University of Phoenix’s new Head Ran College closed after fraud lawsuit
The for-profit academic giant the University of Phoenix today named George A. Burnett its new president. Burnett, who was due to start work next week, was once the CEO of Denver-based Alta Colleges, operator of Westwood College, which closed in 2015 following a devastating legal complaint, alleging systematic deception. of students, filed by the State of Illinois. .
Burnett became CEO of Alta in 2006, after working at Telecom Qwest Communications, which in 2004 paid $250 million to settle charges of widespread fraud from the Securities and Exchange Commission, in part based on activities that occurred under Burnett’s watch.
In 2009, with Burnett, a Dartmouth graduate, at the helm, Alta agreed to pay the U.S. government $7 million to resolve allegations that the company’s schools in Texas submitted bogus scholarship and scholarship applications. federal student loans. the Department of Justice alleged that colleges in Alta Texas obtained the required state licenses by declaring to the state that they complied with placement reporting requirements and that their interior design programs were meet the requirements of a professional license. Alta, Texas campuses stopped enrolling new students in 2011 following actions by the Texas Workforce Commission and the U.S. Veterans Administration.
In late 2011, Burnett resigned as CEO of Alta, a move that came, according to the Senate HELP Committee’s full investigative report into the for-profit college industry, “as a result of ‘a number of issues involving the college’s accreditation and certification as well as lawsuits filed’. by former students. »
In 2012, Westwood paid $4.5 million to settle claims by the Colorado Attorney General that he had engaged in deceptive marketing practices – misleading prospective students, engaging in misleading advertising, and failing to comply with Colorado consumer loan laws.
And in 2014, Illinois Attorney General Lisa Madigan sued Westwood, alleging that the school, beginning in 2004 and throughout the trial, “engaged and continues to engage in practices misleading, unfair, and abusive in the marketing and selling of their criminal justice program. By misrepresentation and omission of material facts, defendants have misled and continue to mislead students about nearly every material aspect of the degree career-focused in criminal justice – from funding and cost of the program to the likelihood of a positive employment outcome after the student leaves school.”
Attorney General Madigan’s complaint included devastating allegations of wrongdoing regarding Westwood’s criminal justice program, which was introduced to low-income Illinois students and cost more than $75,000:
During marketing of Illinois’ consumer criminal justice program, defendants touted future careers in law enforcement — as police officers, sheriff’s officers, and FBI agents — and corrections . In fact, only 3.8% of graduates were employed as sworn police or corrections officers. The two most common jobs for graduates of the defendants’ criminal justice program were security guards (18%) and retail (8.9%) – positions that typically only require a bachelor’s degree. secondary school or an equivalent diploma. Remarkably, graduates of the defendants’ criminal justice program had a median starting salary lower than the median salary of a 25-year-old with a high school diploma. Unsurprisingly, the defendants do not promote these poor graduate outcomes. Instead, the defendants misrepresented and omitted key and material information from prospective and enrolled students.
One Westwood tactic described by the AG was particularly cruel:
In a recorded phone call with a prospective student, an admissions representative told the prospective student that only a very small portion of interested students would be recommended for admission, which sparked cheers among Westwood employees. “You know, I want you to know that on a day-to-day basis we probably interview maybe 50 to 60 students. And out of those 50 to 60 students, we’re probably able to, you know, on a good day, recommend five to six. And you heard the celebration – you heard the celebration from everyone, you know, when we were able to recommend a student. In reality, there is no mandatory or formal recommendation process. According to a senior Alta Colleges, Inc. employee, each student determines if they have met the admission requirements by showing proof of high school graduation or equivalency and then passing the test requirements. classification or by submitting the results of previous examinations.
Westwood settled the Illinois case in 2015 for $15 million. A few months later, the school closed. Alta Colleges, which was owned by Boston private equity firm Housatonic Partners, received up to $338 million a year – more than a third of a billion dollars – from US taxpayers for scholarships and student loans.
In July 2021, the Biden administration approved 1,600 defense claims from Westwood alumni borrowers who were defrauded by the school, requiring a taxpayer bailout of $53 million, money Alta had pocketed . The action came after years of efforts by Sen. Dick Durbin (D-IL) to highlight abuse at Alta/Westwood and secure relief for former students.
After leaving Alta, in 2012 George Burnett became the CEO and president of another for-profit career college, Northcentral University. Northcentral was acquired by the nonprofit National University System in 2019. Around this time, Burnett left to become executive vice president of Academic Partnerships, one of the companies engaged in the sometimes troubling and legally questionable activity of l operating non-traditional online programs. for-profit and state universities.
So, with a new US president who has promised to hold for-profit schools accountable for scamming students and taxpayers, the biggest school in the industry has hired a new president who previously ran a scam school?
It may be difficult to find a new leader in such an uncertain environment for the industry. Granted, the new predatory college ops chiefs Perdoceo and Zovio don’t look like top draft picks. But in an industry that continues to recycle predatory business leaders, it may just be the University of Phoenix showing its own nasty scratches. Phoenix itself has repeatedly engaged in deceptive, predatory, and illegal practices, resulting in investigations and actions against it by the Federal Trade Commission, Department of Justice, Department of Education, VA, the Department of Defense and various state attorneys general.
Phoenix has always denied wrongdoing and, after being bought out by private equity firms in 2016, pointed out that the conduct that got them into trouble happened under previous owners. But Greg Capelli, the CEO of Phoenix’s parent company, the Apollo Education Group, under the previous owners, is still the CEO under the current owners. They haven’t really changed. A Phoenix instructor who recently left school told me last fall that under new private equity owners, his bosses pressed teachers to keep students from dropping out, no matter how badly. they struggled with the courses and showed that they could not benefit from it. (The instructor recently repeated his story to federal investigators.)
The new college president, President Burnett, should fit right in.