Last month, the
Minnesota Court of Appeals upheld a fraud verdict against Minnesota School of
Business (MSB) and Globe University (Globe). This is the latest setback for
MSB, which has experienced several regulatory and litigation woes in recent
years.
2018: MSB/Globe University Lose a Fraud Suit in Minnesota Court of Appeals
In 2014, the Minnesota Attorney General’s Office sued MSB and its sister school, Globe University, accusing the two schools of violating the Minnesota Consumer Fraud Act and the Uniform Deceptive Trade Practices Act. According to the Minnesota AG Lori Swanson, MSB/Globe mislead prospective students to believe that the schools' four-year criminal-justice program would lead to a becoming police officer and that it's two-year criminal-justice program would lead to becoming a probation officer.
In 2014, the Minnesota Attorney General’s Office sued MSB and its sister school, Globe University, accusing the two schools of violating the Minnesota Consumer Fraud Act and the Uniform Deceptive Trade Practices Act. According to the Minnesota AG Lori Swanson, MSB/Globe mislead prospective students to believe that the schools' four-year criminal-justice program would lead to a becoming police officer and that it's two-year criminal-justice program would lead to becoming a probation officer.
These programs were expensive, ranging from $39,000 to $78,000. As the Minnesota Attorney General's Office said in its recent press release, "As a result of the schools’ misrepresentations, many students were saddled with large amounts of student loan debt without the ability after graduation to obtain a job in their chosen career field of serving Minnesota’s citizens as police and probation officers."
After a 17-day trial, a Minnesota trial court ordered restitution for 15
students who testified they had been defrauded and approved a restitution
program that would enable other students to file fraud claims as well. Under
the trial court's order, these claimants "would receive a rebuttable
presumption of harm and causation."
MSB and Global appealed this ruling, and last month, the Minnesota Court of Appeals approved part of the trial court's judgment but not all of it. The appellate court ruled that the 15 testifying students had adequately proved their injuries and causation under the Minnesota Consumer Fraud Act. Therefore the trial judge's restitution order for these 15 students was upheld.
On the other hand, the appellate court ruled that the state had not satisfied its burden of showing a causal nexus between MSB/Globe's representations and injury to students who had not testified at trial. Therefore, the trial court's restitution plan for other students was not approved by the appellate court.
MSB and Global appealed this ruling, and last month, the Minnesota Court of Appeals approved part of the trial court's judgment but not all of it. The appellate court ruled that the 15 testifying students had adequately proved their injuries and causation under the Minnesota Consumer Fraud Act. Therefore the trial judge's restitution order for these 15 students was upheld.
On the other hand, the appellate court ruled that the state had not satisfied its burden of showing a causal nexus between MSB/Globe's representations and injury to students who had not testified at trial. Therefore, the trial court's restitution plan for other students was not approved by the appellate court.
2017: Minnesota
Supreme Court rules MSB loaned student money at usurious interest rates
Last month’s decision by the Minnesota Court of
Appeals is MSB’s latest litigation setback. Last year, after a long, drawn-out
lawsuit brought by the Minnesota Attorney General's Office, the Minnesota Supreme Court ruled that MSB had charged its students usurious interest rates
and had loaned students money without having a valid lender's license.
According to the Minnesota Supreme Court, MSB
had loaned students money at interest rates ranging from 14 to 18 percent. The
students never saw this money; it went directly to the school to pay students'
tuition and fees.
Minnesota has a usury law that caps interest
rates at 8 percent unless the lender offers an open-end credit
plan. MSB had not loaned
students money pursuant to an open-end credit plan, the Minnesota Supreme Court ruled; therefore its interest
rates were usurious under state law. In addition, the court concluded, MSB was
in the business of making loans and had loaned money to its students without
having the required state license.
