The following is the Department of Justice’s announcement from July 22, 2011 that they have finally settled the qui tam suit with whistleblower and former employee, David Goodstein and one other whistleblower regarding the fraud called Kaplan University and in this case the ‘Surg Tech’ program which was the subject of the qui tam, or False Claims suit against the corporation.
David Goodstein was the whistleblower in this case and it was thanks to him that readers of Dailycensored and elsewhere were able to help surface this case and force the Department of Justice to finally hold the company liable after years of foot-dragging. To find articles on Kaplan you can simply search the search engine for this site, by typing in ‘Kaplan’, and you will find articles by David as well as continuous coverage of the issue. As David noted in an e-mail sent to me back in June as the settlement was being hammered out:
(“As I was saying your article got the NYT involved and that forced the DOJ and DOE to do the right thing, etc, etc. So you really were responsible for our success! Stay in touch”, personal e-mail).
I mention this only due to the fact that many believe that alternative press plays no role in putting pressure on criminal enterprises. In fact, as one can see, they do have some effect even if it is only to create havoc for such institutions as Kaplan. There is little doubt that the DoJ would never have pursued this case without publicity.
Although the students will not end up with debt and will be compensated for the fraud perpetrated against them, thanks to the courage of David Goodstein and our ability to ‘trickle up’ the story to mainstream press, Kaplan understands that this is simply ‘chump change’ for the cost of doing business. Petty cash one might say. While the company ponies up the $1.6 million (which is little more than a nuisance payment for the multi-billion dollar enterprise) they are busy reorganizing their corporation to assure maximum profits and continued selling of this crime syndicate as a real University. With public universities crumbling under the weight of the phony austerity programs and attacks against public education, for-profit behemoths like Kaplan will grow both in size and in insidious profits that deprive students of a real education.
Here is the public notice from the DoJ regarding this case. Afterwards readers can read about the reorganization that is going on now to give the public the impression the criminal syndicate is changing for the better when nothing could be further from the truth!
U.S. Department of Justice
United States Attorney
Eastern District of Pennsylvania
615 Chestnut Street
Philadelphia, Pennsylvania 19106-4476
July 22, 2011
PHILADELPHIA - A $1.6 million settlement agreement was filed today resolving allegations that CHI Institute (“CHI”), in Broomall, Pennsylvania, failed to provide its students with the educational program it had promised them, announced United States Attorney Zane David Memeger.
CHI is a proprietary school, which offers career-focused, technical and vocational courses. CHI is part of Kaplan Higher Education Corporation, a subsidiary of Kaplan, Inc., which is owned by The Washington Post Company.
The settlement resolves allegations raised by a whistleblower pursuant to the qui tam provisions of the False Claims Act and resolves the findings of a Department of Education program review. The qui tam action and the program review focused on a program that CHI offered that led to a diploma in surgical technology, also called a “surg tech” program. The majority of students who enrolled in the surg tech program received some form of federal student financial aid – by way of grants, direct federal loans, and/or guaranteed student loans.
The surg tech program included both classroom time and an externship at a hospital or surgery center. The externship was a form of field training in a clinical setting. To graduate from the surg tech program, a student had to complete both the classroom and the externship portions of the program.
The qui tam action and the program review alleged that CHI misled students and the federal government about the availability of externships necessary for students to graduate from the surg tech program. That is, the qui tam action and the program alleged that CHI did not have sufficient externship spots for the students who signed up for the surg tech program. The result, according to the allegations, was that students paid CHI – with federal student financial aid – for an educational program that CHI knew it could not provide. The program review went on to allege that CHI did not comply with a number of federal student financial aid program requirements.
“Federal education assistance is a cherished resource that the government provides to help promising students who cannot afford the rising costs of higher education,” said Memeger. “The institutions that benefit from such assistance must deliver what they promise - whether it is in the form of classes, training, or preparing to successfully enter the job market. When those institutions fail to deliver, we all lose, but perhaps more importantly, individual students are denied valuable opportunities to succeed.”
