Closing of College Shadows Candidate for Governor
By SAM DILLON; JIM RUTENBERG CONTRIBUTED REPORTING FROM NEW YORK FOR THIS ARTICLE. (NYT) 1246 words
Published: November 17, 2005
In the days since William F. Weld left Decker College here to focus on a race for governor of New York, the commercial trade school has been raided by federal agents, declared bankruptcy and left hundreds of students marooned without classes.
The turmoil has cast a new spotlight on Mr. Weld, the former Republican governor of Massachusetts, who served as chief executive officer of Decker through October and whose investment firm has a minority stake in the college, which offered courses like computer keyboarding and carpentry to low-income students.
Decker announced its closing with a posting on its Web site on Oct. 21, three days after 40 federal agents raided two of its three Louisville campuses, seeking evidence of conspiracy to defraud, of wire fraud, and student financial aid fraud, David L. Huber, the United States attorney for the Western District of Kentucky, said in a statement.
The Kentucky attorney general has also opened an investigation into whether the school engaged in ”false, misleading or deceptive practices,” as defined by the state’s Consumer Protection Act, in statements made to students about benefits available. And the federal Education Department cut the school off from federal student aid, saying it had breached its fiduciary duty in ”very severe” ways.
A spokesman for Mr. Weld, Robert Gray, said on Wednesday, ”As a former United States attorney, Bill Weld is very sensitive to this type of situation and believes any wrongdoing should be fully investigated and prosecuted.” Mr. Weld was a United States attorney in Boston and later a senior Justice Department official in the Reagan administration.
R. James Straus, a lawyer representing Mr. Weld here, said that ”to my knowledge” Mr. Weld had neither been subpoenaed in any investigation nor interviewed by any agents. Mr. Straus said that his only knowledge of the allegations of fraud came from what he had read in Kentucky newspapers.
”Mr. Weld’s position at Decker was to provide strategic direction, and the suggestions of fraud that I’ve read about have to do with student recruitment and allegations about the payment of employees, and he would not have been involved with admissions and payroll,” Mr. Straus said.
But a former employee of the trade school has come forward to say that Mr. Weld was more involved in its day-to-day operations than indicated and that he was aware there were problems.
Steve Johnson, who worked as an admissions officer at Decker from June through early August, said he routinely saw Mr. Weld walking the halls and entering his executive offices at Decker’s headquarters. During the summer, Mr. Weld issued a message on the Decker computer system saying that he had heard rumors that some employees were engaging in fraudulent activities and that if he identified any he would take action, Mr. Johnson said.
”I will personally see that you leave in handcuffs,” Mr. Johnson quoted Mr. Weld’s message as saying. Asked about that, Mr. Straus said, ”I have not seen that communication or heard about it directly.”
Several top Republican strategists and allies of Mr. Weld’s said they did not know enough about what happened at Decker to say whether it would affect a campaign for the Republican nomination for governor.
Ryan Moses, executive director of the New York Republican State Committee, said allegations against Mr. Weld lacked merit and came from publicity seekers. ”It seems to me that these people are trying to make a name for themselves by taking advantage of Governor Weld’s candidacy,” he said.
In Louisville, the college’s collapse has unleashed a torrent of anger and lawsuits.
Decker had some 3,700 students, more than 3,000 of them studying in online courses and several hundred attending in classrooms. In addition to its Louisville campuses, Decker operated construction schools in Atlanta, Indianapolis and Jacksonville, Fla.
Many students complained bitterly, in interviews and at a tumultuous public meeting on Nov. 2. Students have said that Decker officials failed to disclose when recruiting them that classes in topics like construction electrical wiring would be online rather than in person, and they complained that their education has proved worthless in the job market.
Many said they owe thousands of dollars in student loans that the school encouraged them to assume.
Tiffiny Gibson, a 26-year-old mother who studied in Decker’s medical office program for 13 months before it closed, said that she has tried repeatedly, and unsuccessfully, to get a diploma for her studies. No school official has been available with explanations, and callers to the school are greeted by an answering machine. Ms. Gibson said her studies cost about $10,000, and that Decker officials helped get loans to pay that.
”I feel like they really took advantage of me,” she said. ”They crushed my dreams.”
Mr. Johnson, the former admissions officer, described Decker as a high-pressure sales operation. He said his job was to oversee one of several Decker call centers staffed with salespeople calling potential students who had responded to television advertisements, and pressuring them to enroll.
Students who enrolled were lodged in cheap hotels for a few weeks during the time in which they actually attended classes on campus, and then sent home to receive most of the rest of their Decker education online, Mr. Johnson said.
He said that among the activities he witnessed were the creation of phony tax documents for students otherwise ineligible for federal loans. He said he came forward with files documenting his suspicions and showed them to his bosses, but was not given an opportunity to show them to Mr. Weld personally. He said he was then transferred to another Louisville campus.
Mr. Johnson said that he provided documents to FBI agents, and recorded Decker officials for federal officials before they raided the Decker campus. His role could not be independently confirmed.
The United States attorney’s statement on Oct. 21 cautioned that ”no charges, complaints, or indictments have been issued against anyone and that a search warrant is merely an investigatory tool.”
The school’s troubles had begun to escalate in June, when the federal Department of Education sent a team of officials to review its operations.
On Sept. 30, the department sent Mr. Weld a letter disqualifying Decker from participation in federal student aid programs. It said that Decker had broken federal aid rules and that it owed $7.2 million to the government.
Decker, it said, had failed to refund that amount in federal aid after students who received it withdrew from classes. Last month, Mr. Weld said that Decker had ”serious factual differences” with some of the findings.
The department suspended the eligibility of Decker students for aid including Pell Grants and Stafford loans. The college closed three weeks later. Two weeks after that, it agreed to enter bankruptcy proceedings.
Photo: William F. Weld, a former governor of Massachusetts, at home on the Upper East Side. His investment firm has a minority stake in a college under federal investigation. (Photo by Michelle V. Agins/The New York Times)
