Dean from Univ nailed for fraud is tapped to lead Dept. of Ed fraud enforcement

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The Department of Education’s enforcement unit, which was created by the Obama administration as part of its aggressive plan to “respond more quickly and efficiently to allegations of illegal actions by higher education institutions,” is getting a new director, and some people may think it’s a strange choice.

The Student Aid Enforcement Unit was created in February 2016 to protect students and taxpayers after years of pressure from advocates, who said officials weren’t doing enough to police bad actors; especially in the area of for-profit colleges.

The Enforcement Unit was initially led by Robert Kaye, one of the nation’s top enforcement attorneys. But now it’s to be led by Julian Schmoke, the former employee of DeVry University.

Schmoke once served as a dean at DeVry University.

What makes the appointment somewhat strange, is that DeVry University agreed to pay a $100 million settlement last year after the FTC charged the University with running false advertisements on several occasions, but that settlement was basically an agreement that prevented any criminal or civil charges from potentially moving forward.

The Attorney General’s investigation found that many of DeVry’s advertisements centered on a claim that 90% of DeVry graduates who are actively seeking employment obtain employment in their field of study within six months of graduation. The Attorney General’s investigation revealed that the 90% claim was misleading because a substantial number of the graduates included in the figure were graduates who were already employed prior to graduating from DeVry. In fact, many of the graduates included in the 90 percent figure were employed before they even enrolled at DeVry.

The FTC had charged the school with running false ads claiming 90 percent of DeVry graduates seeking full-time jobs were employed in their field of study within six months of getting their degrees.

Another series of false ads claimed that students with DeVry degrees were paid 15 percent more on average than other graduates.

Borrower advocates and even members of Congress expressed concern about Schmoke’s appointment, especially given DeVry’s history, according to a report in Marketwatch. They say it seems to be part of a broader pattern of the Department of Education appearing friendlier toward the for-profit college and student loan industries under Secretary of Education Betsy DeVos.

Earlier this year, the Department announced delayed implementation of two rules fortified under the Obama administration aimed at cracking down on bad actors, particularly regarding for-profit colleges.

“His association with DeVry and the fact that he’s being made the head of investigations at the Department of Education, does send a signal to students, to taxpayers and to the markets that the Department is not serious about investigating deceptive practices and other abuses by for-profit colleges,” said David Halperin, a lawyer and for-profit college critic.

Halperin said he’s troubled by Schmoke’s association with DeVry and the broader for-profit college industry, but he’s particularly concerned that Schmoke doesn’t appear to have any investigative experience. Schmoke, who most recently worked as the executive director of campus operations at West Georgia Technical College, has held jobs as an engineer and as a professor and administrator at higher education institutions.

His resume pales in comparison to that of Kaye, who spent several years investigating and enforcing consumer fraud at the Federal Trade Commission before leading the education enforcement unit.

“By appointing someone with apparently no investigative experience, Secretary DeVos is signaling that the Department no longer takes seriously its obligation to ensure that colleges are complying with the law,” Halperin said.

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