U.S. Federal Government Sues Utah’s Stevens Henager College Over Fraud, Fasification, Illegal Recruiting

By    |  May 11, 2014

In a move that is not entirely surprising to some, the United States federal government has sued a for-profit career institute from Utah, Stevens-Henager College, after two whistleblowers first came forward to reveal fraudulent recruiting practices that involved paying illegal commissions to student recruiters.

The suit also claims that Stevens-Henager employed faculty members who lacked the minimum qualifications required by the school’s accrediting agency (ACCSC), and that Stevens-Henager officials purposely falsified student attendance records and grades. The case is United States ex rel. Katie Brooks and Nannette Wride vs. Steven-Henager College, Inc., et al., Case No. 1:13-cv-00009 (District of Idaho).

Shady History Includes ‘Mormon’ Connection

Stevens-Henager, which has been heavily scrutinized by the federal government on more than one occassion, was earlier connected by CollegeTimes to Utah’s Church Of Jesus Christ Of Latter Day Saints after our team discovered a Mormon magazine from the 1980s had incidentally revealed that major leaders of the LDS church had attended a groundbreaking ceremony of one of the Henager campuses. (That archived article from LDSchurchnews.com was quickly deleted after our discovery, and now redirects to DeseretNews.com, a Salt Lake City based newspaper owned by the LDS church.)

Regardless of Henager’s unclear relationship with the LDS church during its 100+ year history, the college was more recently purchased by one Carl Barney, who also currently owns Independence University, CollegeAmerica, and California College – all for-profit institutes that lack regional accreditation.

According to a statement released by the Department of Justice, the DOJ, along with the Department of Education, allege that the college paid illegal incentives to recruiters based on the number of new students they were able to enroll. Federal law prohibits any such commission payments, in order to combat student loan default rates, the enrollment of unqualified students, and the waste of student loans and grant funds:

The United States has filed a complaint under the False Claims Act against Stevens-Henager College, Inc. and its owner, The Center for Excellence in Higher Education, for illegally compensating recruiters, the Department of Justice announced today. Stevens-Henager operates a chain of for-profit colleges in Idaho and Utah.

“Congress has made clear that colleges should not pay improper incentives to admissions recruiters,” said Stuart F. Delery, Assistant Attorney General for the Civil Division of the Department of Justice. “The Department of Justice and the Department of Education are working together to combat abusive recruitment practices that can harm students and result in the waste of taxpayer funds.”

The False Claims Act under which the lawsuit was initially filed, allows private citizens to file suit over false claims (fraud) on behalf of the government. The act then allows the government to take over the allegations, which is has done in this case. Interestingly, the whistleblowers in this case were two former Stevens-Henager employees from Utah, but they decided to file their federal lawsuit in Idaho instead. Stevens-Henager currently maintains several campuses in Utah and Idaho.

In order for any US colleges to offer federal student aid – such as loans and grants – schools must agree to not offer recruiters any commission or other incentives. The re-organized DOJ lawsuit claims Stevens-Henager ignored those rules for several years, and lied to the federal government, in order to receive more than $650 million in taxpayer money. An attorney from Salt Lake City with ties to the case said Henager recruiters even enticed homeless people to enroll in order to cash in on illegal commissions.

The Republic Report’s David Halperin first reported the whistleblower lawsuit in early April, before federal prosecutors decided to file their own (second) complaint:

Last year I obtained a letter that a Stevens-Henager employee wrote to government authorities alleging a lack of standards and integrity in the school’s recruiting. It read in part: “Our admission representatives are required to enroll anyone and everyone. All entrance and diagnostic testing has been eliminated… Toothless and homeless people are not marketable and will never pay back student loans. We still enroll them… Our director said, ‘Get 40 people and I don’t care what you say or do to get them.'”

Stevens-Henager and its affiliated colleges have established records of leaving their students deep in debt. For example, as of 2009, 40.2 percent of students of the Flagstaff, Arizona, campus of CollegeAmerica defaulted on their loans within three years. The figure was 38.8 percent at the CollegeAmerica campus in Denver, and a still-high 24.7 at the Stevens-Henager campus in West Haven, Utah. For comparison, the default rate at Michigan State University was 4.3 percent.

Although Stevens-Henager is described in the Justice Department’s news release as a chain of for-profit colleges, the college’s website describes it as a nonprofit institution, which was apparently a strategic business attempt the college made last year in order to avoid the seemingly ever-growing ‘for-profit education’ controversies.

Update 5/11/2014: It appears that the Standard Examiner, an Ogden, Utah based newspaper, has deleted this story from its website after having initially published the story via the automated Associated Press wire. (Editor’s Note: the main campus of Stevens Henager College is also – coincidentally – located in Ogden, Utah.)

