Showing posts with label Judge Sallie Kim. Show all posts
Showing posts with label Judge Sallie Kim. Show all posts

Wednesday, March 11, 2020

Calvillo Manriquez v. Devos: Judge Sallie Kim holds U.S. Department of Education in contempt for failing to abide by her injunction in the Corinthian Colleges case

Corinthian Colleges, a for-profit chain of colleges, went bankrupt in 2015 under a shower of fraud accusations. More than 100,000 former students filed claims with the U.S. Department of Education, seeking relief from federal student loans they took out to attend the defunct chain’s schools.

Corinthian students maintained that they were lured to attend the school by the college chain's job placement rates, which turned out to be inflated. Initially, DOE granted full relief to some claimants.

In 2017, however, DOE unilaterally changed the way it processed these claims and only granted partial relief from student loans under a formula that calculated the income of borrowers who had been enrolled in Corinthian programs. A group of former Corinthian students sued DOE for arbitrarily changing the rules and Judge Sallie Kim certified the lawsuit as a class action.

Judge Sallie Kim issues a preliminary injunction against DOE

While this litigation was ongoing, Judge Kim issued a preliminary injunction against DOE, ordering the agency to “cease all efforts to collect debts from Plaintiffs” (Calvillo Manriquez v. DeVos, p. 538). Corinthian appealed Judge Kim’s preliminary injunction to the Ninth Circuit Court of Appeals, and Judge Kim stayed all proceedings while the appeal was pending.

Later, the student plaintiffs filed a motion asking Judge Kim to lift the stay and enforce her injunction. Judge Kim then ordered DOE to file a report regarding the status of its compliance with her injunctive order.

DOE filed a “Compliance Report,” in September 2019, admitting that it had erroneously sent a notice to 16,034 borrowers that student-loan payments were due. In response to that notice, more than 3,000 borrowers made one or more payments on their student loans.

According to Judge Kim, DOE did not notify any of the borrowers that it had made a mistake and did not issue refunds to borrowers who had made payments in violation of the preliminary injunction. (p.538)

Moreover, in violation of Judge Kim’s injunctive order, DOE “provided adverse reports to credit reporting agencies for 847 Corinthian borrowers and collected on the loans of 1,808 Corinthian borrowers through wage garnishment or offsets from tax refund[s].” (pp. 538-39).

Judge Kim finds DOE in contempt of her preliminary injunction

After hearing the evidence, Judge Kim held DOE in contempt. In her order, the judge wrote:
[T]here is no question that [DOE] violated the preliminary injunction. There is also no question that [DOE’s] violations harmed individual borrowers who were forced to repay loans either through voluntary action or involuntary methods (offset from tax refunds and wage garnishment) and who suffered from the adverse credit reporting. Defendants have not provided evidence that they were unable to comply with the preliminary injunction, and the evidence shows only minimal efforts to comply with the preliminary injunction. The Court therefore finds Defendants in civil contempt. (p. 540)
Judge Kim then fined DOE $100,000.
The Court finds that a monetary sanction of $100,000 paid by [DOE], to a fund held by Plaintiffs’ counsel, is the best method to remedy [DOE’s] wrongful acts. Given that there are over 16,000 borrowers who have suffered damages from [DOE’s] violation of the preliminary injunction and given that there may be some administrative expenses to remedy the harm, the Court finds the amount reasonable. (p. 540)
Conclusion

Calvillo Manriquez v. DeVos is simply one more sign that the U.S. Department of Education holds distressed student debtors in contempt and Judge Kim’s contempt order was certainly appropriate.

Nevertheless, the $100,000 fine that Judge Kim issued against DOE is totally inadequate to get DOE’s attention.  A $100,000 fine is just pocket change to DOE Secretary Betsy DeVos—probably less than the annual maintenance costs on her yacht.  And $100,000 distributed to the 16,000 Corinthian students who were injured by DOE’s conduct amounts to only about eight bucks apiece.

Corinthian Colleges filed for bankruptcy nearly five years ago, and some of the plaintiffs were injured earlier than that. Five years is too long to wait for justice. The Department of Education should be ordered to forgive all student-loan debt acquired by students who attended for-profit colleges that have been found guilty of fraud and deception.  In other words, all the poor souls who attended Corinthian Colleges should have their student loans forgiven in their entirety.

References

Calvillo Manriquez v. DeVos, 411 F. Supp. 3d 535 (N.D. Cal. 2019).


The Seaquest: Betsy DeVos's yacht



Sunday, October 27, 2019

Impeach DeVos, Not Trump: Democrats should focus on Betsy DeVos' outrageous mismanagement of the student-loan program

Let me start by saying this: I am a registered Democrat who voted for Bernie Sanders in the 2016 Democratic primary race in Louisiana. I will vote for a Democrat in Louisiana's 2020 primary election, although I am not happy with my choices.  I am neither a MAGA Republican nor a Never-Trumper; I just want a decent person to be President. Is that too much to ask?

I admit that I am just an old white guy who lives in Flyover Country--and a cisgendered old white guy at that. Nevertheless, I don't get the Democrats' obsession with impeaching President Trump. Congressman Schiff wants to impeach Trump over a phone call? What's that about?

I hate to be the one to break it to you, Adam, but impeachment is never going to happen.  Nancy Pelosi will never call for a vote on the matter, and the Senate will never impeach the President. The 2020 election is only 12 months away--12 months! Why don't the  Democrats focus on nominating a reasonable candidate who can defeat Trump in 2020?

On the other hand, Trump's Education Secretary, Betsy DeVos, is eminently impeachable and should be impeached. I've commented on her outrageously incompetent management of the federal student-loan program on several occasions. DeVos simply refuses to administer the government's various student-loan forgiveness programs in a competent manner. She's screwed up the Public Service Loan Forgiveness Program and the Borrower Defense program, and her agency opposes bankruptcy relief for distressed student-loan debtors--no matter how desperate a debtor's circumstances.

And now she has been held in contempt by a federal judge for defying a court order. U.S. Magistrate Judge Sallie Kim ruled that DeVos and DOE violated Judge Kim's preliminary injunction to stop collecting on student loans owed by students who attended Corinthian Colleges, a defunct for-profit college.

Judge Kim was actually pretty steamed about DOE's intransigence. At one point, the Judge said, "I'm not sending anyone to jail yet, but it's good to know I have that ability."

The unlawful collection activities were actually carried out by DOE's contracted student-loan servicers, not DOE itself. But DOE is responsible for the servicers' actions. Mark Brown, a senior DOE official, acknowledged a screw-up. "Although these actions were not done with ill intent," Brown said, "students and parents were affected and we take full responsibility for that."

If the Democrats were smarter, they would focus their impeachment energy on DeVos, not President Trump.  An impeachment inquiry could speed ahead with full compliance with due process.  There would be no need to hold secret hearings in the basement of the Capitol. DeVos' malfeasance is adequately documented by competent evidence, including several adverse court rulings against DeVos and DOE. And I predict that some Republicans in both the House and the Senate would support impeachment once the facts of her maladministration were brought to light.

And impeaching DeVos would publicize to every beaten-down student-loan debtor that the Trump administration doesn't care about them.  President Trump's total indifference to the student-loan train wreck could be exploited by the Democratic candidates who are calling for student-loan forgiveness.

But the Democrats' aren't interested in doing something sensible. Like Captain Ahab chasing the great white whale in Moby Dick, they scour the oceans of bureaucratic nonsense looking for some way to impeach President Trump.  And Trump, like Moby Dick, may wind up putting a great big hole in the Democrats' boat.

Will the Great White Whale sink the Never-Trumpers?