In accordance with the settlement agreement, CHI shall make total payments of $1.6 million. Included in that amount are payments to satisfy the student loans of surg tech students who did not receive the promised externships. Also included in that amount are payments to the federal government for losses associated with the federal student financial aid program, and a payment to the whistleblower pursuant to the False Claims Act.
The case was investigated by the Department of Education Federal Student Aid Office and the Department of Education Office of Inspector General. It is being prosecuted by Assistant United States Attorney Michael S. Blume.
UNITED STATES ATTORNEY’S OFFICE Contact: PATTY HARTMAN
EASTERN DISTRICT, PENNSYLVANIA Media Contact
Suite 1250, 615 Chestnut Street 215-861-8525
Philadelphia, PA 19106
COPIES OF NEWS MEMOS AND RELATED DOCUMENTS CAN ALSO BE FOUND AT
Kaplan seeks to reorganize
NEW YORK July 19, 2011—
By (name withheld due to possible retaliation) (my comments are indicated in the body within parenthesis).
Kaplan, Inc. Chairman and CEO Andrew Rosen today announced a more cost-efficient organizational structure for Kaplan Higher Education (KHE). This change will reallocate resources to preserve and enhance quality student services and academic innovation, while streamlining general and administrative activities. Most centralized services provided under the KHE umbrella will be shifted to the units that house its two separate types of institutions—the Kaplan College/Kaplan Career Institute campuses, and Kaplan University. Some centralized services will move to Kaplan, Inc. The KHE administrative infrastructure will essentially disappear.
Jeffrey Conlon, who has served as Chief Executive Officer of Kaplan Higher Education since 2009, will be leaving his post. Conlon has been with Kaplan since 1993, first in its Test Prep division. He joined Kaplan University in 2004 and became President of its campus-based schools in 2005. He took over as president of Kaplan Higher Education in 2008 (my comments: and according to insiders and whistleblowers Conlon knew of the Surge Tech fraud. Seems that this is how fraudsters and hucksters are rewarded at Kaplan for their mendacity and involvement in criminal activities by being moved around within the corporation like corrupt priests by the Vatican). However, Rosen, the CEO of Kaplan spun it another way):
“During his tenure, Jeff has been instrumental in improving student outcomes, raising academic standards, and introducing the bold Kaplan Commitment initiative, which helps ensure that our students are making well-informed educational choices,” said Rosen. “He has been an important part of Kaplan for many years, and we owe him a deep debt of gratitude.”
As part of the restructuring, Lionel Lenz relinquishes his role as chief financial officer for KHE. Lenz joined Kaplan in 2009 and has earned a reputation for managing complex operations to support large-scale growth.
(My question: Was Conlon ‘busted’ during this settlement? Could this be why he is being moved within the company like a pederast priest is moved by the Vatican?)
Beth Hollenberg, President of Kaplan Higher Education Campuses (KHEC), will also be leaving her post in this reorganization. Hollenberg has been with Kaplan for 11 years, joining its Higher Education division in 2008. She is credited with overseeing the Kaplan campuses through a period of academic expansion.
Both Conlon and Hollenberg are exploring other positions at Kaplan. Conlon will also assist with the transition period as KHE services are transferred to the Kaplan campuses and Kaplan University.
John Lock, who joined Kaplan early this year and has 25 years experience as an educator and successful executive, will take over from Hollenberg and assume the role of President of KHEC.
“John is a proven advocate for innovation, technology, and blended educational models that can dramatically transform education,” said Rosen. “We are pleased that he will assume leadership of KHEC and look forward to his leading our campus-based schools on our mission of developing truly transformative educational services.”
No executive changes are being announced at Kaplan University (my comments: and no criminal indictments were issued by the Department of Justice. A simple fine for the cost of doing business was the deal struck instead. In an effort to shrug off any mendacity and spin this reorganization in the interest of students, Rosen announced):
“The changes announced today will further our efforts to focus investment and resources on areas that matter most to students,” said Rosen.