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Full title: Affidavit (re:435 Motion objecting to claim, 558 Reply) filed by Minnesota School of Business, Inc.. (Andre, Samuel) (Entered: 07/13/2021)
Document posted on Jul 12, 2021 in the bankruptcy, 32 pages and 0 tables.
Bankrupt11 Summary (Automatically Generated)
Rasmussen College specifically held transfer sessions for the Debtors’ currently enrolled nursing students in order to keep them at the same cost of tuition and timeline for graduation as their enrollment with the Debtors. Alternatively, Concordia University obtained the Debtors’ Bachelor of Science in Nursing degree program and hired the Debtors’ prior faculty and administrators of the program.The Debtors’ currently enrolled students were also provided the option to wait for Concordia University’s licensure to be approved, at which time Concordia University promised to provide full transfer of credits for all courses completed by students with the Debtors. At this meeting, you confirmed the intent to transfer control in whole of the current Globe University Baccalaureate program to Concordia University, St. Paul. Based on the information both of you provided, this transfer would include retaining the current Globe University Program Director and nursing faculty, updating all clinical affiliation agreements under the controlling body of Concordia University, St. Paul, continuing the use of the current Globe University curriculum with conversion to a semester plan, submitting to the Commission on Collegiate Nursing Education (CCNE) notice of the change in the controlling body, providing a firm plan and commitment to physical space, including the construction of a simulation lab and class rooms, transferring all lab equipment from Globe University to Concordia University, St. Paul in summer 2017 and providing access to equivalent library resources.
List of Tables
Document ContentsUNITED STATES BANKRUPTCY COURT FOR THE DISTRICT OF MINNESOTA Jointly Administered Under Case No. 19-33629 (WJF) In re: Minnesota School of Business, Inc., Case No.: 19-33629 Globe University, Inc., Case No.: 19-33632 Chapter 11 Cases Debtors. DECLARATION OF JEANNE HERRMANN IN SUPPORT OF MOTION OBJECTING TO CLAIM (CLAIM NO. 40, CASE NO. 19-33629) Jeanne Herrmann, under penalty of perjury, states: 1. I am a resident of Wisconsin and am the former chief operating officer of Minnesota School of Business, Inc. and Globe University, Inc. (the “Debtors”). All capitalized terms herein have the meaning ascribed to them in the Motion Objecting to Claim (Claim No. 40, Case No. 19-33629) [Dkt. No. 435]. 2. The Debtors’ nursing degree program required Claimant to complete 180 Credits, which were traditionally completed over 12 school quarters in three years. To complete the degree program in three years, a student would be required to attend full-time and successfully complete all coursework. At the time of her re-enrollment with the Debtors, the Claimant transferred 31 credits toward her degree from Dakota County Technical College, Inver Hills Community College, Normandale Community College and the University of Minnesota-Twin Cities. 3. A true and correct copy of the Claimant’s Enrollment Agreement with the Debtors is attached hereto as Exhibit A.
