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Shuttering of For-Profit College Brews Fury

SAN ANTONIO (CN) — Fifty-nine students have sued Texas-based Career Point College, claiming the profit-seeking school induced them to take out high-interest student loans then shut down this month under federal investigation, leaving them drowning in debt.

Christopher Kinna and 53 others sued the college, its corporate affiliates and associates, its CEO Lawrence D. Earle, and vice president Carol B. Kendall, on Oct. 20 in Bexar County Court.

Five other students filed a similar complaint on Oct. 18 in the same court.

Career Point's main campus and headquarters is in San Antonio, with other campuses in Austin and Tulsa, Okla.

It claimed on its website "to provide career-specific diplomas and degree programs relating to in-demand fields in business, medical, nursing, cosmetology and information technology."

In the Oct. 18 lawsuit, five women say Career Point instructed them and other students to apply for federal student loans "ranging from $19,000 to over $30,000," and for federal Pell Grants.

"Unfortunately, Career Point did not inform the students that Career Point alone would retain control over the grant funds and that it would solely decide if and when to distribute these monies, if any, to plaintiffs. Certain plaintiffs never received a penny of their Pell Grant and Career Point's use of these funds remains unknown," lead plaintiff Erica Eckols says in that complaint.

Eckols adds: "Acting alone or in concert with third-party lenders, Career Point induced plaintiffs to obtain additional loans with interest ranging from 18 to 24 percent."

Only one of these five plaintiffs was provided with information on the cost of tuition —$19,440 — but the college called that "merely an estimate," these plaintiffs say.

San Antonio media have reported that the lawsuits are class actions, though that is not explicitly stated in the complaints.

Career Point sent a mass email on Oct. 16, telling students the school was closing immediately.

In that email, which is cited in the complaint, defendant CEO and President Earle said that "three long-term employees had collaborated to violate the rules related to student aid funds."

Earle wrote that "no money was stolen," and that Career Point "self-reported the violation and agreed to repay all inappropriately received funds," but the U.S. Department of Education refused to accept its "plan."

"Instead, the Department of Education severely restricted government funds going to the college, making it impossible for the college to continue operations."

Eckols et al. call Earle "the president and sole owner of Career Point." They say Earle gave them no information on what the "three long-term employees" did, and omitted important details, for instance, the "misappropriation of federal funds."

"Apparently, employees of Career Point, acting in the course and scope of their employment, improperly obtained over $4,600,000 in federal loan funds," the complaint states, citing reports from two San Antonio news stations.

These reports "stat(ed) that Career Point 'failed to pay credit balances and required returns of unearned Title IV program funds totaling more than $4.6 million,'" according to the complaint.

It continues: "According to Mr. Earle, Career Point previously exhausted its other financial resources and was forced to close immediately. Mr. Earle did not disclose that the Department of Education required Career Point to obtain a $10,000,000 letter of credit to continue its operations."

Eckols says that Earle "further stated in the notification that Career Point would assist its students in transferring to other schools. However, the phone lines for Career Point are disconnected and plaintiffs have no mechanism to obtain any information or documents concerning their education."

Most of the website has been disabled as well, leaving it "a shell of its former self," Eckols says. "At every turn, plaintiffs were promised by representatives of Career Point that documents and information would be provided. At every turn, that did not occur."

Eckols claims that Career Point "took affirmative steps to conceal information from plaintiffs and the other 1,000-plus students regarding their financial aid and the manner in which it was used."

To cap it off, Eckols says, when she learned of the financial fiasco, "Career Point embarked on a campaign to defame and discredit (her), telling students that they should not communicate with her because of her negativity." She says the dean told her she could drop out "if she did not like the way the school was managing its affairs."

Eckols claims that "Career Point intentionally concealed the investigation by the Department of Education" to keep the money rolling in until the last minute.

In the days before the fatal Oct. 16 email, Eckols says, "Career Point continued to enroll students and induce them to incur significant debt, including certain plaintiffs herein. Upon information and belief, on or about October 10, 2016, Career Point enrolled a new class of approximately 16 students. The defendants' actions are deceptive, fraudulent, and were clearly designed to keep the money flowing. Without new students and hundreds of thousands of dollars in new financial aid funds, Career Point was insolvent and could not operate."

The Oct. 20 complaint from 54 students makes similar allegations. For instance: "Defendants have maintained silence concerning the closure, except for information posted on its website directing students to make email requests for information, none of which have been honored."

In this complaint, some students say that unauthorized, fraudulent loans were taken out in their names, and they have been told that despite the fraud, they will have to pay off the loans.

The students say their debts range from $5,000 to $30,000 apiece.

As the complaints state, Career Point's telephone number has been disconnected. It did not respond to an email request for comment.

The students seek compensatory and punitive damages for breach of contract, fraud, deceptive trade, misrepresentation, usury and conversion.

They also want an injunction preventing Career Point from destroying or transferring assets.

Defendants in the 54 students' complaint include Dickinson of San Antonio Inc., Dickinson of Austin Inc., Dickinson of Spencer Lane Inc. dba Career Point College, Academic Financial Solutions LLC, San Antonio Multi-Media Inc., Earle and Kendall.

The five women sued Earle, Kendall, Dickinson of San Antonio Inc., Academic Financial Solutions LLC, River City High School Inc., Dickinson of Austin Inc., and Dickinson of Spencer Lane Inc. The five plaintiffs are represented by Randall Pulman with Pulman, Cappuccio, Pullen, Benson & Jones; the 54 by Aric Garza, both of San Antonio.

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