With false claims trial looming in KC, for-profit college shuts down

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Heritage College closed its doors only a few days after an appeals court cleared the way for a trial on whether the school deliberately falsified attendance records and grades to receive about $32.8 million in federal funding.

A fraud case against Denver-based Heritage College was filed in January 2011 under the U.S. False Claims Act. Whistleblowers Cathy Sillman and Chickoiyah Miller filed the suit on behalf of the U.S. government, through their attorneys Matt Bartle of Graves Garrett LLC in Kansas City and Gene Graham Jr. of White Graham Buckley & Carr LLC in Independence. The plaintiffs seek treble damages and attorney fees.

The plaintiffs allege that Heritage employees purposely falsified attendance records and grades because the level of federal student aid the college receives is tied to those records.

Judge Nanette Laughrey of the U.S. District Court for the Western District of Missouri granted Heritage College's motion to dismiss the case in March 2014. The plaintiffs appealed the ruling, which was overturned by the 8th U.S. Circuit Court of Appeals in April 2015.

Heritage College then submitted the case to the U.S. Supreme Court, which chose not to consider the case but made a ruling on a similar case that sent all Federal Claims Act actions back to the appeals courts for reconsideration. On Oct. 19, the 8th Circuit once again ruled that the Federal Claims Act case against Heritage College should be brought to trial in district court.

On Tuesday, about two weeks after the appeals court ruling cleared the way for the case to go to trial, Heritage College announced that it would permanently close all 10 of its campuses.

"The reason for the campus closures is that Heritage does not have the cash to continue to run its business," the for-profit college wrote on its website. "Numerous factors contributed to the circumstances including declining student population and a continued, decreased demand for the services of for-profit schools.

"Heritage did not close due to wrongdoing or a forced closure by a regulatory body, and we did explore a range of options that would have enabled the campuses to remain open serving students. Unfortunately, the options were not viable and our efforts proved unsuccessful."

Heritage operated 10 campuses nationwide, including one in Kansas City at 1200 E. 104th St. that had about 150 students. Heritage didn't respond to emails requesting comment on how long it has been having financial difficulties and whether it disclosed the risk of closing to the students the school continued to enroll. Heritage's lead attorney, Steve Gombos of Ritzert & Leyton PC in Virginia, could not be reached for comment.

Plaintiffs attorney Graham said that he has been filing fraud cases against for-profit colleges for decades and that he's not surprised to see Heritage cite financial difficulties and close its doors right when a light was about to be shined on its operations.

"I can't even tell you how many of these for-profit schools I have sued, and the story is always nearly identical," Graham said. "They hire instructors with little to no experience, they rent some space, then jack up the tuition to more than students would pay at a metropolitan community college with real educators. What I hope the press highlights for the public is that you can go to a metropolitan community college and get credits that transfer to legitimate universities and get a real degree. When you go to these for-profit schools, they shut down, and those credits are worthless."

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