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Corinthian CEO Led For-Profit College Industry PAC

05/26/2015 07:03 am ET | Updated May 26, 2016

An email newsletter obtained by Republic Report reveals that the political action committee of APSCU, the main lobbying group of for-profit colleges, was headed in 2012 by Jack Massimino, CEO of the now disgraced, bankrupt Corinthian Colleges. The newsletter also highlights the active involvement in APSCUPAC of other for-profit college executives whose companies are now under investigation -- or have been penalized or shut down -- by law enforcement.

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The involvement of these executives and other information exposed in the newsletter add to the long list of reasons to doubt the credibility of APSCU, the prime mover of efforts to rid for-profit colleges of accountability for waste, fraud, and abuse with federal tax dollars.

The newsletter reports that in the first quarter of 2012, APSCUPAC contributed to politicians including Reps. Jesse Jackson, Jr. (D-IL), Rob Andrews (D-NJ), Nancy Pelosi (D-CA), and John Kline (R-MN), and Senate candidate Scott Brown (R-MA).  Federal records confirm these contributions and show that others receiving APSCUPAC money in 2012 included Reps. Eric Cantor (R-VA), Virginia Foxx (R-NC), Alcee Hastings (D-FL), Steny Hoyer (D-MD), and Kevin McCarthy (R-CA), Senate candidate Ted Cruz (R-TX), Senators Robert Menendez (D-NJ) and Rand Paul (R-KY), and dozens more.

The APSCU email dates from May 2012, a time when mounting media exposes had revealed widespread deception and other abuses at for-profit colleges.  Yet the for-profit college industry was fighting back aggressively, with big spending to influence the whole of Washington -- advocacy groups, journalism outlets, and, especially, politicians. And the industry's aggressive lobbying, PR work, and cash contributions were paying off; the Obama Administration had dramatically watered down its "gainful employment" rule, which was aimed at cutting off federal aid to career training programs that left its students with insurmountable debt. The dilution of the rule meant that only some of the most egregiously awful career education programs might be affected. But even that weak gainful employment provision was on the verge of being overturned in court in the face of an attack by high-priced lawyers representing APSCU.

It was a presidential election year, and APSCU's next aim was to use its taxpayer-provided cash -- the industry was getting more than $30 billion a year from federal student aid -- to make campaign donations to politicians who would do its bidding. With many member schools receiving about 90 percent of their revenue from taxpayers, APSCU had an enormous stake in the outcome of the election. President Obama had spoken in detail about the abuses of predatory for-profit schools, while Mitt Romney, when asked on the campaign trail about his views of higher education, praised for-profits, especially Florida's Full Sail University (without mentioning that Full Sail executives were huge donors to his campaign and that Romney's own private equity firm was invested in Full Sail).

You Don't Know Jack?

So APSCU decided that the right leader for its political contributions arm was Jack Massimino, whose Corinthian Colleges already was being examined by a group of 23 state attorneys general for deceptive practices and by the federal Consumer Financial Protection Bureau for unlawful student loans practices. By then it was quite clear that Corinthian was one of the worst-behaving colleges, and since then much more has come to the surface: Corinthian is now out of business under the weight of repeated media reports of how it abused students and misled authorities, lawsuits brought by the CFPB and three state AGs, investigations by the Justice Department and SEC, and an unprecedented $30 million fine from the Department of Education.

As his school's reputation, enrollments, and share prices all plummeted, Massimino was taking a $3 million salary, bringing in enough to own an $11.5 million, 10,000-square-foot, mountain-view second home in Park City, Utah, whose real estate listing declared it "Simply THE finest home in Kamas Valley and possibly the Intermountain West; it offers a heated horse barn, a "Children's 'Art Barn,'" and a pond on 61 acres.

But Massimino may have been the man for the job in the eyes of his APSCU colleagues, because while Corinthian clearly was not good at providing quality, affordable education, it was practiced in buying influence in Washington: Corinthian was one of the biggest spenders in the industry on both political contributions and lobbying, providing campaign cash to influential politicians like Reps. Kline, Foxx, Andrews, and Hastings, Senator Marco Rubio (R-FL), and Romney, all of whom served as cheerleaders for for-profit colleges. Corinthian had hired lobbyists including former House Democratic leader Dick Gephardt; it also used non-disclosed dark money spending to support non-profit advocacy and research groups capable of influencing the debate.

