The Killing of CollegeAmerica and CEHE

(This post follows my earlier post: “Persecution: Prosecutorial Abuse in Colorado.” It provides a lot more detail for those interested—those in the career college sector, and the former employees of CEHE. Feel free to share this. Others can safely ignore this unless you want to read a horror story of government corruption.)

The Wall Street Journal on June 22, 2016, reported as follows:

Carl Barney thought he was doing a good deed by going nonprofit. [Yet] the feds still want to kill his schools.

… the administration isn’t content with shutting down for-profits: now regulators and prosecutors are even going after a businessman who waved the white flag and converted his vocation schools into nonprofits. With this administration, it’s a sin if you ever try to make a buck. (Emphasis in the original.)

It took them five more years to manage to kill CEHE’s colleges. How was it done?

An assault by Michale McComis^[1] and ACCSC over ten years, culminating in a capricious withdrawal of accreditation, which provided the leverage for the U.S. Department of Education (the “Department”) to kill the schools. The forced closure of the colleges was affected by an organized, coordinated campaign straight out of The Art of War by Sun Tzu. Here are the rapid, coordinated steps:

On Thursday, April 22, 2021, ACCSC withdrew the colleges’ accreditation.

The next day, Friday, April 23, 2021, the Department ordered the “suspension” of the company’s CEO, Eric Juhlin. So, they took out the leader. Without a leader, the company was unable to effectively fight back.

The next business day, Monday, April 26, the Department demanded to hear what actions had been taken to ensure Mr. Juhlin’s departure. It needed to ensure he was neutralized.

Then just two days later, on April 28, 2021, the Department placed CEHE’s colleges on Heightened Cash Monitoring 2 (“HCM2”)—immediately cutting off of all pending financial aid disbursements for all currently enrolled students. No more money will come to CEHE.

While the Department, pursuant to HCM2 rules, agreed to reimburse CEHE, they did not. In fact, the Department, shortly after imposing HCM2, admitted it had “no intention” of processing any HCM2 submission by CEHE’s colleges.  CEHE, in an effort to do the best it could for about 10 thousand students, spent its entire $50 million of reserves continuing to educate its students and working to find transfer options to protect the credits each student had completed.  After four months of spending all of its reserves to help students, coupled with the Department’s refusal to follow the HCM2 rules for reimbursement, CEHE ran out of money. It was unable to continue paying instructors and staff, and pay rent.  In the end, these very decent colleges, including Independence University, were forced to close in August 2021.

The tightly dated campaign was carefully planned and well-coordinated. This has all the hallmarks of a multi-agency collusion to put schools out of business.

What Brought This Foulness to CEHE

The 10-year coordinated campaign to cripple and close CEHE started in 2012.

Prior to 2012, the colleges enjoyed excellent relationships with our accreditor, ACCSC. Many executives served on accreditation visiting teams and as team leaders. Then, when we became nonprofit, one of CEHE’s attorneys argued with and offended McComis by challenging his authority. He pushed back (too hard) on demands from McComis to make purchase notes, in a merger of the colleges into CEHE, contingent in the transaction.

An Anonymous Smears Campaign

Additionally, in the spring of 2012, an organized campaign of anonymous smears, masquerading as complaints, were sent to ACCSC.  Seven such smears were distributed in May 2012, two in July 2012, and six more in early 2013. They continued until 2017. Prior to this time, there had not been a single anonymous smear/complaint against CEHE’s colleges.

All smears were received within a three-month timeframe except for the subsequent missives. One of the more passionate missives raged: “… scandal!!!!! [sic],” “misrepresentation,” “scam for unsuspecting students,” “corrupt organization,” and threatens “an intensive well-orchestrated investigation.” These missives were copied to the Department of Education, to all Attorneys Generals’ offices in all the states where the campuses were located, and major media outlets in all states.

The anonymous smears failed to name any actual individual, or even a particular campus; there were no actual events, testimony, nor evidence of any kind with any of these “complaints.” The kind of language used throughout them was “scummy,” “despicable,” “corrupt,” “fraudulent tactics,” “rip-off”—no facts, just hateful smears.

This malicious mischief had a purpose. What was that purpose, and from whom did it originate? This hate campaign was organized by someone. We believe the perpetrator(s) were Katie Brooks and Nannette Wride and their plaintiff attorney, Brandon Mark. They were planning a fake lawsuit to line their pockets with what they hoped would be millions of dollars. What was the motivation for their campaign? Simply, to motivate state Attorneys General, ACCSC, the Department, and plaintiffs’ lawyers to coordinate an attack against CEHE’s colleges. Any person who can credibly provide evidence re: Brooks, Wride, and Mark will be rewarded $5,000 to $25,000, depending upon the evidence provided.

