ATI career school company implodes amid fraud claims; $3.7 million whistleblower settlement

By Dan Christensen, BrowardBulldog.org 

A for-profit career school operator with once-bustling campuses in Broward and Miami-Dade counties agreed this month to pay $3.7 million to the government to settle whistleblower fraud claims.

ATI Enterprises, which operated as ATI Career Training Center, agreed to the payout while denying accusations it had recruited students at homeless shelters, strip clubs and among criminals, then forged paperwork to make them eligible for thousands of dollars in federal tuition grants and loans.

The settlement, announced by the Justice Department last week, comes as crisis managers liquidate the Texas-based company by selling off assets and transferring or referring students to other schools, according to interim CEO Michael F. Gries.

At its height a few years ago, privately held ATI boasted 24 campuses in five states with more than 3,000 employees and 16,000 students. It was valued at more than $400 million.

ATI’s South Florida training schools in Fort Lauderdale, Oakland Park, the Doral area west of Miami International Airport, and Miami Gardens closed at the end of last year, Gries said.

Whistleblower Dulce Ramirez-Damon

The settlement resolved a pair of federal whistleblower complaints, including one filed in federal court by Dulce Ramirez-Damon, ATI’s former assistant director of education in Fort Lauderdale.

Ramirez-Damon’s False Claims Act complaint was filed in secret in July 2011. It alleged that ATI had engaged in a “systematic and nationwide fraudulent practice of forging documents and records to create an appearance of student eligibility in order to receive federal funds.

A similar whistleblower action was filed in federal court in northern Texas in 2009. Both suits have now been made public.

Private individuals bring false claim lawsuits in the name of the United States. They share in any recovery, in this case up to 25 percent plus attorney fees.

After investigating, the government decided to intervene on Aug. 7 in Ramirez-Damon’s case for the purposes of settlement, court records say.

The Department of Justice’s press release said ATI’s payment would resolve allegations it “falsely certified compliance with federal student aid programs’ eligibility requirements and submitted claims for ineligible students.”

ATI also allegedly misrepresented its job placement statistics to authorities in Texas in order to maintain its licensing and accreditation, the press release said.

‘MISUSE OF FUNDS’

Federal prosecutors in Miami, Washington, and Texas investigated, along with the Department of Education’s Inspector General.

“Federal financial aid is there to help students attain their dreams and goals, and misuse of these funds to increase corporate profits is unacceptable,” Miami U.S. Attorney Wifredo Ferrer said in a press release. “We are committed to ensuring that federal student aid is used for the benefit of students.”

Neither Ferrer’s office, nor Ramirez-Damon’s Miami lawyer, Bjorg Eikeland, responded to requests for comment.

Former ATI CEO and Chairman Arthur E. Benjamin

ATI has changed hands a couple of times in recent years, with the current owner being Texas-based Ancora Holdings.

But according to Gries, “all of these allegations” engulfing ATI occurred under the leadership of former ATI Chief Executive and Chairman Arthur E. Benjamin, a resident of Delray Beach.

Benjamin, who now runs Salt Lake City-based Stone Mountain Investments, did not return a phone message left with his office. Here’s a link to a You Tube video he made about ATI when he was CEO.

Benjamin worked at ATI from 2005 to 2011. While there, he contributed tens of thousands of dollars to a bipartisan array of Congressional candidates, according to federal election records.

Florida recipients of Benjamin’s largess include: Rep. Debbie Wasserman Schultz, D-Weston; Rep. Alcee Hastings, D-Miramar; ex-Reps. E. Clay Shaw, R-Fort Lauderdale and Ron Klein, D-Boca Raton; and Charlie Crist, the ex-Republican and ex-governor and presumed frontrunner for the Democratic nomination to challenge Republican Gov. Rick Scott.

The whistleblower lawsuit alleges that within a month of Ramirez-Damon’s hiring in October 2009 it became apparent to her that ATI was engaged in active Pell Grant fraud. She said she notified her superiors, but that company management chose “to look the other way.”

Ramirez-Damon claimed she was abruptly demoted in April 2011 and transferred off the Fort Lauderdale campus at 2890 NW 62^nd Street to a job as an instructor in Miami. The reason: “to keep her silent” and deny her access to school records, the lawsuit said.

She is no longer employed by ATI.

Pell Grants provide government aid to students from low-income families. At ATI, students could take courses to train them for jobs in automotive, health care, business, information technology and other fields.

According to the whistleblower suit, ATI falsified documents to enroll “as many students as possible” in programs with tuitions ranging from $13,741 to $46,744 per program. One former ATI employee is quoted as saying “the ATI culture…was to recruit anyone with a pulse.”

The numbers could add up quickly.

‘A LUCRATIVE SCAM’

“With a student mass of over 750 (in Fort Lauderdale) alone, and 18,000 country wide, federal subsidy of tuition is a very lucrative scam for ATI,” the suit said.

To find students, the suit said, ATI admission representatives targeted “the ‘down and out’ at homeless shelters, strip clubs and poor neighborhoods.” The “bait” to entice them to sign up was the promise of financial aid and low-interest loans. ATI distributed flyers promising lucrative salaries and guarantees of job placement.

The alleged fraud by ATI was sweeping: forged admission exams, forged proof of education, the acceptance of students without screening for criminal history, forged attendance records and falsified grades – all done to make it appear that federal standards were being met so the money would continue to flow.

In the lawsuit, Ramirez-Damon contended, “of a student body of 750 enrolled students” in Fort Lauderdale “at least 150-200 students have a violent or drug-related background.” She provided the names of more than a dozen such students in her complaint.

“It is common practice at ATI when a student is missing attendance, that employees check (the) Florida Department of Corrections website to see if the student has become incarcerated,” said the lawsuit.

ATI would also “re-circulate” poorly achieving students who faced dismissal, letting them know that they could transfer into another career training program. “This way the old grades no longer count and the student is again eligible to receive financial aid,” the suit says.

Some students who failed would fail again because they did not have the academic ability or background to take the courses they were in, according to the lawsuit.

“As a result, the students incurred more debt without graduating. ATI, on the other hand, has made more money,” the suit said.

The government’s press release noted that $2 million of ATI’s settlement payout would be used to refund student loans involving lawsuits brought by individual students against ATI.

The press release did not say how much taxpayers lost on government loans to ATI students.