According to the 2012 newsletter, Massimino co-chaired APSCUPAC with Bruce Busada, President of the Diesel Driving Academy in Shreveport, Louisiana.

Buying Access to Congress

The APSCUPAC newsletter is blatantly clear that these for-profit college campaign donations were being provided to buy access to Members of Congress: "A robust PAC helps carry our message to the lawmakers on Capitol Hill.... We take every chance we can to speak with our legislators to make sure they hear our desires for student access and success. Your contribution to APSCUPAC directly helps us continue the conversation with these members at small events where there [sic] attention is soley [sic] focused on the issues at hand. Every opportunity to sit with a Member and share our student's [sic] stories of success. [sic] Help us continue our advocacy on your schools' and your students' behalf."

The newsletter illustrates this effort in describing "four very successful" APSCUPAC fundraising events held during APSCU's annual Capitol Hill lobby week: "We honored Education and Workforce Committee Chairman, John Kline with fundraisers to kick things off Monday morning. Great conversation held between our members that attended and Mr. Kline. Further, Dr. Virginia Foxx, Chair of the Subcommittee on Higher Education was able to join us as special guest. We are grateful for their time and the opportunity to share with them our concerns."

The APSCUPAC newsletter also highlights the roles of other for-profit college executives whose companies have come under heavy public scrutiny.

According to the newsletter, APSCUPAC held "a successful VIP Allied Engagement Event with guest of honor Chairman Art Keiser." Arthur Keiser was then the chairman of the overall APSCU organization, despite the fact that the school he runs, Keiser University, had converted to a non-profit institution in 2011. As a front-page report in the New York Times recently noted, that conversion was structured in a way that provides large and questionable financial benefits to Arthur Keiser. And last month, a federal court decision revealed that the U.S. Justice Department had intervened in a whistleblower lawsuit alleging some 200,000 false claims by Keiser University, resulting in a settlement that requires the school to pay $335,000 to resolve the claims.

The APSCUPAC newsletter also reports financial contributors to the PAC, and they include the two executives in charge of the school CollegeAmerica, Carl Barney and Eric Juhlin. As the same front-page Times story reported, CollegeAmerica, in early 2013, also converted to a non-profit, also on questionable terms that favored the for-profit owner, Mr. Barney. In April 2014, the Justice Department sued CollegeAmerica, alleging that the school violated the federal ban on paying sales commissions to college recruiters, thus encouraging the recruitment of students unlikely to benefit from the school -- and more likely to end up buried in debt. In December 2014, the Colorado attorney general sued CollegeAmerica, alleging a wide range of deceptive practices that harmed students.

Other donors to APSCUPAC reported in the 2012 newsletter include additional companies that, or executives of companies that, are now under law enforcement investigation, among them EDMC, Westwood/Alta, and DeVry.

All About the Benjamin

But perhaps the most colorful executive mentioned in the newsletter gets the most fawning treatment.

A newsletter feature called "PAC Committee Member in the Spotlight" debuts with a profile of  "Mr. Arthur E. Benjamin." According to this profile, "Arthur works everyday to save lives, empower others and ensure quality care for all living beings. His personal missions support education, animal rescue and breast cancer research." There follows a breathless account of Benjamin's personal journeys to rescue animals: "Whether it's the frightened, bedraggled Hurricane Katrina kittens that were rescued and given real homes, or the grossly abused circus lion moved to a new beginning atop a Tennessee mountain, Benjamin's caring intuition for animals knows no boundaries."  And finally, the newsletter offers a detailed account of Benjamin's journey to Canada to rescue seal pups from clubbing by fishermen.

"My heart is bigger than I am," the newsletter quotes Benjamin as saying. "I will do anything."

But who is Arthur Benjamin? As presented on his own website, he is a Voltaire- and Shaw-quoting "Internationally Recognized Educator, Corporate Leader, Philanthropist and Animal Rights Activist." However, Benjamin is not one content to just give to charities and rescue animals. He also flaunts his wealth on the Dallas and South Florida party circuits, posing gleefully with a wide range of socialites and celebrities.

In addition, Arthur Benjamin was the CEO of ATI Career Training Center from 2005 to 2011. This for-profit college company had campuses in Florida and Texas and offered programs in fields including health care, information technology, and auto repair. And it was a systematic fraud that ripped off students and taxpayers until it was shut down after being sued by the Justice Department.

