3 Former Employees Accuse Kaplan U.

of
Bilking Government Out of Billions
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By GOLDIE BLUMENSTYK
Three former academic officers at Kaplan University have filed a wide-ranging federal lawsuit
that accuses the fast-growing for-profit institution of defrauding the U.S. government of more
than $4-billion.
The lawsuit alleges that Kaplan enrolled unqualified students, inflated their grades so they
could stay enrolled, and falsified documents to obtain accreditation for certain academic
programs. The suit, filed in U.S. District Court in Tampa, Fla., also accuses the company of
paying for its own employees to enroll in classes so it could meet the requirement that at least
10 percent of its revenue come from sources other than federal loans and grants.
In addition, the complaint accuses Kaplan University, whose parent company is a subsidiary of
the Washington Post Company and one of its most profitable ventures, of providing its college
recruiters with incentives based on the number of students they enrolled, in violation of federal
regulations.
In an interview last week, Kaplan officials strenuously denied the allegations, calling them "all
unfounded," and said the parties bringing the case were disgruntled former employees who had
made "outlandish claims in numerous forums" in recent years that had been repeatedly
rejected.
One of the former officers who filed the suit said he had firsthand knowledge that Kaplan's
accreditation materials were falsified because he took part in the process, submitting data to
the North Central Association of Colleges and Schools that purported to show there would be
employer interest in a new program in law and legal studies.
"We forged all that. We just drew up whatever numbers we wanted," said the official, Ben H.
Wilcox, who is now working as a lawyer in Oklahoma.
Mr. Wilcox was employed at Kaplan from February 2005 until May 2006, serving as a dean of
paralegal studies and later dean of extended campuses. He said he was fired, but an official
speaking for Kaplan said he left by "mutual agreement" with the university.
Alleged Misrepresentations
Mr. Wilcox said he was also part of a university effort to mislead a visiting accrediting team in
what was supposed to be a conference call between the team and a dozen or so Kaplan
students. Instead, the people calling in were "all our admissions reps, one floor above us, all on
separate lines," said Mr. Wilcox.
In addition to its online program, Kaplan operates 70 colleges in the United States and others
around the world, and enrolls a total of about 80,000 students. In 2007 its higher-education
operations generated revenue of more than $1-billion, of which $745-million came via federal
student loans and Pell Grants.
The subsidiary, once known as a test-preparation business, entered the college business in
1998 with the founding of an online law school. In 2000 it bought the Quest College chain of 30
institutions, and subsequently expanded operations worldwide.
The lawsuit was filed under the federal False Claims Act, which allows whistle-blowers to sue
companies and organizations they accuse of obtaining federal funds under false pretenses. In
this case, the parties allege that the university obtained federal loans and grants on behalf of
its students after falsely certifying that it complied with federal laws.
The lawsuit says the company has illegally obtained "over one-half billion" dollars annually
since January 1999, and seeks damages of three times that amount plus civil penalties.
When first filed, False Claims Act suits are kept secret, giving the U.S. Department of Justice
time to investigate and decide whether to intervene. The lawsuit against Kaplan, filed in April
2007, was unsealed by the court late last month, after the department declined to pursue the
case. The government could still join the case.
Kaplan officials said they had not been subpoenaed or questioned by federal investigators
during the period that the suit was under seal and only learned of it once it was unsealed.
The parties bringing the claim, who are called "relators," can now pursue the case on their own,
and if they prevail would be entitled to a share of the damages.
In addition to Mr. Wilcox, the relators are Jude Gillespie and Carlos Urquilla-Diaz, who both
worked at the South Florida campus in Fort Lauderdale.
Mr. Gillespie is described in the complaint as a former department chairman and a professor of
paralegal studies, who worked on the campus from August 2004 through April 2005. The
complaint gives the same description for Mr. Urquilla-Diaz, but other records indicate he
worked on the campus as a professor and administrator in the paralegal-studies department
from September 2005 through August 2006.
Strong Denials
In denying the lawsuit's allegations, Kaplan officials took direct aim at the accusers, saying in a
written statement that the former employees "have made a laundry list of unfounded
accusations, as well as direct threats to our faculty and administrators."
"Their ongoing attempts to hurt the university, its faculty, administration, and students have
continued to fail," the statement said. "They are now trying to use your newspaper as a vehicle
for their unfounded claims."
It continued: "In addition, we have strong evidence indicating that one of the plaintiffs illegally
accessed our university e-mail system and sent a series of extremely profane and threatening
e-mails to students, faculty, and executives. We have reported this to the FBI."
Kaplan would not say whom it suspects.
In an interview, Mr. Wilcox denied responsibility. Since leaving Kaplan nearly two years ago, he
has held three jobs, including two short stints at other for-profit institutions. He served for
three months as a dean at the Dallas campus of Westwood College, a division of Alta Colleges
Inc. He was also employed by Career Education Corporation, in Schaumburg, Ill.
He and his former co-workers have since become tangled in a web of legal disputes. Among the
several claims filed by Mr. Urquilla-Diaz and Mr. Gillespie over the past few years is a
wrongful-termination lawsuit brought by Mr. Urquilla-Diaz against Kaplan that names the
institution and several employees, including Mr. Wilcox, as defendants.
John W. Andrews, the lawyer who is representing the three men in their lawsuit under the False
Claims Act, is also representing Mr. Urquilla-Diaz in his wrongful-termination suit. He said some
of Mr. Wilcox's behavior was ordered by his superiors.
"Unfortunately, good people do some wrong things when they're working for a big corporation,"
said Mr. Andrews. "I think you'll find that Mr. Wilcox followed orders. I think you'll find his
conscience caught up with him."
Brad Wolverton contributed to this report.

