Dade Medical College showing signs of financial trouble

Dade Medical College recently moved its campus to a new location on Krome Avenue in Homestead.
Dade Medical College recently moved its campus to a new location on Krome Avenue in Homestead. Miami Herald staff

Only a couple of years ago, Dade Medical College was a stunning South Florida success story. Its charismatic owner, Ernesto Perez, was adding campuses, hosting black-tie Miami charity events, and riding the school’s chartered jet to Tallahassee to mingle with lawmakers and Gov. Rick Scott.

Today, Dade Medical is showing signs of financial trouble, including bounced employee paychecks. The school recently chose to shut down its nursing associate’s degree program at three campuses — after multiple years in which its graduates struggled to pass the nursing license exam. The nursing degree was Dade Medical’s signature program, accounting for more than half its students.

Asked about the nursing program closures, Perez wrote in an e-mail that the college is shifting gears — with a new emphasis on training ultrasound techs.

“Our focus has and will continue to be allied health education,” wrote Perez, a onetime rock musician who fashioned a second career as an education entrepreneur. “And we will continue to try and fill the needs for students that don’t seem to find what they are looking for at other universities and colleges.”

Earlier this month, the U.S. Department of Education placed Dade Medical on a status of “heightened cash monitoring.” The decision came after a September federal inspection at Dade Medical and its subsidiary school, the University of Southernmost Florida. This extra level of oversight means that Dade Medical now must cover the upfront cost of teaching students, and then later ask for reimbursement from the federal government through Pell grants and loans, instead of getting that financial aid money at the outset, according to the U.S. Department of Education website.

Asked about the change, a U.S. Department of Education spokesman said “we do not have an official comment on the reasons as we do not acknowledge ongoing program reviews.”

This heightened federal oversight can delay a school’s cash flow by weeks, said Barmak Nassirian, director of policy analysis for the American Association of State Colleges and Universities. He said the changed status was a signal of concern over the school’s finances.

Some Dade Medical employees had their paychecks bounce last week. Early this week, an email from the HR director to some employees stated “it has come to our attention that there has been an issue with last week’s payroll and we are currently trying to assess the situation … if you have deposited your check, please review your account and verify whether the funds have been honored.”

Dade Medical did not respond to a question about the returned checks.

Earlier this month, a California-based private student loan company, American Student Financial Group, won a federal court ruling in a lawsuit against Dade Medical and was awarded roughly $4.6 million. ASFG had entered into a contract with Dade Medical to help administer the college’s private loans. The California firm sued after Dade Medical stopped paying certain fees required under the deal. Asked about the court case, the college declined comment.

The award can be offset in part by collateral Dade Medical put up as part of the agreement with ASFG.

In September, Dade Medical representatives appeared before Florida’s Commission for Independent Education — the state’s for-profit college oversight agency. At that meeting, Dade Medical executives said they were still enrolling new nursing students at the Miami Lakes campus, although in June the Florida Board of Nursing had ordered the program closed because of low scores on the RN license exam. Dade Medical had appealed the nursing board’s decision, and so legally it could still enroll students. But it wasn’t disclosing to these new sign-ups that there was a pending shutdown order in place, the school acknowledged.

CIE board member Nancy Bradley told the school: “I’m very concerned about new students being enrolled in a program with such an order. … It’s a big, big risk at this point.” The CIE ordered Dade Medical to start disclosing to new students that the program might be shut down.

Two weeks later, Dade Medical announced it was ending its Miami Lakes nursing program, along with similar programs at the Miami and Hollywood campuses.

Perez was once himself a CIE board member, but he stepped down in 2013 after being charged with perjury and providing false information through a sworn statement. Prosecutors said he concealed previous arrests on official documents. Perez denied the allegations, and the case is still pending.

In an Oct. 9 letter to the Florida Department of Health, Dade Medical wrote that it would finish teaching those nursing students already enrolled, although Hollywood students would have to drive to the Miami Lakes campus to finish their required classes. Graduates from all three campuses had consistently received low scores on the nursing license exam. So far this year, the RN passage rate is 51 percent at the Miami campus, 38 percent at the Hollywood campus, and 61 percent at the Miami Lakes campus. The national average is 87 percent.

In March, Dade Medical moved from a Krome Avenue building it was renting for its Homestead campus to another building a couple of blocks away that its real estate affiliate owns. That move was designed to reduce the company’s rent expenses by $13,950 per month, the school said in financial documents submitted to the state. But Dade Medical never got the move OK’d by the city, and because of recent changes to city zoning laws, the new Homestead campus is operating in an area where schools are prohibited, city officials say.

“Technically, they’re not allowed to be there,” said Homestead Development Services Director Joe Corradino. He said Dade Medical applied for a business license from the city a month ago but was denied because of the zoning issue.

Perez once pitched his school as the centerpiece of downtown Homestead, surrounded by restaurants and other amenities that would follow. As his companies sought to accumulate city-owned properties to achieve that goal, Perez, his school and his associates spent thousands on campaign contributions and also hired the wife of the then-mayor, Steve Bateman, to do real estate work.

A recent Miami Herald series, Higher-Ed Hustle, identified more than $170,000 in Dade Medical campaign contributions to candidates across Florida. The money came from the college, its employees and other affiliated companies.

Despite his political activity, Perez’s bid to buy nearly 20 Homestead-owned properties — at a deep discount — fell apart in late 2013.

These days, Dade Medical’s real estate affiliate is trying to sell seven downtown Homestead properties it owns — with a total asking price of $9.6 million.

In recent years, more than a dozen Dade Medical students have filed complaints with the CIE, the state’s oversight agency, alleging dishonest practices and poor quality education that could potentially put healthcare patients at risk.

Those student complaints have been dismissed by the CIE, which is dominated by the for-profit college industry.

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