and delivered the commencement speech at a FastTrain graduation ceremony. The college established a Leadership Scholarship in Hastings’ name.

Hastings did not return several calls seeking comment.

Obama pushed forward with his gainful employment rule, and the final rule — after years of court battles and lobbying efforts — is set to take effect in July.

It has been significantly modified. Under the revamped rule, it will take multiple years of violations by a school before there is a penalty, and students who didn’t graduate but incurred big debts are not factored into the federal calculation.

Pam Bondi’s record

It was mid-November, and Florida Attorney General Pam Bondi was being questioned by Tallahassee reporters about media reports that, during her first term, she had accepted more than $51,000 in free meals, hotels, and airfare — much of it paid for by the Republican Attorneys General Association.

RAGA accepts millions of dollars from business interests, meaning Bondi’s perks were indirectly paid for by contributors that included tobacco companies, payday loan stores — and for-profit colleges. RAGA also gave at least $650,000 to Bondi’s reelection campaign, according to the New York Times.

“I’m proud of what we’ve done to protect consumers,” she said during the encounter with reporters. “No access to me, nor my staff, will ever affect what we do to protect consumers of the state of Florida.”

Corporate lobbyists attend the RAGA functions they’ve helped bankroll, and in some cases use the opportunity to try to persuade AGs not to sue or investigate their clients. Attorneys general are the top law-enforcement official in their respective states.

One lobbying firm, Dickstein Shapiro, was a regular at the events, and boasted about its level of access, the Times reported.

“We are in constant communication with AGs and their staffs,” Dickstein Shapiro wrote to one prospective client, according to the report. “We attend all AG meetings.”

The Times uncovered numerous documents linking Bondi to Dickstein, including nearly a dozen dinner invitations to Bondi or her staff, and a fundraiser for Bondi co-hosted by Dickstein attorneys and held at Donald Trump’s Mar-A-Lago Club in Palm Beach. Among the documents: a September 2013 email sent to Bondi’s then-deputy, Carlos Muñiz, to schedule a meeting regarding a Dickstein client, the for-profit college company Bridgepoint Education.

“Maybe you have the head of Consumer Protection and an education policy person join the meeting?” wrote Dickstein senior advisor Chris Tampio, according to the Times. “And maybe have AG Bondi ‘stop by.’”

Bondi’s office said the attorney general didn’t attend, that only her staff did.

Attorneys general in several states have undertaken investigations into Bridgepoint, which operates Ashford University. The Iowa attorney general accused the company of using “unconscionable sales practices” to deceive students into enrolling — such as falsely telling consumers that an online Ashford education degree would directly lead to a career as a teacher.

Last May, Bridgepoint agreed to pay the Iowa attorney general $7.25 million to settle that state’s investigation. Of that payout, $7 million would go to reimbursing former and current Iowa students. Bridgepoint also agreed to disclose in writing to anyone enrolling in Ashford’s College of Education programs that “an online degree from Ashford University does not lead to immediate licensure in any state,” and that the program is not accredited by any of the three major teacher-accreditation bodies.

Bondi declined to join other states in fighting Bridgepoint. Her office told the Herald that Bondi never considered an investigation because only a handful of complaints had been received from students in Florida.

Although her office has undertaken a dozen investigations against for-profit colleges — half of them initiated by her predecessor, Bill McCollum — the highest payout that Bondi has secured on behalf of students was $83,000 from JLF University, a small South Florida nursing school.

A Herald review of the Florida investigations shows that some have lasted for several years with no resolution.

The ones that were resolved ended up with a voluntary settlement where the school pays Bondi’s attorney fees, promises to operate with consumer-friendly practices going forward, admits to no wrongdoing and pledges to retrain some former students for free.

In June 2014, Bondi’s office announced it had reached a settlement with Kaplan University, the online giant partially headquartered in Fort Lauderdale. The settlement obliged Kaplan — which has received nearly $5 million in state, Broward County and city tax incentives — to be transparent and honest with prospective students in the future about its tuition costs, job placement rates and accreditation. The school paid $200,000 toward Bondi’s attorney fees, but admitted to no wrongdoing.

Kaplan offered free retraining, but there were conditions that excluded many.

To be eligible, students had to have attended during a 34-month period between 2008 and 2010, and they could not have left the school because of “disciplinary violation(s), failure or inability to attend class due to budgetary issues, health or family issues, childcare issues, transportation issues, relocation, schedule conflicts, imprisonment, pregnancy, military service, academic failure [including failure to meet satisfactory academic progress standards] or eligibility for unemployment benefits or receipt of other government support.”

