WOODBURY, Minn. -- Fallout from a court ruling that Globe University and the Minnesota School of Business defrauded students continues to get worse and is increasing the threat the Woodbury-based chain of for-profit schools will be forced to close.
The U.S. Department of Education told the schools Oct. 3 to stop enrolling new students and moved to increase oversight and restrict the institutions’ access to federally backed student loans. In addition, the Accrediting Council for Independent Colleges and Schools, or ACICS, has asked school officials to make a case for keeping the institutions open.
The restrictions come after a Hennepin County district judge ruled in September that Globe University and the Minnesota School of Business defrauded students by falsely leading them to believe completing criminal justice degrees would make them eligible to become police or probation officers. Minnesota Attorney General Lori Swanson filed a lawsuit against the schools in 2014 after more than 700 students complained they were misled.
After the fraud ruling, the state Office of Higher Education moved to revoke the institutions’ ability to operate. That decision is being appealed and in the meantime the schools have to develop contingency plans for students who need to complete their degrees or move to other schools.
“They have a lot of obstacles for continued operation,” said Betsy Talbot, manager of institutional registration and licensing for the state Office of Higher Education.
A spokeswoman for the two schools did not immediately return a request for comment on Tuesday.
Swanson wants the schools to pay a $2.5 million penalty and restitution to as many as 1,200 students who attended the criminal justice program between 2009 and 2014. Criminal justice degrees from the schools cost between $40,000 and $80,000.
In an Oct. 6 court filing, attorneys for Globe and the Minnesota School of Business rejected the state’s proposed penalties. They called them unreasonable, noting the state failed to prove part of its case against the schools.
Hennepin County District Judge James A. Moore found the company committed fraud when promoting its criminal justice program, but he rejected other allegations the schools systematically lied about job placement rates, transferability of credits and accreditation. The schools’ attorneys want to limit fines, attorneys fees and restitution payments to roughly $500,000 or less.
“It’s disappointing the company continues to oppose making things right for these criminal justice students who the court found to have been defrauded,” said Ben Wogsland, a spokesman for Swanson.
If Globe University and the Minnesota School of Business can survive the state’s efforts to close them and the federal government’s new restrictions, they will likely need to find a new agency to act as their accreditor. Last month, the U.S. Department of Education moved to revoke the oversight powers of ACICS, saying the institution failed to ensure students receive quality educational programs.
ACICS accredits 18 colleges in Minnesota including several Globe and Minnesota School of Business campuses. The state Office of Higher Education is working with the schools to find new accreditors under an 18-month time frame allowed by state rules.
Globe University and the Minnesota School of Business can’t start that process until they’ve resolved their issues with the state.
In 2015, the schools had 19 campuses in Minnesota, Wisconsin and South Dakota enrolling more than 4,500 students. After the fraud trial began in April, the company announced it was closing several Minnesota campuses and consolidating others.
About 1,700 Minnesotans were enrolled in the schools as of September, state officials said.