14. The Claimant voluntarily withdrew from the Debtors’ program in September 2016 after completing five quarters of attendance with the Debtors. In that time, the Claimant completed 62 credits in addition to her 31 transferred credits accepted by the Debtors; the Debtors’ nursing degree program still required the Claimant to complete 87 credits to obtain her degree at the time of her withdrawal. The Claimant averaged 12 credits per quarter, 3 credits behind the 15-credit average for a timely projected completion of the Debtors’ nursing program. If the Claimant had continued her attendance at this rate and with her transfer credits, the Claimant was projected to complete her degree after an additional 7 quarters, or nearly two years of full-time attendance (not the six months claimed by the Claimant). 5. The Debtors’ nursing program continued to operate through December 31, 2016. As described in more detail below, the Debtors arranged for a “teach-out” for its currently enrolled nursing students in conjunction with the Minnesota Office of Higher Education (the “OHE”). 6. Based on the Debtors’ books and records, the Claimant’s total tuition incurred during her enrollment with the Debtors totaled $35,389. The Claimant received $8,646 in institutional grants and loans to offset the cost for tuition and fees. In total, the Claimant incurred $26,743 in tuition and fees paid to the Debtors. 7. Attached hereto as Exhibit B is a true and correct copy of excerpts from the Findings of Fact, Conclusions of Law, and Order entered by the Hennepin County District Court on September 8, 2016, in the State of Minnesota in Court File No. 27-CV-14-12558. 8. During the Debtors’ final quarter, the Debtors partnered with two other academic institutions, Rasmussen College and Concordia University, through which the Debtors’ current nursing students could transfer their credits and graduate after the Debtors’ closure. The Debtors negotiated these transfer and “teach-out” opportunities with the direct help and support of the
2OHE. Rasmussen College specifically held transfer sessions for the Debtors’ currently enrolled nursing students in order to keep them at the same cost of tuition and timeline for graduation as their enrollment with the Debtors. Students who utilized this path were considered to have met entrance requirements at Rasmussen College and were only required to submit a transcript for review to continue on with their enrollment. This service was provided and communicated to all students who were enrolled in the Debtors’ nursing program at the time of closure. A true and correct copy of one of these communications is attached hereto as Exhibit C. A majority of students of the Debtors who were nearing completion of the Debtors’ nursing program chose this option to complete their degrees. 9. Alternatively, Concordia University obtained the Debtors’ Bachelor of Science in Nursing degree program and hired the Debtors’ prior faculty and administrators of the program. A true and correct copy of a letter describing this obtainment is attached hereto as Exhibit D. At the time of the Debtors’ closure, Concordia University was in the process of seeking approval for this program. A true and correct copy of a letter describing Concordia’s approval efforts is attached hereto as Exhibit E. The Debtors’ currently enrolled students were also provided the option to wait for Concordia University’s licensure to be approved, at which time Concordia University promised to provide full transfer of credits for all courses completed by students with the Debtors. This service was also provided and communicated to all students who were enrolled in the Debtors’ nursing program at the time of closure. A true and correct copy of one of these communications is attached hereto as Exhibit F.
16STATE OF MINNESOTA DISTRICT COURT COUNTY OF HENNEPIN FOURTH JUDICIAL DISTRICT Case Type: Civil Other/Misc. Court File No. 27-CV-14-12558 Judge James A. Moore State of Minnesota, Plaintiff, FINDINGS OF FACT, CONCLUSIONS OF LAW, AND ORDER vs. Minnesota School of Business, Inc. d/b/a Minnesota School of Business, and Globe University, Inc. d/b/a Globe University, Defendant. The above-entitled matter came on for a Court Trial before the undersigned Judge of District Court at the Hennepin County Government Center from April 4, 2016 – April 26, 2016. Solicitor General Alan I. Gilbert, and Assistant Attorneys General Keala Ede, Kirsi Poupore, Jason Pleggenkuhle, Kathryn Landrum, Thomas Madison, and Adam Welle, appeared on behalf of Plaintiff, State of Minnesota, by its Attorney General, Lori Swanson. Attorneys Joseph W. Anthony, Brooke D. Anthony, Amelia Selvig, and Daniel Hall appeared for and on behalf of Defendants, Minnesota School of Business, Inc. d/b/a Minnesota School of Business and Globe University, Inc. d/b/a Globe University (“Defendants”). Testimony was taken and exhibits received into evidence. The Court allowed the parties’ a briefing schedule and took this matter under advisement upon receipt of the parties’ post-trial submissions. INTRODUCTION A case of this magnitude, complexity and importance deserves, at least, a brief introduction for the reader. The Findings of Fact and Conclusions of Law stated herein are the end product of many months of litigation, voluminous briefing and extensive evidence. To understand the claims and
17consumers cannot be expected to “take the time and the trouble” to review contract to check if it contradicts sales agents’ misrepresentations); FTC v. Brown & Williamson Tobacco Corp., 778 F.2d 35, 42-43 (D.C. Cir. 1985) (noting that consumers tend not to see fine-print disclosures). Defendants own expert summed up how students rely on admission representatives’ guidance in interpreting written materials offered by schools. (4/26/16 AM Tr. 111:10-19 (Chiagouris).) V. ACCREDITATION AND TRANSFER OF CREDIT A. The State Failed to Prove, Widespread, Systematic Deception on Transfer of Credit 28. In its Trial Memorandum and Opening Statement at Trial, the State asserted that it would prove the Schools “systematically” misrepresented students’ ability to transfer the Schools’ credits to other schools. The weight of the evidence admitted at trial was contrary to the State’s claim. 29. The evidence that the Schools trained admissions representatives to inform students that the transfer of credit was up to the receiving institution. Numerous current and former representatives testified that they consistently told students that the receiving institution would decide whether to accept the Schools’ credits. The Schools’ enrollment agreement and catalog further informed students that the transfer of credits was up to the receiving institution. Several students testified that they understood that their credits were not necessarily transferable. The Schools’ representations regarding the transfer of credits were accurate. The receiving institution does, in fact, decide whether to accept the Schools’ credits. The Schools do not have any control over that decision.