2016: MSB/Globe's Fraud
Ruling Led Minnesota to Revoke MSB/Globe’s Authority to Operate
In September 2016, in the wake of the trial court's fraud ruling against MSB, Larry Pogemiller, Minnesota Commissioner of Higher Education, revoked MSB/Globe's authorization to operate in the state of Minnesota. Last month's ruling by the Minnesota Court of Appeals, partly affirming the trial judge's fraud decision, would seem to vindicate Pogemiller's decision.
And then there was more bad news for MSB/Globe. In December 2016, The U.S. Department of Education revoked the two school's access to federal student-aid money, which provided the bulk of the schools' operating revenues.
Globe University Continues to Survive in Wisconsin
One might think that all this litigation and regulatory pressure would cause MSB and Globe to shut down completely; but--like a Timex watch, Globe University, at least, has kept on ticking. Broadview University, another for-profit school owned by the same people who own Globe and MSB, has purchased four Globe campuses in Wisconsin, and this purchase was approved by the Trump administration's Department of Education.
Jeanne Herrmann, Broadview's CEO, said claims against MSB/Globe were unfounded. “Whatever one may think of the motivations of the litigation in Minnesota, that state-specific allegation had and continues to have nothing to do with the school’s campuses outside of Minnesota, " Herrmann said in a written statement (as reported by Inside Higher Ed).
In September 2016, in the wake of the trial court's fraud ruling against MSB, Larry Pogemiller, Minnesota Commissioner of Higher Education, revoked MSB/Globe's authorization to operate in the state of Minnesota. Last month's ruling by the Minnesota Court of Appeals, partly affirming the trial judge's fraud decision, would seem to vindicate Pogemiller's decision.
And then there was more bad news for MSB/Globe. In December 2016, The U.S. Department of Education revoked the two school's access to federal student-aid money, which provided the bulk of the schools' operating revenues.
Globe University Continues to Survive in Wisconsin
One might think that all this litigation and regulatory pressure would cause MSB and Globe to shut down completely; but--like a Timex watch, Globe University, at least, has kept on ticking. Broadview University, another for-profit school owned by the same people who own Globe and MSB, has purchased four Globe campuses in Wisconsin, and this purchase was approved by the Trump administration's Department of Education.
Jeanne Herrmann, Broadview's CEO, said claims against MSB/Globe were unfounded. “Whatever one may think of the motivations of the litigation in Minnesota, that state-specific allegation had and continues to have nothing to do with the school’s campuses outside of Minnesota, " Herrmann said in a written statement (as reported by Inside Higher Ed).
We'll Always Have Wisconsin!
So if you are a student who liked how you were treated in Minnesota by MSB or Globe, simply move to Wisconsin, where you can enroll at Broadview University, which is owned by the same nice folks who own MSB and Globe. I’ll bet your credits will transfer, and you will enjoy the same friendly and professional service in Wisconsin that you got in Minnesota. You Betcha!
So if you are a student who liked how you were treated in Minnesota by MSB or Globe, simply move to Wisconsin, where you can enroll at Broadview University, which is owned by the same nice folks who own MSB and Globe. I’ll bet your credits will transfer, and you will enjoy the same friendly and professional service in Wisconsin that you got in Minnesota. You Betcha!
References
Mark Brunswick.
Globe
U and Minn. School of Business must close, state says after fraud ruling. Star Tribune, September 9, 2016. Paul Fain. A Shuttered For-Profit Re-emerges. Inside Higher Education, August 9, 2017.
Christopher Magan. Globe U. and Minnesota School of Business to start closing campuses. Twin Cities Pioneer Press, December 21, 2016.
State of Minnesota v. Minnesota School of Business, A17-1740, 2018 Minn. App. LEXIS 277 (Minn. Ct. App. June 4, 2018).
State of Minnesota v. Minnesota School of Business, 899 N.W. 467 (Minn. 2017).
U.S. Department of Education. Globe University, Minnesota School of Business Denied Access to Federal Student Aid Dollars. U.S. Department of Education press release, December 6, 2016.
