Ex-employees describe predatory playbook

Vince Martin is a former admissions recruiter for Everest University, and he has a message for all those students he signed up:

“I’m really sorry.”

Martin worked as a sales rep in a massive Tampa call center that occupied an entire floor of a shuttered JCPenney. His job was to sell prospects on Everest as their ticket to a future of high-paying jobs and financial success.

Martin said he was told the college had a job placement rate of over 90 percent. He became convinced the rate was fiction, and that the company was preying on dropouts yearning for a second chance, single parents desperate for a better life and workers who had been downsized. They didn’t have counselors or financial advisors guiding them.

“I just felt like I was doing evil,” Martin told the Herald. He gave a sworn statement in 2011 to the Florida attorney general’s office.

Four years after Martin quit his job — and 4 1/2 after the Attorney General’s Office began its investigation of Everest — Florida has done nothing to sanction the school or seek compensation for its students. The Florida investigation remains open, as do the Florida schools, but under new ownership.

Other states have taken a more aggressive approach. Massachusetts and California sued Corinthian Colleges, parent of Everest, demanding reimbursement for students. The attorneys general of nine states, from California to Connecticut — but not Florida — wrote to the U.S. Department of Education earlier this month, urging the department to forgive Everest students’ federal loans because of the company’s conduct.

The DOE didn’t do that, but last summer the department did order Corinthian to close or sell its 100-plus campuses, including 11 in Florida.

Corinthian declined to address Martin’s comments.

Martin is one of several employees of for-profit colleges who told the Florida attorney general’s office that they were wracked by guilt, convinced that they had become tools in the deception and exploitation of people struggling during difficult times. Their sworn statements, only now being made public, are either the grumblings of disgruntled ex-employees — as some school officials say — or a cautionary tale for those looking for a place to learn.

“Sir, why did you leave Kaplan?” Assistant Attorney General Rene Harrod asked former recruiter Mark Stegall on Nov. 22, 2010.

“I was disgusted with myself,” Stegall responded. Stegall testified that he had previously worked in other sales jobs, and “there are some things I don’t feel bad about selling.” But at Kaplan, he said, “you just felt like you were putting these people who were already in a bad situation in life in a worse one.”

Told of Stegall’s statement — and sworn testimony from two other former employees — Kaplan did not address their comments directly, but it stressed that the state’s investigation of the company was closed this past June without any finding of wrongdoing. As part of a settlement with Florida Attorney General Pam Bondi, Kaplan agreed to offer free retraining to a limited number of students who fell within certain parameters. As of early this year, 10 students had expressed interest in the free classes, the state says.

“Kaplan is proud of our record serving students, including the more than 250,000 who have earned their college credentials at our schools over the past decade,” the company, based partly in Fort Lauderdale, said in a statement.

Keiser University also was the subject of an attorney general investigation. In a negotiated settlement, it admitted no wrongdoing and offered to let some students retake classes. As of early this year, about 1,500 Keiser students had expressed an interest in that opportunity, the attorney general’s office said.

The Miami Herald examined thousands of pages from a dozen Florida attorney general investigations — and then followed up with interviews. Other employees who were never part of those investigations also were contacted.

Some worked as recruiters, others as instructors, academic administrators or job placement counselors.

Recruiters were trained to sign up prospects “by any means necessary,” testified Sharon Newson, a former Tampa-based recruiter with the University of Phoenix, which remains under investigation four years later.

A dying wish

In her sworn statement from 2011, Newson said an 86-year-old man who was on kidney dialysis wanted to earn a degree. “That was his dying wish,” Newson said. But the man didn’t know how to operate a computer and the University of Phoenix is primarily an online school. Newson refused to sign him up for online classes until he learned computer basics, which delayed his start date by two months.

Newson said her bosses at the nation’s largest for-profit college, with about 242,100 students, questioned why she hadn’t signed up the prospect right away. She said it was standard practice for recruiters to enroll students who didn't really want to attend the school, or for whom the University of Phoenix was a poor fit.

