By Jared Chausow
By Katie Toth
By Elizabeth Flock
By Albert Samaha
By Anna Merlan
By Jon Campbell
By Jon Campbell
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The former Massachusetts governor has pressed on with his campaign to win the Republican nomination to succeed New York's George Pataki despite widespread reports (most recently and thoroughly in the Sunday New York Times, by Sam Dillon and Patrick Healy) about his ill-fated mission to Louisville, where, in January of this year, he agreed to become the $700,000-a-year chief executive officer of Decker College.
Weld has acknowledged that things didn't work out well there, but has insisted he wasn't part of the problem. "I was proud of the programs Decker offered," he told NY1's Davidson Goldin last week.
But starting in 2004, students, instructors, and recruiters began stepping forward to complain that the college, which had locations in four states, operated as little more than a cyber-age "loan mill," duping desperate, low-income job seekers into believing the online courses would make them skilled and employment-ready construction trades workers in a few months in exchange for shouldering federal student loans of more than $20,000.
The AFL-CIO's Building and Construction Trades Department added another allegation: that Decker was a key player in a national effort by non-union construction contractors to train employees on the quick and the cheap, while making money doing so, and avoiding lengthy and more costly hands-on apprenticeships.
In late September, the school had its access to federal student loans shut down after regulators cited it for abuses, including failing to remit $7 million in loans it took in from students who later dropped out. On October 5, the Kentucky Attorney General's office announced it was investigating the school for possible consumer fraud. The next day, Weld, who had already relocated to New York to begin campaigning, resigned his position as Decker's CEO. It was none too soon. On October 18, 40 agents from the FBI and other agencies descended on Decker's Louisville campus and hauled away more than 1,000 cartons of records. The school closed its doors three days later.
None of that slowed down the former federal prosecutor, the tall rusty-haired man Boston wags dubbed "Big Red" during his years as governor from 1991 to 1997. Last week, Weld launched a website (weldfornewyork.org) saying he could do for New York what he did for Massachusetts by lowering taxes and getting tough on crime. But he's facing more questions about his strange tenure at the junior college in Louisville than anything he did as the Bay State executive.
Weld's involvement with Decker began when his financial firm, Leeds Weld Equity, which sought out for-profit educational investment opportunities, decided in 2002 to buy a $30 million minority share in a company called Franklin Career Services, a nationwide chain of truck driving schools owned by a pair of brothers, Gerald and Jeffrey Woodcox, of Louisville. At the time, business at Franklin was booming. Annual profits in 2001 reached $79 million. But there too, serious questions about management practices were already being raised.
The toughest queries came from an insurance firm, Royal Indemnity, based in North Carolina, which had agreed to provide credit-risk insurance for pools of student loans made to Franklin's pupils. At its zenith, when Weld's firm bought into the company, Franklin had 33 separate schools, including sites in Mississippi, Missouri, Kansas, Louisiana, Ohio, West Virginia, and Albany, New York. Students were promised an intensive 16-day driving course at the end of which they would qualify for a Class A commercial driver's license. The cost was steep, ranging from $8,000 to $12,000. To finance the program, Franklin assisted students in obtaining loans from an outside lender. In turn, the lender purchased insurance coverage from Royal Indemnity to protect it from defaults.
In early 2002, however, Royal Indemnity abruptly ceased providing insurance. The reason, as the insurance firm later claimed in a 2004 civil racketeering lawsuit, was that student default rates were soaring above 70 percent. Franklin and its loan company, the lawsuit claimed, were running "a massive fraudulent tuition loan scheme."
The insurance company's formal complaint depicts Franklin and its owners as routinely hoodwinking vulnerable job seekers into signing up for the loans, regardless of their ability to repay them. Among those sought out to sign up and take on the loans were "criminals, drug addicts, alcoholics, and the homeless." To do so, the trucking school's recruiters allegedly "routinely submitted falsified loan applications," the insurance firm chargedeven using pre-printed answers regarding past employment and salary history on application forms.
Nor did students get much of an education, the company alleged. Royal accused Franklin of using unlicensed instructors and defective trucks. When it came time to pass the qualifying licensing test, Royal claimed that Franklin's instructors provided students with the answers to the written test.
Franklin denied any wrongdoing and the suit is still pending. But whatever its actual practices, the insurance company wasn't the only one with suspicions. In 2001, the Kansas Board of Regents ordered Franklin's local branch to cease enrollment over concerns about its curriculum. In July 2002, Ohio state officials ordered 400 graduates of a Franklin school to retake their driving test, or face cancellation of their licenses. Some grads couldn't afford to take the test again; others flunked, and were later unable to get work or repay their loans, the insurance company asserted.
The earliest coverage of the Decker scandal appeared in the Louisville Courier- Journal, where reporter Mark Pitsch recounted how, after Franklin's driving schools ran into trouble in 2002, its owners decided to buy Decker, an existing business college in Louisville eligible to receive federal Title IV loans. Remarkably, despite the problems at the truck driving schools, Weld and his investment firm jumped in again, buying a 19 percent share in the new venture.
The school's pitch was to add construction skills to its curriculumand do all but nine weeks of the training via online courses. As Decker's first CEO, the owners hired Daniel Bennet, a leader in developing non-union construction training programs, an industry that the AFL-CIO has long accused of pushing profits over safety needs. Indeed, when Decker filed its application to open a branch in Georgia, it submitted a business plan to state officials that claimed that a local contractors' association could open a Decker branch and, with as few as 240 graduates a year, earn a $300,000 annual profit.
But according to a lawsuit filed in February by two graduates of the Georgia center, there wasn't much learning going on. Edward Meadows and Andre Copeland said that they quit their regular jobs to be trained as heating and ventilation installers. But the men said that the curriculum changed repeatedly with seven different unqualified instructors in their one-year course. They said they only graduated because they were fed answers to tests. Neither man was later able to find a job. (Decker responded that the men knew what they were getting when they signed up.)
Somehow, none of these problems registered with Weld. In a June 2005 newsletter to Decker students, the CEO said the school beat any of his past gigs, including governor, prosecutor, or novelist (he's written three): "I don't know that I've ever had a position where I had so clearly the feeling that my day-to-day actions are likely to create history for a whole group of people, and a favorable history at that. Decker College is an amazing company . . . I can assure you that we will be making not only business history, but academic history as well."