At the time the May 2012 APSCUPAC newsletter was presenting Arthur Benjamin as a saintly figure, repeated media investigations of ATI by Dallas's WFAA-TV and others already had exposed troubling, deceptive behavior at the school. By 2013, the Justice Department had joined two federal whistleblower lawsuits, one pending since 2009. According to the lawsuits, ATI, driven to sign up students and cash their federal financial aid checks, looked for recruits in homeless shelters and strip clubs, falsely promising jobs with big salaries. ATI signed up non-English speakers for classes conducted in English. An ATI staffer said, "the ATI culture... was to recruit anyone with a pulse."

The lawsuits allege that ATI falsely told students who had previously dropped out that their current federal loans would be forgiven if they re-enrolled, but ATI in fact had no intention of paying off such debt. ATI falsified student transcripts and attendance records. ATI deceived state officials monitoring the school's job placement rates by making up false jobs and false employers, for example: inducing a worker at a trailer manufacturer to falsely tell authorities that ATI graduates worked there; creating fake business cards for students that the school couldn't place; counting business administration graduates as placed in their field if they worked as cashiers; and employing graduates for a single day past graduation at ATI itself and then counting them as placed.

ATI's interim CEO, Michael Gries, told the Miami Herald that all of the alleged misconduct at ATI happened under Mr. Benjamin's term as CEO.  About $236 million in federal student aid went to ATI starting in 2005. In 2013, ATI agreed to pay $3.7 million to resolve the whistleblower cases; ATI admitted no wrongdoing.

Arthur Benjamin also has been accused by multiple women  of serious personal misconduct, charges he has denied, contested with mixed success, and sometimes settled.

ATI was, until it was shut down, a member of APSCU. Indeed, Arthur Benjamin, during the period that he was ATI's CEO, served on the board of directors of APSCU (then called the Career College Association). He also served, before Massimino, as co-chair of the APSCU PAC.

Remarkably, Arthur Benjamin remains the vice chair of the three-member board of directors of American Institute, a for-profit college he helped found -- and a current member of APSCU.

More Bad Actors in APSCU

The companies described above are not the only bad actors who have been part of APSCU:

  • FastTrain College, raided by the FBI in 2012 amid allegations of fraud, including the notorious allegation that the school hired "exotic dancers" to recruit male students, was a member of APSCU until it was shut down; the Justice Department has since indicted FastTrain president Alejandro Amor and three of his former staff for conspiracy and theft of government property.
  • American Career Institute, sued for fraud by the Massachusetts attorney general, was a member of APSCU until it shut down.
  • Neutron Interactive, an online lead generation company that Republic Report exposed last year for using fake job ads to lure unemployed people into sales calls for overpriced for-profit college programs, is still a member of APSCU.
  • Another current APSCU member is Kaplan, which has been under investigation by at least five state attorneys general in the past few years, and which recently agreed to pay about $1.3 million under a settlement with the Justice Department to resolve whistleblower allegations that it employed unqualified instructors at its campuses in Texas.
APSCU carries on, with no shame, or even humility, over any of this.  This month APSCU CEO Steve Gunderson has been all over Capitol Hill, aggressively lobbying Members of Congress to overturn the Obama Administration's gainful employment rule; his insistent pleas, of course, are backed up by the piles of campaign cash that APSCU members and others in the industry have continued to dole out. APSCU is also back in court, with those same expensive lawyers, once again asking a federal judge to throw out the rule. And next week APSCU members will come together in Denver for their annual meeting, where they will play golf and listen to keynote speaker Newt Gingrich tell them how wonderful and indispensable their schools are.

But the record is clear: APSCU has consistently harbored fraudulent operations as members, bad schools that leave many students worse off than when they started, buried in debt they cannot repay. And APSCU has blocked measures, like gainful employment, that would weed out such bad operations and help channel taxpayer and student dollars only to honest, quality career education programs that actually help students.

As a front group for the worst actors in higher education, APSCU has no credibility. It does continue to have something bigger: The billions in taxpayer dollars that Washington keeps funneling to predatory colleges. Corinthian's reign is over, but many almost-as-bad companies remain in operation. Responsible public officials should be working overtime to end this travesty.

This article also appears on Republic Report.