1830. The State contends that Defendants misled students by failing to disclose that the Schools’ credits were unlikely to transfer to other schools, but the evidence admitted at trial does not support the State’s contention. 31. Although some schools may not have accepted the Schools’ credits in the past, other schools have articulation agreements with the Schools and do accept the Schools’ credits. The Court finds that whether a student’s credits are likely to transfer depends on the school to which the student intends to transfer. Without more information about the transferee school, the Schools cannot accurately state, one way or the other, if a student’s credits would transfer. 32. Although critical of Defendants’ disclosures, the State failed to clearly explain what additional information the Schools should have disclosed about the transferability of credits. 33. There can be no doubt that some of the witnesses who testified did not understand that credits obtained at Defendants’ institutions would probably not transfer to other colleges or universities. These individual misunderstandings cannot be attributed to Defendants. To the extent that witnesses were misinformed by admissions representatives by affirmative statements that credits would transfer, those statements were not authorized by Defendants. Defendants had clear policies and scripts for admissions representatives to follow on the issue of credit transfer. Admissions representatives were provided extensive training on an on-going basis designed to insure compliance with the policies. Admissions representatives were monitored for compliance with the policies and the scripts. Although individual employees
19may have deviated from the policies such unauthorized acts cannot form the basis for corporate liability for deceptive trade practices or consumer fraud. 34. The State argues that Defendants’ policies and scripts on the issue of credit transfer were deceptive on their face. At trial the State extensively questioned Defendants’ representatives about whether the scripts could have been better written or more forthright. This line of questioning and argument misses the point. The question is whether Defendants engaged in deceptive or fraudulent practices, not whether they could have done more to dispel potential misperception. If the Court were to adopt the State’s articulation of the standard, there would be no business practice in the state that would be immune from challenge under the statutes. Instead, the Court focuses on what Defendants required their employees to say, not what might have been said.22 The Court finds that Defendants timely, effectively and clearly advised prospective students that transfer of credit is up to the receiving institution. B. The State Failed to Prove, Widespread, Systematic Deception on Accreditation 35. The State also failed to offer sufficient evidence to show that Defendants systematically misrepresented or misled students about their accreditation. The Schools are nationally accredited, not regionally accredited. The evidence admitted at trial established that the Schools consistently and accurately identified themselves as nationally accredited, not regionally accredited. No 22 Notwithstanding this legal conclusion, the Court disagrees with Defendants’ representatives who attempted to argue that nothing more could have been said about the topic. The disclosures, while sufficient to avoid liability were carefully crafted to meet that standard and nothing more. The State argues that doing the bare minimum is, in itself, deceptive because it serves to entrap the unsophisticated consumer. The statutes however set the standard as deception and do not impose a duty to make sure that no one misunderstands.