Update 5/14/2014: Updated to clarify that SHC’s (historical) relationship with the LDS church is NOT official, and is in fact, unclear at best. The LDS church refused to comment on its relationship with both Stevens Henager College and Neumont University when contacted via email by the CollegeTimes team.

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24 Comments on “U.S. Federal Government Sues Utah’s Stevens Henager College Over Fraud, Fasification, Illegal Recruiting”  (RSS)

  1. I worked for this school for many years and have left due to them not fixing the problem they are still doing the same things they were sued for in the first place so who do I contact to give them the information I have. This is not about winning anything for myself but more for my students or anyone that was ripped of by this company and I just need to be pointed in the right direction so they will at some point have to stop what they are doing to innocent people.

  2. Has anyone lawyered up? If so I need lawyers contact information If anyone has it Please…

  3. I went to this school and now they want me to pay them some kind of loan back that I didn’t even know I was getting from the university. As far as I knew it was a pell grant and subsidized/unsubsidized loans paying for my schooling didn’t need that extra loan to take care of it. Now I’m paying for that because they won’t transfer my credits over and/or present me with an associates degree having enough credits done for it.

  4. I want my money back. I got A’s without even trying and B’s just for asking.

  5. I started at Stevens-Henager (online) in March of 2012. They promised me that, by joining their graphic design program, I would be able to use my knowledge and skills gained to secure that illustration job that I’ve always dreamed of. This couldn’t be further from the truth. I am realizing now, almost 2 years after graduating with nearly $40,000 in debt, and nothing close to a graphic design job (or even being considered for one), that I really don’t know much at all. I did all of my homework, turned in all of my assignments, made the president’s list numerous times, there is no reason I should feel under qualified, yet, I do every single time I look for a job. I don’t feel like I learned what I should have from this school, despite all of the effort that I put into it. In all honesty, I learned more from searching google or youtube for tutorials than I did from any instructor. Forget about getting someone to ever respond to an email or phone call. I went through an extremely hard time in 2013 that almost made me a drop out, but when I reached out to the school for help, I got nothing. It all seemed so shady to me and now I know why. Any additional information that could be provided to me about this would be greatly appreciated.

  6. I just wanted to add my experience to this thread. I was a student at the Boise campus in 2006-2007 as part of the newly added Graphic Design program. I was 18 when I was lured in by their false promises. I admit that I had some responsibility in my decision to attend the school, but to this day I still feel that my choice was affected by promises made by the school that would have never been held up on their end. I was told it would be a 20 month program in which I would learn the skills necessary to obtain a graphic design job.

    In the beginning, there were 5 of us in the program. Two of them started a couple months before the 3 of us that started when I began. We acquired 3 or 4 additional students while I was there. All of us were in the same classroom together, with ONE professor teaching ALL of the classes. She actually quit after the first couple of months, and they brought in a new professor to take her place. Honestly, one professor cannot properly teach all aspects of graphic design (which involves using several different software programs), especially to students that were at different points in the program. We basically worked independently, as we were enrolled in different “courses,” but all used the same classroom. As time went on, it became more and more evident that the professor was not capable of teaching some of the month-long courses that were required. I felt like I was teaching myself, and there was one student that was far more proficient at most of the things being taught that would help the rest of us. As I became more aware of my situation, I chose to leave and transfer to a more reputable school. It was pure luck, in my opinion, that the school that I transferred to accepted Stevens Henager credits toward their “general” elective classes. I know others that transferred that received no credit, as their credits are NOT ACCEPTED by most colleges, as they would lead you to believe when you’re enrolling.

    Now, here I am, 10 years later, and I am still struggling to pay my $30k of student loans that I racked up. I don’t feel like I received anything for what I paid for. I honestly hope that they are shut down so that no one else has to be in this situation.

  7. If you were a student you can go to https://studentaid.ed.gov/sa/repay-loans/forgiveness-cancellation#false-certification

    here you will find the information and links to file a complaint with the department of education. I worked there for several years and thank God everyday I am out. They are not in compliance by any means and manage by fear of the constant threat of being fired. Now it is up to 6 starts for enrollment and 22 packages per month to keep your job. I can remember them trying to enroll a blind couple in an online program as well as 3 Alzheimer’s patients whose children had called in and demanded we stop contacting them. In the last 3 years at least 8 people have been fired for fraud 4 in financial aid in Phoenix that packaged students who had cancelled their enrollment to keep their jobs. They figured out how to manipulate the forms sent out to students so they could sign the student’s name to them. STAY AWAY from this school. And if there is a way to join the lawsuit or at least get on the list to testify please post

    • Mary: I am the lawyer representing the whistleblowers in this lawsuit. I would like to talk to you about your experiences as a recruiter. Please contact me at your convenience. 801-536-6958.

