Feds Say ATI's For-Profit Colleges Created Fake Jobs, Companies to Rip Off Students and the Government

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ATI's beautiful Maple Avenue campus.
ATI Career Training Center is the type of school you see advertised on daytime TV. It prepares its graduates for "rewarding careers" in "fields such as health care, personal fitness and wellness, business technology, information technology, automotive repair, air conditioning and refrigeration repair, and welding," per its website.

Three years ago, a handful of former employees sued North Richland Hills-based ATI Enterprises, which operates three campuses in North Texas and others in Oklahoma, Florida, and New Mexico. They said the school over-promised, lying to prospective students -- and the Texas Workforce Commission -- about their job prospects upon graduating and goosing enrollment to receive federal aid.

In a complaint unsealed yesterday, the U.S. Department of Justice agreed, alleging that ATI "engaged in a widespread scheme to defraud the Department of Education and the Texas Workforce Commission ... in order to receive federal funding it would not otherwise have been entitled to receive."

Also, according to the complaint, the schools sucked. Classes were overcrowded, the buildings were falling apart, police coverage was required during school hours because "students at ATI were also sometimes violent towards each other, instructors, and staff."

Trying to recruit homeless people as students isn't illegal, per se, but giving out gift cards was. So was other stuff, like the alleged lies about job placement, was since it violated the federal False Claims Act.

The lies, the government says, were myriad. They told convicted felons they would have no trouble getting a job and told dropouts their student loans would be forgiven if they returned to school. They fabricated a number of diplomas from DISD for high school dropouts ineligible for student aid. Unsurprisingly, several defaulted on their student loans.

Basically, the feds allege, the school was focused on increasing admissions and, by extension, profits, above all else.

In furtherance of that strategy, ATI employed an army of Admissions Representatives and put intense pressure on them to enroll as many students as possible. Admissions Representatives went to great lengths to recruit bodies. They would recruit new students at prisons, parole meetings, homeless shelters, and the Salvation Army. They would induce students to enroll at ATI with promises of gift cards, bus basses, and, in some cases, even housing.

To further goose placement numbers, the school allegedly made fake business cards created to place in students' files. Some were employed as janitors for a day pass graduation to be listed as placed. The school created fake companies at which they said graduates worked when they actually didn't. Also:

Several students who graduated in business administration and worked as cashiers were improperly counted as placed in their field of study because they worked with money. Fore example, one ATI employee counted as "placed" a business administration graduate who worked at at Dollar General. ... Another student with a welding diploma, NF, was counted as placed in his field while working as a manager at a Braum's Ice Cream Shop because he once repaired a machine in the shop by welding parts.

Between 2005 and 2012, students enrolled at ATI's campuses received more than $236 million in federal aid. The government's complaint doesn't specify how much of that is believed to have been obtained fraudulently, other than saying the figure is in the millions. Working on getting a hold of someone with the school, but no luck so far.

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16 comments
roo_ster
roo_ster

"They said the school over-promised, lying to prospective students...about their job prospects upon graduating and goosing enrollment to receive federal aid."

 

And how is this different from any public or private university liberal arts department? 

 

I recall the NYT article on the nitwit chick who took out loans to go to Columbia or some such fancy-pants school and majored in religion and women's studies.  She was oh-so-surprised that she ended up $200k in debt and with no employer wanting to touch her with a 10' pole.

 

Or the gal who took at beau coup loans to go to TCU to major in social work. 

 

Maybe, just maybe, fed.gov out to get out of the student loan business.  Maybe the originator of the loans and the institution that takes the risk ought to be the university / school their own selves.  They can charge reasonable rates for guys seeking an engineering degree and reasonably ginormous rates for empty-headed goobers who high-dollar unis to major in degrees worthless to the marketplace.

Mess
Mess

Thanks for continuing to follow an important topic. I know you're counterparts at DMN and D regularly diss the Observer, but neither has done a fraction of the work to expose the For-Profit "colleges" or the Deion Sanders "school" - both are extreme assaults on the Dallas poor. Very sad. I applaud your concern for digging deep into topics beyond what's in some local reality tv chicks closet and all the other bullshit fluff I find in local blogs.

Tiney
Tiney

y'all should have a link to the cover story about this that came out a few weeks ago. it was an amazing and sobering piece.

Mark Haubrich
Mark Haubrich

Lots of endless black whole stats..I lost count on this round of unemployment.. The worst is the hire of some one whos' made 1.5 mill on payroll and the one in line behind them is at 200k at 50 years of age.

David Nichols
David Nichols

Free market rules! Especially with gov't loans and grants

Peter Crandall Polk
Peter Crandall Polk

They have been ripping off the feds for years, especially with veteran's benefits.

Russ Coffman
Russ Coffman

Time to nationalize them, You never hear of Medicare ripping people off.

Joel Musfeldt
Joel Musfeldt

I think it's safe to assume that all of these for profit trade schools are guilty of this to one extent or another.

xyxyxyxyxyxy
xyxyxyxyxyxy

FYI... you munged the first link in the article, it's leading to the wrong place. (feel free to delete this comment when fixified)

Chris Lawson
Chris Lawson

Its about time they figured this scam out!

James080
James080 topcommenter

Many, if not most, of these for-profit internet based "universities" appear to be operated with one over-riding business purpose - qualify every applicant, regardless of qualifications, for a federally guaranteed student loan payable in advance to the "university." South University, owned by Education Management Corporation, is a prime example of a business posing as a provider of higher education, but instead operating as a creator of federally guaranteed student debt.

 

I have a relative who was caught up in the South University recruitment process. She barely graduated from high school with a special education diploma due to her learning differences, yet she passed South's internet admission tests (the first "A" grades she every received) and was sent a bill for her 1st full semester tuition, about $12,000. South's commission based recruiter told her not to worry about the tuition, they would arrange a federally guaranteed student loan for her. She was lucky I was able to stop this fraud before the loan was funded.

 

http://www.nytimes.com/2011/08/09/education/09forprofit.html

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