20evidence was admitted at trial that the Schools misrepresented their accreditation status, much less that the Schools did so on a “systematic” basis. 36. The State argues that Defendants sought to deceive students when they made reference to their accreditation in their transferability disclosures. Defendants’ statements in that regard are strictly true. Regionally accredited schools agreed that they would not reject transfer credits from Defendants simply because of Defendants’ national accreditation. VI. ROLE OF DEFENDANTS’ ADMISSIONS REPRESENTATIVES A. The State Failed to Prove, Widespread, Systematic Deception in the Admissions Process 37. In its Trial Memorandum and Opening Statement at Trial, the State asserted that it would prove the Schools “systematically” misrepresented the sales aspects and selectivity of their admissions process. The weight of the evidence admitted at trial was contrary to the State’s claim. 38. A business does not commit fraud by engaging in sales and marketing. LensCrafters, Inc. v. Vision World, Inc., 943 F. Supp. 1481, 1489 (D. Minn. 1996); (“generalized statements of product superiority, that are expressed in broad, vague, and commendatory language . . . constitute ‘puffery’ and are not actionable” under either state or federal law); see also Bernstein v. Extendicare Health Servs., Inc., 607 F. Supp. 2d 1027, 1031 (D. Minn. 2009) (explaining that statements about “quality” and “exaggerated blustering or boasting and vague, subjective statements of superiority” constitute puffery and are not actionable). Marketing for higher education is no different from other businesses. All colleges and universities recruit students. All colleges and universities try to “sell” prospective students on a dream that students who
2150. The State’s evidence also failed to establish that the Schools’ placement rates were false or misleading. Although some witnesses testified about instances in which they believed graduates were considered placed when they should not have been considered placed, the State’s case was not based on anecdotes about the placement or non-placement of individual graduates. The State’s case was based on the overall placement rates that the Schools disclosed to applicants. In order to prove the Schools violated the CFA or DTPA with their placement rates, the State would have needed to submit evidence that: (1) the Schools consistently identified graduates as placed when they were not actually placed; (2) as a result, the Schools’ published placement rates were materially higher than their actual placement rates; and (3) the higher published placement rates were likely to mislead applicants to enroll that otherwise would not have enrolled had they known the actual placement rates. The State failed to establish that the Schools engaged in such widespread, systematic deception with respect to placement rate calculations. There was no evidence at trial about any concerted effort by the Schools’ to inflate placement rates, no evidence about the specific placement rates the Schools published, no evidence about what the placement rates should have been if they were accurate, and no evidence that any applicant was misled or was likely to be misled by hearing or seeing the published placement rates as opposed to supposedly more accurate rates. The testimony of Defendants’ witnesses about their good faith efforts to calculate placement rates in accordance with the regulations was credible.
26December 15, 2016 Kendra Saal, MSN, RN Dean of Nursing Globe University 1401 West 76th Street Richfield, MN 55423 Dear Director Saal, This is a follow-up to the meeting on December 15, 2016 with Josanne Christian and you. At this meeting, you confirmed the intent to transfer control in whole of the current Globe University Baccalaureate program to Concordia University, St. Paul. Based on the information both of you provided, this transfer would include retaining the current Globe University Program Director and nursing faculty, updating all clinical affiliation agreements under the controlling body of Concordia University, St. Paul, continuing the use of the current Globe University curriculum with conversion to a semester plan, submitting to the Commission on Collegiate Nursing Education (CCNE) notice of the change in the controlling body, providing a firm plan and commitment to physical space, including the construction of a simulation lab and class rooms, transferring all lab equipment from Globe University to Concordia University, St. Paul in summer 2017 and providing access to equivalent library resources. Upon receipt of a formal letter confirming the date of the change in ownership, the Board will note the continuing approval of the program as Concordia University, St. Paul Baccalaureate Nursing Program. We understand that in your ongoing role as Program Director you will be overseeing the construction of classrooms and a nursing lab consistent with Board of Nursing Program Approval Rule: MR 6301.2340 Subpart 1 Controlling Body B.provide adequate fiscal, human, physical, clinical and technical learning resources to supportprogram processes, security, and outcomes. We look forward to surveying the new space in summer 2017 to affirm needed resources are in place. The meeting with Ms. Christian and you communicated focused attention on the success of progressing nursing students at Globe University. We appreciate your collaboration during this challenging situation. Sincerely, Marilyn Krasowski, EdD, RN Director for Education Minnesota Board of Nursing Marilyn.Krasowski@statemn.us 612-317-3014 cc: Eric LaMott, PhD, MS Josanne Christian, RN, PHN, MSN Betsy Talbot, Manager, Office of Higher Education