In a written response, Mark Brenner, chief of staff for Apollo Education Group, parent company of the University of Phoenix, said of the previously undisclosed records: “Throughout the course of the attorney general’s lengthy investigation, we have refuted the outdated allegations you have selected for your story.” He added: “Since the 2008-09 time frame when this misconduct is alleged to have occurred, the university has invested tens of millions of dollars for the purpose of ensuring that no such conduct could ever occur again.”

Brenner wrote that the company has adopted numerous consumer safeguards, such as a “three-week, risk-free trial period” and a “robust Code of Ethics.”

At the Brandon campus of Everest University, former employees told the Florida attorney general’s office that document fraud was so rampant that employees had a word for it: “ghosting.” The practice kept a student enrolled after he or she had dropped out. The college would then bill the U.S. government for Pell grants (need-based awards) even though the student wasn’t in class. Students still would be responsible for loans.

Seth Kanowitz, an Everest program director who had previously worked 16 years as a police officer, said in his Sept. 27, 2012, sworn statement: “There are some things that I experienced on that campus during my tenure there that made me extremely uncomfortable.”

Another Everest program director, Phil Penrod, said his mother-in-law — a student — was a victim of ghosting. A third Everest program director, James Jehs, also talked about ghosting, and said in his October 2012 testimony: “Honestly, you know, in a tough economy, you want to keep your job ... you felt you had to keep your mouth shut.”

A spokesman for Corinthian acknowledged that students were billed improperly in Brandon but said the problems were limited to one mid-level manager.

“We voluntarily refunded about $250,000 to the federal government and we reported our findings to the U.S. Department of Education,” wrote Joe Hixson. “As a result of our probe, the administrator resigned and would have been terminated had she not resigned. We took these steps on our own initiative. ... We did the right thing.”

Sworn statements by former Everest employees described a culture fixated on numeric goals. While the pressure came from multiple bosses, the ex-employees repeatedly mentioned Laura Vang, the former academic dean.

One of Everest’s key numeric goals, according to testimony, was a 95 percent student retention rate. Anything less than that was a problem.

At one staff meeting, Kanowitz said, someone mentioned that a “huge” number of students were going to be dropped.

“Dean Vang was noticeably shaken, became emotional and walked out of the office — walked out of the meeting,” Kanowitz stated. “And we all kind of just looked at each other.”

“And she came back and said, ‘We will not be dropping this many students. This is far too much. This is unacceptable. ... There are jobs at stake.’”

Vang’s LinkedIn profile says she left Everest in 2013 and took a similar job at ITT Tech, which has faced lawsuits and enforcement action around the country.

Vang did not return several phone messages. On one occasion, she did not pick up the phone even after an ITT associate said she was there.

Everest’s Brandon campus is still operating, but in February it switched to new ownership.

Into the ‘tree house’

Fraudulent billing was also a problem at Kaplan, according to former admissions advisor Natalie Joseph.

Students who enroll in school but never log on are supposed to be dropped. Joseph told Bondi’s office that recruiters at the Boca Raton call center would log on for students during the first week of online classes, counting them as “present.” That ensured the recruiter got credit for the enrollment, but it also meant the student would get a bill for classes he or she didn’t take.

“I had students call in, get me on the phone and tell me, ‘I didn’t log in,’” Joseph testified in July 2011. She said it was “common practice” for the staff to falsify attendance in this way.

Joseph, who worked at Kaplan from 2007 until mid-2011, was one of two Kaplan employees who admitted under oath that admissions recruiters would sometimes call potential students from a personal cellphone — so the conversation wouldn’t be recorded. She said they referred to this technique as going into the “tree house.”

Kaplan’s response did not directly address Joseph’s statement, but the company wrote that “Kaplan has led the industry in terms of best practices that foster greater transparency and help students make informed choices.”

At some for-profit colleges, recruiters who signed up the most students were given rewards — gift cards, free dinners at expensive restaurants or free trips to Las Vegas or Cancún. Every year, Corinthian held “Parthenon,” an all-expense-paid group vacation/rally for top-performing employees.

