Posts Tagged ‘Art Keiser’

Click here to read the Keiser Lawsuit against Florida State College Jacksonville.

Keiser University, a regional for-profit college, has filed suit against Florida State College at Jacksonville President Steven Wallace and one of his top administrators, saying they tried to sully the school’s image by colluding with detractors of for-profit colleges.

The crux of Keiser’s civil suit, filed Monday in Broward County, hinges on e-mails from Wallace and Susan Lehr, FSCJ’s vice president of government relations. The e-mail exchanges included representatives from The Institute for College Access and Success, a national group that has lobbied for tighter restrictions on for-profit schools.

The lawsuit claims the community college leaders tried to launch a clandestine smear campaign designed to build negative publicity for the proprietary college, which has one campus in Jacksonville.

An FSCJ spokesman said Wallace hadn’t received the lawsuit by Monday evening and declined to comment.

In the e-mails, an account linked to Wallace disparages the for-profit sector in a note to Gilchrist Berg, a prominent Wall Street short seller who founded a multibillion-dollar Jacksonville-based hedge-fund firm.

“All right, my friend. Here is a bunch of good stuff to get you started in your exploration of greed, corruption and predatory schemes among Florida’s proprietary and for-profit career ‘colleges,’” the e-mail said. “The new technical college we will launch on 8/1/09 is designed, in part, to drive the sleazebags out of our region.”

The same e-mail identifies Lehr as the “designated antagonizer of the privates.”

Other e-mails include correspondence between Lehr and Steve Eisman, a hedge-fund manager who gave a vitriolic speech against for-profit education during a Senate hearing in May.

“I cannot thank you enough for speaking out on the for-profit higher ed industry,” the e-mail said. “I read your speech and could just leap with joy!”

The lawsuit alleges Lehr “tailored a Florida State College press release” to the speech’s message, which alluded to the “subpriming of students.” The release was distributed to multiple news outlets, according to the lawsuit.

Keiser officials said the negative publicity has hindered student enrollment and financially harmed the company. The suit seeks damages, but a total amount wasn’t listed.

James Waldman, Keiser’s general counsel, said this is the first lawsuit ever filed by Keiser.

It’s unclear if this is the first time a for-profit school has sued a state-funded institution.

“My hope is other proprietary schools take action if this is going on elsewhere,” Waldman said. “There is no place in this country for the government schools to operate in such a manner to harm private businesses.”

matt.coleman@jacksonville.com, (904) 359-4654

From: http://jacksonville.com/news/florida/2010-10-04/story/profit-college-sues-fscj-president

Hedge-fund manager Steven Eisman made a fortune shorting subprime debt, and at last May’s Ira Sohn Conference in New York he announced his next target: For-profit colleges. Now Eisman’s efforts have inspired a nasty lawsuit by a Florida school that accuses him of conspiring with administrators at two competing public colleges to drive down the value of for-profit schools.

I’d file this under “sour grapes” along with any number of similar suits against short-sellers, or the United States Football League’s hail-Mary antitrust suit against the NFL. Except for two things: Plaintiff  Keiser University in Fort Lauderdale used the Freedom of Information Act to get all sorts of nasty e-mails from public school administrators to the short-sellers. And the law firm at the bottom of the complaint, Bartlit Beck , has a well-deserved reputation for top-gun litigation.

The suit is curious because it doesn’t name Eisman or the other short-sellers as defendants and the plaintiff, Keiser, isn’t one of Eisman’s publicly traded targets. Instead it names Steven Wallace and Susan Lehr, chief executive and head of government relations, respectively, at Florida State College at Jacksonville. But more litigation may be coming soon. Keiser got 15,000 documents in its FOIA request including some that might give ammunition to public companies should they decide to sue.

“There are other documents out there that were not necessarily relevant to our lawsuit that certainly implicate claims by others,” said James Waldman, in-house counsel at Keiser. Since they’re all public documents, Waldman said, he’s in a sharing mood.

The suit accuses Florida State College of disparaging Keiser and other private schools of feeding “false stories to the media” that the private schools ripped off students and provided worthless degrees. That was Eisman’s investment thesis, of course, as well as a frequent complaint by critics of for-profit career schools that often operate on a stream of federal loan money.

Named as “co-conspirators” are Eisman of Frontpoint Partners in Greenwich, Conn.; Gilchrest Berg of Water Street Capital in Jacksonville; Antal Desai with CMCG in Dallas and officials with several groups opposed to the private student loan industry as well as U.S. Public Interest Group.

“Here’s a bunch of good stuff to get you started in your exploration of greed, corruption and predatory schemes among Florida’s proprietary and for-profit career `colleges,’” Wallace says in one e-mail to Berg the plaintiffs say they obtained under a FOIA request. In another e-mail, Wallace boasts to Berg that a planned new public technical colleege “is designed, in part, to drive the sleazebags out of our region.”

Wallace and Lehr were at a meeting and unavailable for comment Tuesday.

The lawsuit details correspondence between various public-education advocates and reporters at USA Today, Bloomberg, the Miami Herald and others. The suit says such efforts tortiously interfered with the relationship between Keiser and its students and constituted “injurious falsehood.”

In his May speech entitled “Subprime Goes to College,” Eisman ripped the entire sector as providing subpar educations financed with subsidized federal loans. He was particularly critical of Washington Post Co., which has long since moved on from its newspaper roots and now derives most of its earnings from for-profit education including its Kaplan testing unit.

So far, Eisman’s bet has paid off, with for-profit schools falling up to 50% amid rumblings the government will impose new rules tying access to federal loans with the schools’ success in finding graduates jobs.

Meanwhile in August, the General Accountability Office released a report showing that undercover tests of 15 for-profit colleges found that all 15 had engaged in deceptive practices including overstating “undercover applicants’ potential salary after graduation” and failing to disclose all costs. Perhaps mindful of future litigation, the report was careful to state that “results of the undercover tests and tuition comparisons cannot be projected to all for-profit colleges.”

From: http://blogs.forbes.com/danielfisher/2010/10/05/e-mails-spice-up-lawsuit-over-private-colleges/



For-Profit Institution Sues a Public-College President, Alleging a Smear Campaign

In a clear sign of the heightened tensions over proposed new federal regulations on for-profit colleges, Keiser University, a for-profit education system based in Florida, has sued a public-college president there, accusing him and a top administrator of smearing Keiser by communicating derogatory comments about the for-profit education industry to investors and others via e-mail. Keiser itself is not publicly traded, but its founder and chancellor, Art Keiser, has been an outspoken criitic of the proposed regulations. The civil suit was filed in state court against two officials at Florida State College at Jacksonville—its president, Steven R. Wallace, and its vice president for government relations, Susan M. Lehr.

From: http://www.forprofitedu.com/2010/10/keiser-university-files-civil-suit-against-florida-state-college-at-jacksonville/