28Website: www.nursingboard.state.mn.us December 9, 2016 Eric LaMott, PhD, MS Provost and COO Concordia University, St. Paul 1282 Concordia Avenue St. Paul, MN 55014 Dear Dr. LaMott: This letter is in response to a request to confirm the ongoing standing and continuing approval of the Globe University/Minnesota School of Business baccalaureate nursing program by the Board of Nursing. Program Director Saal informed us of a potential change in the controlling body of the program to Concordia University. We appreciate the urgent need to continue to serve progressing nursing students. On December 5, 2013, the Board granted continuing approval to Globe University’s Baccalaureate Nursing Program based on compliance with all program rules and Commission on Collegiate Nursing Education (CCNE) board action on October 10-12, 2013 granting accreditation until the next reaccreditation visit in 2023. CCNE’s action was based on meeting all four accreditation standards with no compliance concerns. Globe University’s Director submitted the most recent annual board compliance survey on September 28, 2016 demonstrating compliance with program rules. According to MR 6301.2340 Subp. 3 Nursing education program, the program director shall inform the board within 30 days of a change in control of the program. Pursuant to this provision, the receiving controlling body is required to provide documentation to the Board of this acquisition/change in control including the proof of the transfer in ownership and whether the existing program curriculum, director, faculty and physical resources will remain in place. This documentation must address the other required criteria for nursing education programs including adequate resources to support the program. MR 6301.2340 Subp. 1.B. I hope this letter provides the necessary information for Concordia University, St Paul during this time of negotiations. Feel free to call me at 612-317-3014. Sincerely, Marilyn Krasowski, EdD, RN Director for Education Minnesota Board of Nursing Marilyn.Krasowski@state.mn.us cc: Kendra Saal Josie Christian Betsy Talbot
30rom: Jeanne Herrmann <JHerrmann@globeuniversity.edu> ent: Monday, December 19, 2016 3:28 PM ubject: Nursing Communication Course (Nursing.Communication.Master): Update for Nursing Studentsecember 19, 2016 ear Globe University/Minnesota School of Business Nursing Students: e are grateful for your patience and know how incredibly difficult it has been to be without answers about your ontinued education. We have been working tirelessly to find pathways that would provide the best possible experiencnd outcome for all students. e are pleased to provide our nursing students a seamless pathway to graduation. Concordia University and Globe haveen working diligently to achieve all of the necessary approvals to have Concordia acquire the nursing program, cluding faculty, curriculum, equipment and at least initially will be leasing space in Richfield to serve you. While much ill remain the same, there are also some exciting changes that will come along with this partnership. You will become ember of the Concordia University community with expansive academic offerings and support for you now and in youture. It is our goal to make your experience as stable as possible with this transition. dividual advising sessions will be scheduled with students to design a plan specific to your success. You are encourage reach out to your campus team for further information. Financial aid is available and will need to be re-applied for rough Concordia University. Financial aid information will be shared by the Concordia team in the coming days. In the eantime, any questions can be directed to Kendra, Dean of Nursing. is our sincere desire to have you continue your education. We are proud to have had the opportunity to serve you anmain steadfast in our commitment to your success. lease know, you have a choice about whether you want to continue your education through the arranged teach-out ith Concordia University. Students attending schools that close, have the option to discontinue their education and eek a discharge of their federal student loans. Students choosing to seek a loan discharge should be aware of the llowing: o qualify for an automatic discharge of federal student loans, a student: • must be enrolled at Globe at the time of closure or in the 120 days prior to the closure;• must not have completed their program at Globe; • must not have transferred Globe credits to a comparable program of study at a different institution; and,• must not have participated in a teach-out of their program with Globe or another institution. • For further information regarding these options, please see the following links: ttps://www.ohe.state.mn.us/mPg.cfm?pageID=2213 ttps://studentaid.ed.gov/sa/repay-loans/forgiveness-cancellation e encourage all students to weigh their choices carefully. We know you started on this journey to earn the necessary nowledge, experience and credential to become a respected professional of the health care team. We sincerely hope tee you reach your education and career goals and meet your personal calling to become a nurse. We wish you the best
31anne Herrmann, Chief Operating Officer lobe University/Minnesota School of Business