McComis/ACCSC Weaponized the Smears

Someone had to give these unhinged, scurrilous rants effect, substance, and credibility, for in themselves they were worthless. No decent, credible person engages in such low behavior. Using the power and prestige of ACCSC, a national accrediting agency, Mr. McComis empowered and gave credibility to these appalling smears; he treated the smears as legitimate complaints. In fact, Mr. McComis provided copies of all of the anonymous smears to two state Attorneys General before CEHE was even given an opportunity to respond, refute, and contest the legitimacy of these smears. Why? Did Mr. McComis’s original and growing animus toward Barney and, later, Juhlin, bias him to re-assert his authority after being challenged?

It certainly was a moral crime to organize such an anonymous smears campaign and copy so many people with the avowed attempt to defame and destroy the colleges. But the greater crime is using the power and prestige of an accrediting agency to empower them. In effect, Mr. McComis acted as an accomplice by demanding that the colleges provide massive responses to these smears, and ultimately, based entirely on these smears, he issued an unprecedented, company-wide Order to Show Cause (“OSC”) why the accreditation of CEHE’s colleges should not be withdrawn. (A massive, aggressive response was made in response to the OSC, and not a single finding or actionable item emerged from it!)

Because of this outrage and violations of the ACCSC’s own policies, Barney filed a complaint with the ACCSC’s Commissioners, which they ignored until a response was demanded; then the Commission’s law firm provided a boilerplate response. When this was not taken seriously, Barney made a complaint to the Department of Education, which was simply ignored until an answer was demanded, and it too brushed it off.

In April 2017, Mr. McComis again supported an Attorney General’s persecution of CEHE via a scurrilous claim that CEHE had a significant historical record of complaints about its advertising and recruiting methods. He wrote this to Colorado Attorney General, Cynthia Coffman, on April 17, 2017, on the eve of a trial. This action clearly and obviously prejudiced the AG.

Libby DeBlasio Webster’s Assault on CollegeAmerica

Libby DeBlasio Webster was an Assistant AG in the Colorado Attorney General’s office who is a far-left hater of private career colleges and has made it her career to destroy them. She first attacked Westwood Colleges (now out of business), and then Argosy University (subsequently out of business). CEHE’s Colorado institution, CollegeAmerica, got on her list.

Mr. McComis colluded with Ms. Webster by sending her copies of the anonymous smears before CEHE had been afforded an opportunity to respond pursuant to ACCSC rules. Ms. Webster reveled in these smears and, in the fall of 2012, issued the first of many onerous investigative subpoenas, which were a massive burden to CollegeAmerica.

That began Ms. Webster’s ten-year campaign to cripple and close CollegeAmerica, and by extension, CEHE.

In early 2015, Webster filed an “urgent” motion demanding 17 preliminary injunctions against CollegeAmerica. After a week-long hearing on the demanded injunctions, Judge Michael Mullins issued a massive rebuke. The Judge found that the state had not “established a reasonable probability of success” for its claims and denied every single one of Ms. Webster’s injunctions.

But that did not stop Webster. She redoubled her attack and pursued more investigation against CollegeAmerica for 2 more years until a trial was held in November 2017. The judge in that case, Ross Buchanan, sat on the case for almost three years, creating anxious uncertainty and extra work burdens for CollegeAmerica during 2018 to 2020. This provided a window for cover for ACCSC, the Department, and others to continue their attacks against CEHE and its colleges.

CEHE filed two complaints against Judge Buchanan with the Colorado Commission on Judicial Discipline for his delay. Unsurprisingly, after CEHE’s complaints, in August 2020, Buchanan issued a retaliatory judgment against CollegeAmerica.  In fact, CollegeAmerica proved that Judge Buchanan’s decision simply copied (including typos) the draft language provided by Ms. Webster at the end of the trial.

CollegeAmerica was granted an accelerated appeal, and received a very favorable appellate opinion: Judge Buchanan’s order was reversed, Judge Buchanan was removed from the case, and a new trial was granted.

ACCSC and the Department used the judge’s August 2020 corrupt decision to again assault CEHE. Mr. McComis and the Department required that CEHE explain why it should be considered in compliance with accreditation standards and federal regulations, and demanded massive responses which took thousands of work hours.