http://chronicle.com
Section: Money & Management
Volume 54, Issue 28, Page A12

Washington Post Co. (WPO:NYSE)

Knight Ridder/Tribune 03/13/2008 11:32 AM ET

Three ex-staffers accuse Kaplan of

wrongdoing [The Miami Herald]
Recent WPO News
04/08/2008 12:24 PM ET
Mar. 13--Skirmishes between Fort Lauderdale online institution Kaplan University and three
former faculty members that reached the U.S. Equal Employment Opportunity Commission and
the Federal Bureau of Investigation have now landed in federal court.
In a whistle-blower action, a former dean and two department chairman accused Kaplan of
accepting unqualified students and pressuring faculty to grade leniently to keep students
enrolled so it could continue receiving hundreds of millions in student financial aid each year.
The lawsuit was unsealed in Tampa court last week. The Justice Department declined to
intervene in the case, a decision it said "should not be construed as a statement about the
merits of the case."
Kaplan in an e-mail called the plaintiffs "disgruntled former employees." The university said the
three have been making "outlandish claims," including to the EEOC, only to have them
"repeatedly rejected."
Kaplan fired two of the plaintiffs -- Jude Gillespie of Miami Beach, and Carlos Urquilla-Diaz. A
third plaintiff, law studies dean Ben Wilcox of Oklahoma, left the university by mutual
agreement, a spokeswoman said.
The university says it has "strong evidence" that one of the plaintiffs illegally accessed Kaplan's
e-mail system to send threatening messages to students, faculty and executives. Kaplan
reported the matter to the FBI.
The trio's suit alleges Kaplan, one of the largest online universities in the country with 37,000
students as of Dec. 31, has defrauded the federal government by receiving more than $500
million a year in student financial aid since 1999 for running an "online diploma mill."
Among the allegations: That Kaplan awarded trips and club rewards to enrollment counselors
who recruited the most students. (Other for-profit institutions have gotten in trouble for linking
compensation and recruitment because it can lead to high-pressure sales tactics.) The suit also
alleged that Kaplan urged faculty to inflate grades to keep students enrolled.
Kaplan, part of the Washington Post Co., called the 15-page lawsuit "a laundry list of
unfounded allegations."
"Kaplan University operates fully in accordance with all applicable laws and regulations, and
provides an excellent education to thousands of students each year," it said in the e-mail.
The higher-education division of Kaplan Inc., Kaplan University's parent, generated about $1
billion in revenue last year, a 19 percent increase from 2006.
The division received $745 million in federal student financial aid last year.
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http://www.herald.com.
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