At Keiser University, two ex-employees sued in 2012, alleging that perks given to employees violated federal law. The whistle-blower suit was filed by Manuel Christiansen, a former senior admissions counselor at the Fort Lauderdale campus, and Brian Ashton, a former admissions director for graduate-level programs.

The suit alleged that Keiser rewarded high-performing recruiters with gift cards, spa days, cruises and “tokens” that entitled employees to get a half-day’s pay without coming to work.

Federal law is designed to protect college students from overzealous school recruiting, and it bans “any commission, bonus, or other incentive payment based directly or indirectly on success in securing enrollments.”

Emails submitted as evidence in the Keiser suit show that high-level administrators, including Vice President Sherry Olsen, were aware of, and approved of, the perks given to recruiters. After Olsen received a Sept. 3, 2009, email identifying nine employees as “token winners for last week,” Olsen wrote back: “Awesome enrollments everyone! Congratulations and thank you for your hard work.”

A July 29, 2008, email by Sabrina Mohammed, graduate school director of admissions, told recruiters that they needed “just 10 more” sign-ups to win a cruise.

“Let’s keep on pushing along, that cruise is now definitely in sight!” she wrote. In bold type, she added, “All Aboard!!!”

Fort Lauderdale Campus President Rhonda Fuller wrote back, “I will start looking for boats.” Fuller has since been promoted to associate vice chancellor of operations.

In Keiser’s response to the lawsuit, the school acknowledged that about $2,000 in free meals and gift cards were given to employees for “team building.” But Keiser’s attorneys wrote that the violations were “isolated” and not serious enough to disqualify the school from receiving or retaining federal money.

The school also said that its top leadership, including Chancellor Arthur Keiser, had been unaware of the employee incentives, and that the practice was “immediately stopped” when he became aware of them.

One Nov. 19, 2009, email written by Mohammed, then holding the title of vice president of administration, has the subject line “Dr. Keiser just gave me the $500 gift card ... so when are you able to go to dinner?”

In a written statement to the Herald, Keiser University said the $500 gift card “had nothing to do with the enrollment of students and was the result of a prize awarded at a management conference.”

In August 2014, a Fort Lauderdale federal judge, William Dimitrouleas, found that Keiser had broken the rules but deserved a minimal penalty: The school had to pay $11,000.

The whistle-blowers, who sought billions of dollars in damages, filed an appeal.

Although most complaints are filed by low-to-middle level employees, some top for-profit executives have come forward. John Hopkins, the former CEO of Kansas-based Concorde Career Colleges, which has four Florida campuses, filed a lawsuit in March 2015 alleging that his school’s recruiters operate under a quota system, and that “this system wholly disregards the best interests of students.”

Last November, Career College Central, a for-profit college trade publication, published an op-ed by Raul Valdes Pages, a 40-year veteran of the industry. Valdes Pages argued that the sector is no longer focused on making sure students succeed.

In an interview with the Herald, Valdes Pages said the problem is ownership. In the past 15 years, a majority of for-profit colleges have become either publicly traded companies or were taken over by private equity firms. Investors now expect to make a 20 to 30 percent return, he said.

Valdes Pages said he spent 2 1/2 years as the CEO of Sextant Education, which operated a chain of schools that included Southwest Florida College. Valdes Pages said that he tried to improve quality by adding entrance exams and hiring additional job placement staff.

He was fired in 2012 by the private-equity owners, he said, “because I wasn’t hitting my numbers.”

Sextant’s parent company, New York-based AEA Investors, did not respond to a phone message and an email seeking comment.

Telltale emails

Curtis Austin is skeptical of the employees’ stories. Austin, who heads the state’s lobbying association representing for-profit schools, used to be a faculty member at Florida State, and said that public colleges and universities aren’t perfect, either. The proper time to make a complaint is when an employee is on the job, not after he or she has left, he said.

“Things went wrong at FSU all the time while I was there. I would stop and say ‘No,’” Austin said. “I don’t have a lot of patience with people who don’t have moral courage to do what’s right.”