    • Hello Mary.. I am a RT graduate as of 2014. It took EVERYTHING I had just to get through school while working with 3 kids. I had absolutely no support from staff. I would call and e mail daily with no return. I had to travel 1300 miles away for my NICU rotation in which I had to find my own clinical sites and pay for all expenses including airfare, rental car, ect. I am almost $50,000 in debt thanks to them. I also had to take my boards several times just to be able to pass them at $200 a piece out of my pocket.. Not to mention all of the humiliation and the 2 hour each way to be able to take the boards. The instructors were absolutely no help. I used You tube for most of my learning and my fellow RT’s here at the Hospital. I would like to know if I would be eligible for the lawsuit? Any help would be appreciated. Thank you!

    • Any recommendations on lawyers for this, I’m trying to get my student loans paid, but I’m having a very hard time. This school is a joke, I tried to transfer my credits to the university of wyoming nursing program only to find out they will not transfer. I was told that the school was credited when I enrolled. The school messed up in my schedule and did not schedule me for the 2nd xray class. When brought to their attention, they did not fix it, instead had me meet between classes with a teachers aide to learn. I am being charged for not being taught by a teacher of the school. I was also involved in domestic violence situtation and missed some classes for coding. I finished off the class and took the final and passed. Only to be told later that I would have to retake the class. The instructor at that time said I had already passed we’d meet once a week and I would not take the final again. Now the school is charging me for that as well. And since I have been trying to get them to see that I should owe, I now have no diploma, it’s been too long for me to get a position in my field. This was all between 2008-2010. I tried the BBB but no resolution. I need help I can not afford to pay the school and my fed. student loan, that I was duped into enrolling into.

  8. I apologize for the s word. I was angry. That was un-professional and not necessary. I am sorry. Please contact me if we find good lawyer. Class action lawsuit.

  9. I am currently enrolled in this school. And now I don’t understand why I have to pay a monthly fee of 100.00 when my loan isn’t even due till I graduate. The classes are a joke. You don’t learn shit. I turn in my work and 1/4 of the time I get notice they didn’t recieve it,. I learn bare min. And teach myself the rest. This is bull crap. I could of and should Of went to AI. I never saw my Pell grant. I Was depending on that. They could care less. I am 5 months in and I want to sue them. I’m 41 yrs old and it took everything in me to go back to school. I am right where I feared I would be.

  10. I would love more information on this. I started college with them over a year ago. They took out personal loans on top of 30,000 that I have to pay $100 a month out of pocket while in school and my fininacial aid is no where to be seen? They gave me no information as far as financial aid etc, asked about my pell grant and they couldn’t give me any information. Then told me that they were accredited and that I could take my RHIT test after graduation for Healthcare Information Management then to find out that none of the classes will qualify me for the RHIT test that employers require. I will be sueing their asses!!

    • I am in the same boat! I would like the information as well! They are trying to charge me $43,000 for only 4 months of courses that they kept placing me in the wrong ones, sending me broken equipment and refusing to give me information as well as my financial aide. They took out a loan of $43k in my name and they are illegally charging me $100’s more a month with out consent. I was placed on a medical leave of three months and they’re stealing from me. Not to mention I do not qualify for any of the standardized testing required for the area I am trying to get into; seeing as the credits according to the state of Arizona are un-accredited.

  11. I would love to find out more info on joining the lawsuit. I had initially went to Stevens Henager for the Nursing program. I was told I needed to do Medical Specialties first because I didn’t have any medical background. I took their word for it and entered into the MA program which cost over $40k. Shortly after completing that program I entered into the RN program which started out at $57k. At the end of the program they decided to add another class and extend another one, which added another $8k to my total. All in all I am over $100k in student loans, and personally owe the school over $29k for the amount I couldn’t get federally funded. I was lied to about having to do the MA program, and lied to about the cost of the RN program. I am being nickeled and dined to death trying to repay the amounts owed. If anyone has info on how to join or start the lawsuit please let me know.

    • Please let me know if you figure out how to get involved!! They screwed me too, in more ways than one. And now I am stuck with this damn mountain of loans…makes me sick!!