Judge Buchanan bears significant blame for the destruction of CollegeAmerica and CEHE.

Department of Education Assault

First, the Department of Education refused to act on CEHE’s December 2012 Change of Ownership Application for almost four years—CEHE had to operate in limbo with only month-to-month approval.

Second, the Department joined the campaign against CEHE in 2014 by prompting the Department of Justice to intervene in and advance a False Claims Act case brought by two of CEHE’s former disgruntled employees against CEHE.

Third, the Department increased its attack in January 2015 by demanding an outrageous 50% letter of credit of $72 million dollars(!),^[2] which was unprecedented. The Department had never before demanded a 50% letter of credit following a change of ownership. Historically, they had only required a 10% letter of credit, which CEHE had planned for. CEHE spent months trying to work with the Department to reduce the demand to reasonable levels. It refused and ignored all communications.

After we contacted the Utah Congressional Delegation (who then contacted the Department), the Department agreed to lower its letter of credit demand to $43 million, which still was impossible. Raising that huge sum had a crippling effect on the operations of the colleges because they couldn’t do anything except post all funds received to this letter of credit.

Thus, by the end of 2014 and early 2015, there was a coordinated campaign against CEHE by ACCSC, the Colorado Attorney General, and the Department.

Fourth, in 2016, three and a half years after CEHE submitted a complete Change of Ownership application, the Department issued a shocking and unprecedented decision that had no regulatory basis. It wrote that while it was approving CEHE’s ownership of the colleges, it did not believe that CEHE actually operated the colleges (no evidence, just an assertion). The Department’s position was that the former owner, Mr. Barney, was still operating the colleges. (In truth, Mr. Juhlin was CEO and President.) The Department said it would continue to treat the colleges as “for-profit” institutions for Federal regulatory purposes. This was unprecedented—this bizarre action had never been taken by the Department before. This position was solely created as a new category for CEHE, essentially being identified as a nonprofit/for-profit college. The Secretary himself and his assistant issued outrageous and false press releases.

CEHE filed a lawsuit against the Department for this unsupported decision. After new leadership at the Department took charge (following the 2016 Presidential election), the Department reversed itself and approved CEHE’s nonprofit status without claiming any wrongdoing by CEHE. CEHE’s colleges officially became nonprofit institutions in December 2018—six years after the fact.

All throughout this period the IRS was harassing CEHE and Carl Barney personally, demanding massive numbers of documents, but found nothing and eventually simply packed up and went away.

Fifth, another Department assault against CEHE occurred when CEHE’s $43 million dollar letter of credit expired (and was to be returned) in January 2017. The Department refused to return CEHE’s funds based upon a bizarre and unfounded pretext claiming that CEHE had filed a late audit for fiscal year 2015, which was a blatant lie.

Other Bureaucratic Assaults

Throughout the decade of this coordinated attack, there were repeated assaults, investigations, and demands for documents from all of the regulatory bodies in states where CEHE had colleges. Other regulators such as the Veterans Administration and the Consumer Finance Protection Bureau also got in on the act. The destruction and burden on the colleges was unimaginable, retarding the operation and growth of CEHE, leading to overworked staff, and stressing everybody to a breaking point. It became almost impossible to do the work of educating students.

Those Responsible for the Destruction of CEHE

The perpetrators of this campaign include Mr. McComis of ACCSC, Webster of the Colorado AG’s office, senior leaders at the Department, and the cabal of progressive haters of private colleges (David Halperin, Robert Shireman, entities funded by Arnold Ventures, Sen. Elizabeth Warren, and Sen. Richard Durbin).

There are three fundamental perpetrators who were at the inception of this and present all the way through: 1) The perpetrators of the anonymous smears campaign, 2) McComis, and 3) Webster. All worked together to destroy our colleges and CEHE. They have destroyed a decent company faithfully and effectively serving thousands of students.

Please pass this along to other CollegeAmerica and CEHE employees and others in the career college sector.

Carl B. Barney
April 21, 2023

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[1] Michale McComis is the Executive Director of Accrediting Commission for Career Schools and Colleges (“ACCSC”).

[2] The basis of the Department’s letter of credit was CEHE’s 2013 balance sheet following its change of ownership. When CEHE submitted its annual audited financial statements, the Department knew full well that there was no way CEHE could afford or provide a $72 million dollar letter of credit. It was a pretext to close the schools down.