But a number of former employees interviewed by the Herald said they did take their concerns to their bosses, and that they were either punished or ignored. A former Kaplan admissions representative at the Boca Raton call center provided the Herald with emails showing that he met with the human resources department as part of the company’s “Speak Up” program.

In the Sept. 29, 2010, email, he wrote, “I would like to see upper management issue an apology to us recognizing the ‘bad practices’ we were instructed to perform [as I outlined to you in our meeting] misrepresenting and misleading prospective students to help greater the chance of securing an enrollment.”

The former employee, who requested anonymity, said he never heard back from human resources. He also complained to Florida’s Commission for Independent Education about Kaplan’s sales practices. State records show the complaint was dismissed.

Keiser University isn’t the only school where employees have filed whistle-blower lawsuits. There is a financial incentive for getting involved. If a judge finds wrongdoing, millions of dollars can be returned to the government and the whistle-blowers get a cut.

There have been dozens of cases against for-profit schools, including one filed by a former assistant director of education at the Fort Lauderdale campus of ATI Career Training Centers, Dulce Ramirez-Damon, in 2011. Ramirez-Damon’s now-settled lawsuit included emails and other documentation, including:

▪ An internal document from Danielle Toner, the director of financial aid, who complained in writing about the admissions coordinator. “On numerous occasions I noticed that she had forged student initials and signatures ... we would ask for updated enrollment agreements for students and would get initials that look nothing like the students initials ... when I brought it up to her boss ... he stated that he would not talk to her about it,” she wrote.

▪ An internal email from medical assisting instructor Keisha Lopez, who wrote to the campus director on Dec. 22, 2010, that students were allowed to cheat on the school’s admissions exam. One student answered the questions with the help of her three children — and by phoning a friend.

▪ A Nov. 27, 2010, letter to management by career development coach Maria Ream, who complained it was “common practice” for ATI recruiters to enroll students with criminal arrests into the medical training programs — even though, she said, doctors’ offices and hospitals generally won’t hire anyone with a record. Ream said she told the admissions department “many times” to stop doing this but it continued.

▪ An internal document from former campus registrar Sammi Johnson, who said she witnessed the falsification of attendance records — students who were about to be dropped for non-attendance were “then all of a sudden having attendance.” Also, a letter from the program director for respiratory therapy, Ramon Hollander, who complained to the chief operating officer that admissions staff were “clearly forging” the high school diplomas that students needed to be eligible to enroll.

According to the lawsuit, a fake high school diploma from Haiti was frequently used to enroll non-eligible students — this one document was re-used over and over, with only the student’s name and graduation date changed. An alleged copy of the reusable diploma was included with the lawsuit.

Familiar CEO

The lawsuit says that when U.S. Department of Education auditors visited ATI’s Fort Lauderdale campus in early 2011, “hundreds of student files” were improperly altered to deceive the auditors.

The ATI lawsuit includes a Jan. 28, 2011, email written by the campus director that identifies hundreds of files that needed to be “corrected” in advance of the audit “in order to avoid having to refund federal grants.” Corporate higher-ups from ATI’s Dallas-area headquarters flew to Fort Lauderdale so that they could personally manage the process, the lawsuit states.

Included in the lawsuit: photos of the massive stacks of attendance records and transcripts that were purportedly “swapped” just before the auditors arrived.

To settle Ramirez-Damon’s lawsuit, along with a similar Texas case, ATI agreed to pay the U.S. Department of Justice $3.7 million in 2013. Months later, ATI filed for bankruptcy. The company that once boasted 18,000 students — and campuses in five states, including Florida — was no more.

No ATI employees were charged with a crime, and there was nothing preventing company execs from staying in the school business.

Case in point: As ATI campuses closed down, Ancora Education, a Texas-based company, announced it had acquired six ATI vocational schools. The CEO of Ancora was Michael Zawisky, who did not respond to phone messages from the Herald.

Zawisky’s previous job was chief operating officer at ATI.

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