  12. I would love to get a lawyer or be part of this… S-H needs to be shut down and refund ever single student…

    I really wished I would have looked up info about all this before going to Stevens-Henager… “Nationally Accredited” of course sounds better when you don’t know the differences… All the lies and crap they sold me, and how they said my VA GI Bill would cover almost all the costs. It’s funny/sad how it went from 90% covered, to… well it should be about 80% actually, to.. well… it’s probably going to be more like 75%… To when I got the actual papers from the VA and they said it’s only 50% covered. Also that I would be getting close to $900/mo from the VA (housing allowance) since I was an online student. And somehow that number ended up being only $345/mo. And we’re not even going to get into how worthless some of the instructors are… And the tutoring, my first and only time in the ‘student success center’ (their tutor lab, run by current students) I did not understand programming and I was told by a tutor, “Don’t worry about learning programming, just do the homework to pass the class and you’ll be ok”… WTF?? Don’t worry about actually learning?? If that’s the case, why am I going to school??? So in summary… having my schooling 90% paid for, and getting $900/mo to live off of, and being ‘Nationally Accredited”, all sounded amazing, why wouldn’t I signup and go to their college? That’s what I get for not doing my research before signing my life away and getting next to nothing out of it, and now finding out the paper it’s printed on is worth more that the actual bachelors degree…

  13. I enrolled in SHC to become a nurse. They promised they had an eight year accreditation and the advertising said I could be an RN within 22-28 months. I attended there for 22 months and after a long nightmare story I finally got into the nursing program with was an additional 18 months. I passed the first class with a B plus and they failed me and asked me to leave. I was left with a $50k bill in student loans and then quickly received a letter that I owe Stevens Henager 21 thousand dollars with seven percent interest. I am looking for any help I possibly can and am willing to do whatever it takes to get my life back. I spent two years of my life and a lot of money just to end up empty handed. I can’t afford a lawyer, but I am searching for one that could at least point me in the right direction. Please help.

  14. i am wondering how i can join the lawsuit against this school?
    i went there for probably 5 months and when i decided that it wasnt worth it anymore i quit, the school continued to take money from the government i am hoping i can join this lawsuit and get some of that money back from them to the government so i dont have to pay for them.

    • Nicholas Have you looked for lawyers if so Please provide

  15. The school took out a personal loan on my behalf and never picked up my pell grant. And now i owe the school over 16k i just dont understand

  16. I am wondering how you could join the lawsuit. I was a student there. As soon as I needed to go to days due to being unable to afford a babisitter at night. They blew me off and continued to get money. I now owe them $25,000 and the federal government another $25,000 in loans they took out. I was royally screwed over by them and am misreable because I can’t afford to pay anything.

  17. I taught for this school until I was fired in the early part of 2014. The school is horrible. Students were allowed to enter the class the last day of term and instructors were required to take all late work. The school had a late policy in their syllabus, but I was told by Marilee Hall that it was “optional.” No where in the syllabus did it say “optional.”
    If your students dropped the course or if you got a certain amount of F grades, then it was reflected in your rating. There was a meeting held where the school wanted us to meet 95% passing and 95% retention rate. We were told the school understood that the majority of students who fill out the evaluations are the ones who are upset with the course, thus low ratings. Yet they use these ratings against their instructors. I had one student, Joe Callier, outright lie on my evaluation. He stated that I was the worst instructor ever, that I should have held 2 live chats (we are only required to hold one)and that I did not go over the material. All lies. This student did not do his work and went to the dean, Marilee Hall, to ask for permission to make up late work because he was busy with his job. Marilee Hall discussed NOTHING with me. Instead I get an email stating that I am to accept this student’s late work. After the course ended and I read this evaluation, I complained to Marilee Hall. It was obvious this student lied, yet his evaluation was used to calculate my ratings. At that point, I was locked out of my classroom. I got a call the next day from Marilee Hall stating they would no longer offer me classes.
    This school is a joke and I am glad they are being sued. They need to be shut down. According to Marilee Hall, “the school works with their students,” and that the students are our customers. That just translates into “do everything you can to please the students because they are paying for the course, so just pass them.” If you want a high rating, you pretty much have no choice but to give passing grades, because if you flunk them it goes against you.
    I was told I had to contact the students who did not enter the classroom. Most of the times, the phone #s were not accurate in their system. Emails bounced back, but yet the instructor was held responsible if they could not get ahold of the students. Calling students every week is borderline harrassment. I have taught at several schools. None of them required us to call them as much as Stevens Henager.

    Please shut this school down! PLEASE!

  18. I worked for Stevens Henegar college online in Phoenix AZ during late 2011 -2012 and the things they did enrolling students in the online program where horrible. The director required everyone of the admission consulants[ my title] to enroll a minmimum of 3 students per month or you would get fired. They did not care if the students they enrolled were fit for college admission or not as long as you coerced them to sign up that is all that they cared about. Many of those that were put on the start list were lacking important documents to enroll and that still was not a determining factor as they just wanted them to start online class. Most of the students never made it past the first week of classes but the management team could have cared less as long as they were able to aquire the student aid for those that enrolled. They are very unscrupulous in there tactics and it is all about numbers and the profit they can make–in other words they could not care less about the students being successful in getting a degree. This is one of the main factors for me being fired because I could not in good conscience do this to students that never belonged in college in the first place. I am hopeful that the government takes them down and never allows them to scam anyone like this again for purely profit and no regard for the student themselves.

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