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For-Profit School Opertor Owes for Enrollment Lies

DALLAS (CN) - Students can collect damages from a for-profit trade school operator that lied about its program quality and postgraduate employment chances, a judge ruled.

Twenty-one students sued ATI Enterprises and its subsidiaries in Dallas County Court in 2010, alleging they were misled about one-on-one instruction and small classes. They claimed to have instead found overcrowded classrooms that were understaffed by instructors and lacked working equipment.

ATI programs last from 9 to 15 months and cost between $14,000 and $23,000. "Despite repeated promises to rectify these problems, ATI regularly failed to make meaningful changes in a timely manner," the complaint stated. "As a result, many students failed to progress at key points in their curriculum because instructors did not have access to critical equipment and supplies to teach the required skills. In some classes, instructors were forced, at times, to teach without books or other basic teaching tools. Repeated complaints were met with excuses of budgetary limitations, extended delays in approval of expenditures or repeated promises of a resolution of the problem that never came."

The plaintiffs said the problems persisted in ATI's welding, automotive, air conditioning-heating-refrigeration and electronics programs.

"On one occasion, someone defecated on the floor of a bathroom in the administrative office area of the school," the complaint stated. "Despite complaints and requests that the bathroom be cleaned, the human waste was allowed to remain on the bathroom floor for several days."

The plaintiffs said ATI also lied about job opportunities for graduates who ended up facing the same employment difficulties they had before enrolling.

"Despite promises of high paying jobs in their chosen career field, many students were placed in low paying, low skilled positions that they could have obtained without the training provided by ATI," the complaint stated. "Egregious examples included welding students working behind a sales counter of a business that sold some welding equipment, electronics students placed in a retail distribution warehouse where they moved boxes of electronics. Electronics students placed as security guards whose only involvement with electronics was to watch security camera monitors."

They also accused ATI of concealing that employers who had hired ATI graduates in the past are distrustful of the program because they found the candidates underqualified.

A dozen of the plaintiffs claims ultimately went to arbitration where Diana Marshall awarded them $6,000 apiece for the career-placement allegations and $2,500 apiece for allegations pertaining to classrooms, equipment and consumables.

The August 2012 order found several deceptive trade practices claims barred due to a two-year statute of limitations starting 30 days after each plaintiff started class at ATI.

Judge Phyllis Lister Brown of the 162nd Judicial District Court upheld the ruling for nine of the plaintiffs last week, awarding them each $6,000 to $18,430 in damages. The remaining three will take nothing, according to the order.

Brown also awarded the plaintiffs over $1.4 million in attorneys' fees and more than $295,000 for costs.

The order notes that findings from the arbitrator against lost and expected earnings and earning capacity upon graduation.

"No claimant proved that upon full completion of the program and graduation from ATI that, after making a good faith and diligent effort, they remained unable to find field-related employment and that such failure to gain and/or retain field-related employment at an entry level was due to ATI's failure to prepare them with the reasonably expected fundamentals in the trade in the course of instruction as set out in the catalog," Marshall wrote. "No claimant prevailed in proving that they were guaranteed a job or that they were entitled to be relieved of the contractual disclaimer of a guarantee of employment."

ATI is not accountable for what becomes of the personal and employment lives of the plaintiffs, "too much speculation and too many subjective factors surround that kind of exercise," Marshall said.

In September 2012, the federal government intervened in a federal lawsuit filed by former ATI employees in 2009 that accused ATI of lying about job placement rates to secure federal funding.

The former employees said that, from 2007 to 2010, ATI fabricated job-placement statistics for graduates from three Dallas-area campuses, to maintain its state license with the Texas Workforce Commission and federal student aid funding from the Department of Education.

Prosecutors also accused ATI of false advertising to induce students to enroll, in violation of state and federal regulations.

"For example, ATI recruiters used the fabricated placement statistics ATI reported to the TWC as a tool to induce students to enroll in Campuses 10, 30 and 50," prosecutors said.

"ATI recruiters lied to prospective students at Campuses 10, 30 and 50 about the amounts of money they should expect to earn in their chosen fields after graduation from ATI. ATI also enrolled certain students into particular programs of study without telling those students that they would likely be disqualified from employment in their chosen field upon graduation (e.g. because of a prior felony conviction). As a result of ATI's misrepresentation, these students expended significant time learning a trade, and incurring substantial debt, only to be barred from employment in their fields upon graduation."

ATI allegedly lured applicants who had dropped out of the trade school by promising that their existing federal loan debt would be forgiven if they re-enrolled.

"But ATI had no intention of repaying the students' federal loan indebtedness," prosecutors said.

ATI is also accused of fabricating high school diplomas for applicants, to enroll them at ATI, and then improperly taking Title IV money for the unqualified students.

"ATI also routinely altered grades and attendance records of students at Campuses 10, 30 and 50 who were not meeting minimum requirements. ATI kept students on its attendance rolls - and, as such, federal financial aid recipient list - by extending graduation dates fraudulently as well," prosecutors said. "Finally, ATI employees falsified financial aid records in order to secure more federal funding for students than the students were eligible to receive."

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