Long before it was spotlighted in a U.S. Senate hearing last week as an example of aggressive and misleading recruiting tactics at for-profit institutions, Westwood College “flourished in the unscrupulous culture of the for-profit college industry,” say former students in two separate lawsuits filed on Wednesday.
The college and its top executives “engage in deceptive trade practices at every step of the process from recruitment to postgraduate job placement,” claim the lawsuits, one of which was filed in federal court in Colorado and the other in a state court in California. College officials “follow a simple formula: Recruit those with the greatest financial need and enroll them in high-cost institutions to maximize the amount of federal funding” they receive, the lawsuits say.
In a written statement sent to The Chronicle Thursday night, Westwood officials strongly denied the allegations.
The lawsuits, which seek class-action status, accuse the college of training its recruiters to systematically misrepresent not only the cost of attending, but also job prospects for graduates and the nature of its accreditation.
The complaints also accuse Westwood, a 17-campus system based in Denver, and an affiliated institution, Redstone College, of deceiving prospective students by employing admissions representatives whom it puts forth as academic counselors but who are actually hired for their sales skills. The representatives are trained by Westwood to find prospects’ “point of pain and dig,” the plaintiffs say.
In return for enrolling high numbers of students, the lawsuits allege, recruiters are compensated with free trips and other incentives—in one case cited in a court document filed with the complaints, “a fun-packed fully paid vacation in sunny Cancun.”
That document is a copy of a May 2008 e-mail that begins “Ay Caramba” and exhorts recruiters to do their best to gain “Elite” status and win the trip. Another exhibit shows the company’s training materials, including advice to the admissions representatives: “Call new leads within 15 minutes; Call 3 times 1st and 2nd day.”
In its statement, Westwood said the law firm representing the students “does not now, nor has it ever represented a class of former students. Indeed, the law firm’s continued diminution of the hard work and education earned by thousands of satisfied Westwood College graduates and existing students injures the very persons the lawyers purport to represent—an inescapable conflict of interest that the law firm conveniently ignores.
“Westwood maintains (and stands ready to prove in the appropriate forum) that the accusations made by the ‘strike suit’ firm are opportunistic, not representative of the experiences of the overwhelming majority of Westwood students and graduates, and therefore cannot proceed on a class basis.”
Latest Round
The suits were filed by a Florida-based law firm, James, Hoyer, Newcomer, Smiljanich & Yanchunis, which says it has been contacted by more than 700 Westwood students and 50 former employees in the course of investigating the latest complaints and prior lawsuits it has filed against Westwood and Alta Colleges Inc., Westwood’s parent company.
The firm had previously sought class-action status for a complaint raising similar allegations that was filed in Colorado as an arbitration action in 2009 on behalf of other former students. (As part of their enrollment agreements, students promise to pursue any disputes with the college via arbitration, a practice that many other for-profit colleges also follow.) In July an arbitrator, on procedural grounds, denied the request to have that case proceed as a class action.
The James Hoyer firm specializes in class actions and whistle-blower cases, and includes several former prosecutors on its legal staff. It is also the sponsor of a Web site, WestwoodScammed.me, which it uses to publicize the status of its cases and to solicit contact with current and former Westwood employees and students with complaints about the college. (Reports of the latest lawsuits appeared on the site on Thursday.)
In March, Westwood and Alta sued the firm and two of its lawyers, alleging “a conspiracy to damage and defame” the college via that Web site, a Facebook page, and other “new media Internet weapons.” Westwood also accused the law firm of having “published defamatory comments” about the college, and of creating “a national media circus” over the Colorado arbitration case, which the company maintained was baseless.
The law firm has argued that the college’s suit is an unlawful attempt to muzzle it, akin to what’s commonly known as a Slapp suit (for Strategic Lawsuit Against Public Participation).
In April 2009, Alta paid $7-million to the federal government to settle allegations that Westwood had obtained federal student aid by falsely claiming that it complied with state-licensing requirements. Such licensing is required to receive federal aid. The company maintained that it acted lawfully but said it settled to avoid the time and expense of a legal fight.
‘Little to No Instruction’
The new lawsuit in Colorado was filed on behalf of Krystle Bernal, a 2008 fashion-merchandising graduate of Westwood’s Denver South campus, who is now facing federal and private student-loan debt of $75,000; Amanda Krol, a 2009 criminal-justice graduate of Westwood Online who has more than $86,000 in student-loan debt; and thousands of potential others.
The suit in California was filed on behalf of Jesus A. Contreras, a 2007 graduate of its Inland Empire campus, in Upland, who had agreed to pay more than $54,000 for a 34-month program in information technology. In the suit, Mr. Contreras alleges that instructors provided “little to no instruction” and frequently failed to show up at all. In those instances, the suit alleges, students were “still instructed to sign an attendance roster,” to give the appearance that the class had taken place.
Mr. Contreras also says Westwood sought to charge him $20,000 in additional fees and has continued to seek to collect that money since he graduated. (The lawsuit is a response to a collection action against Mr. Contreras.)
The suit states that it seeks class-action status under California law on the grounds that “defendants’ business practices are substantially injurious to consumers; offend public policy, and are immoral, unethical, and unscrupulous.” Both lawsuits note that the recruiting abuses documented by the Government Accountability Office and featured at the Senate hearing—including testimony from a former Westwood recruiter and hidden-camera scenes at some of its campuses—have since become part of a national conversation on for-profit-college abuses.
The college has said that the practices highlighted at the hearing were “unauthorized actions taken by a few Westwood employees.” Still, it announced this week that it would alter some of its admissions and recruiting policies, and pledged to “set a new standard for the student-enrollment process.”
The lawsuits also name as defendants the Westwood College system’s president, George Burnett, who is a former chief marketing officer at Qwest Communications; Westwood’s lawyer, William Ojile; and various related companies. They seek unspecified financial damages on behalf of thousands of students.
Alta Colleges, Westwood’s parent company, is majority-owned by Housatonic Partners, a private-equity firm. In 2008, Alta’s revenue included some $27.5-million in Pell Grants and more than $154-million in federal student loans, one of the lawsuits says. The story of Alta’s founding, by two Harvard Business School graduates, Kirk Riedinger and James Turner, has been chronicled in a case study at the Stanford Graduate School of Business developed by H. Irving Grousbeck, who is a consulting professor at Stanford and a special limited partner at Housatonic and an Alta board member. He is also managing partner of the Boston Celtics.