As of early this year, 10 students had expressed interest in the classes, the attorney general’s office said.

More students — about 1,500 out of the 45,000 who were eligible — expressed interest in retraining under a settlement with Keiser University, signed in 2012, Bondi’s office said. But there are questions about the way students were notified.

Five former Keiser students separately emailed the attorney general claiming the retraining notices from Keiser arrived in plain, unmarked envelopes that could be mistaken for junk mail.

“I threw it away,” said former student Jackie Forester, who added that she later found out about the retraining from her boyfriend.

Keiser stood to benefit if the student response rate was low. Under terms of the settlement, if more than 25 percent of eligible students had opted for the retraining, Keiser would have to donate $375,000 to state scholarship programs, in addition to the $175,000 it reimbursed Bondi’s office for attorney fees.

The student responses never hit that level.

In a meeting with the Herald, Keiser officials said they had used a professional mailing service to notify students, and were unaware of any concerns. They could not produce a copy of the envelope.

Keiser was represented in settlement negotiations by Peter Antonacci, a prominent attorney who recently served a brief stint as Gov. Rick Scott’s general counsel and was deputy attorney general under one of Bondi’s predecessors. He said Bondi’s office approved the notification process.

“I’m real proud of the letter,” Antonacci said. “If people don’t choose to open them, then I don’t know how that reflects on either the attorney general, counsel involved, or certainly not Keiser.”

Bondi declined a Herald interview request. Her special counsel for the Consumer Protection Division, Mark Hamilton, said the attorney general has been “very aggressive” in dealing with for-profit colleges.

During Bondi’s 2014 campaign, Keiser University Chancellor Arthur Keiser contributed $2,500 through other business entities. Full Sail University executives contributed $24,000, and Donald Trump’s foundation contributed $25,000. Trump University, the tycoon’s online, for-profit college, is being sued by New York Attorney General Eric Schneiderman, who alleges it is a sham that defrauds consumers. In April, a judge refused to dismiss the suit.

Matthew Boulay, who served in Iraq with the Marines, said he finds the money flowing to Bondi troubling. Boulay, executive director of the Veterans’ Student Loan Relief Fund, called it “dirty money.”

Boulay’s organization distributes small grants to help veterans pay off their loans, but it’s not a typical scholarship. It awards grants of up to $5,000 to veterans “who believe for-profit education companies have deceived them.” The fund has handed out about 30 of them.

“It’s a sad fact that we have to exist,” Boulay said.

The Bush administration

The federal government has the leverage and the power to clamp down on for-profit college abuses but in practice that happens sparingly.

Under the George W. Bush administration, some restrictions on how recruiters could be paid were loosened, creating more of an incentive to sign up as many students as possible.

These changes were ushered in by Bush’s assistant secretary of education, Sally Stroup, who previously worked as a lobbyist for the for-profit University of Phoenix.

In 2006, Congress inserted a few paragraphs in a budget bill that allowed for fully online schools for the first time.

Under President Obama, the U.S. Department of Education tightened some rules. College recruiter salaries could no longer be tied to the numbers of students they enrolled. But the department has still been criticized by consumer advocates for not doing enough.

Among those critics: Robert Shireman, who was the department’s deputy undersecretary of education in 2009-2010.

Shireman said he arrived with a plan to rein in predatory practices in the for-profit college sector.

Shireman worked to strengthen a rule that allowed federal regulators to terminate or suspend federal financial aid to a school found engaging in “substantial misrepresentation” — lying about the cost of its program or the employability of its graduates, for example.

In an interview, Shireman complained that the federal agency lacks a sheriff-type mentality in its oversight of schools. He said that there is “absolutely congressional pressure” to go easy on for-profit colleges.

The department might ask for a congressman’s support on a K-12 education issue, Shireman said, only to be turned down because the member is unhappy about how a particular for-profit college is being treated, Or, he said, a regulator might flag an action by a for-profit college as suspicious, and “next thing you know, there’s a phone call to the congressional office.”

The industry labeled Shireman an anti-business bureaucrat who was biased against their schools.

When news broke in 2010 that he was stepping down, for-profit college stocks shot up. Corinthian, the owner of Everest University, saw its share price rise more than 12 percent — in a single hour.

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