State AG gets millions in university deceptive marketing battle.
Minnesota Attorney General Keith Ellison has announced a tentative settlement totaling $42 million to benefit 920 former students of the Minnesota School of Business (MSB) and Globe University. The business school occupied a northwest Rochester campus until both of the postsecondary schools shut down three years ago and the U.S. Department of Education removed them from the federal student loan program. Following this, a Minnesota court found these schools “committed consumer fraud by misleading students,” according to court documents.
In fall 2019, Ellison indicated, the office of Minnesota Attorney General Keith Ellison was victorious when the Minnesota Supreme Court ruled that the Attorney General’s Office can pursue tuition refunds for students fraudulently enrolled. The AG said, Had the Supreme Court ruled against the Attorney General today, only the 15 students who testified in court against MSB and Globe would have been eligible for tuition refunds, for a total of $375,000. Because of the Attorney General’s win today, all former students of MSB and Globe’s criminal-justice program since 2009 – 1,336 of them – will be eligible to make a claim for refunds totaling $33.7 million.”
During trial, Ellison’s office was able to show that MSB and Globe University targeted students from low-income families with their “so-called criminal-justice” program, claiming it “would qualify them for jobs as police and probation officers, when that was not the case.” The trial court found “the pervasiveness of [MSB and Globe’s] false and deceptive practices” was proven through “testimony of several former employees…as well as testimony of [MSB and Globe’s] managers…solicitations and mass advertising, and…internal training materials.” The Supreme Court affirmed that the AG could pursue restitution.
Ellison said after this decision, “Minnesotans of all backgrounds just want to be able to afford their lives. Today’s ruling affirms my office’s authority to get money back for Minnesotans when they’re harmed by fraud – in this case, low-income students who were falsely told that they could become Minnesota police or probation officers by enrolling in a program that cost upwards of $70,000. These students were convinced to take out costly student loans, expend hard-earned GI Bill benefits, and spend their savings to attend a fraudulent program because the schools misrepresented to them that it was a way to make a better life for them and their families, when the schools knew it wasn’t. Instead, they were left with a degree they can’t use or credits they can’t transfer – and tens of thousands of dollars in debt. I’m pleased the Supreme Court strongly reaffirmed that my office can restore those losses to victims.”
Ellison’s office issued a release following the tentative settlement of $42 million, stating, “The courts also canceled high-interest student loans issued by the schools and ordered the institutions to make refunds to the affected students. About $3.7 million was returned to the students in 2018 before the Minnesota School of Business and Globe Temple University filed for bankruptcy. Over $23 million from the settlement will be directed at forgiving outstanding federal student loan debt, while $15.6 million will be paid out as compensation to students in the criminal justice program that was the focus of the consumer fraud actions…I hope the relief my office has worked so hard to win will allow them to start affording their lives again after this terrible experience.”