Class Action Suit Against Mountain State U

[Martin Eisenstadt]

Mountain State University lost their NCACS accreditation on July 10, 2012. On July 11, 2012 they got hit with a class action lawsuit. Do similar actions await non-hackers like Trident?

Burger v. Mountain State University, Inc.
Class Action Complaint
by Sean McGinley on 7/11/2012

A Class Action Complaint was filed against Mountain State University, Inc. in Charleston, West Virginia on July 11, 2012. Mountain State University is a private, for profit university head-quartered in Beckley, West Virginia, with campuses around West Virginia including in Charleston. On July 10, 2012, the HLC announced Mountain State University's accreditation was revoked, leaving thousands of students with worthless college course credits, now unaccredited, after many Mountain State students had incurred tens of thousands of dollars in student loan debt to pay the college. The Class Action Complaint against Mountain State University, filed by the Charleston law firms of DiTrapano Barrett & DiPiero, PLLC ( http://www.dbdlawfirm.com ) and the Webb Law Firm, PLLC ( http://www.rustywebb.com ), asserts claims false and deceptive practices, negligence, breach of contract, and breach of the covenant of good faith and fair dealing by the University and its Board of Trustees.

The Class Action Complaint explains that accreditation is a third-party stamp of approval that ensures universities or programs are meeting a minimum set of national standards. If a university loses its primary accreditation, any subsequent degrees conferred by the university are effectively worthless. The Higher Learning Commission (“HLC”) is the regional accrediting agency that accredits institutions of higher education in West Virginia. According to a spokesman for the HLC, losing an accreditation “is a very rare circumstance.” Mountain State University is the first higher education institution in West Virginia history to have its school-wide accreditation revoked.

In 2008, the HLC told Mountain State in its report that despite the university's strong financial position and rising student enrollment, "it is not clear how the University will continue to respond to future challenges and opportunities with no clearly defined process for updating the University's long-term plans; limited empirical evidence [transparency] guiding planning and budgeting ... no program review processes to determine and sustain academic quality and viability; and a lack of strong communication and collaboration in governance." The 79-page 2008 report went on to say "long-term planning was remarked as “not necessary” and “pie in the sky” by some employees and board members,’ and expressed concerns that there were no mechanisms in place to get feedback on how to improve the university.”

In 2010, a national agency (“NLNAC”) revoked the accreditation for Mountain State University's nursing school. That prompted the West Virginia nursing board to place Mountain State's nursing program on provisional status, for major problems in leadership and failure to keep up-to-date student records.

Throughout the accreditation problems, members of Mountain State's board of trustees said they didn't know how bad the issues in the nursing school were. They promised to take corrective action. But in June 2011, the HLC placed Mountain State University on "show cause" status, citing the school for its top-down leadership, lack of long-term planning, failure to collaborate with faculty, failure to give information to students, and the loss of specialized accreditation for the nursing program. The HLC gave Mountain State one year to make big fixes at the school or risk losing its accreditation altogether. Also, in 2011, the Chronicle of Higher Education indicated in its report that “[n]o other college in the survey [of 519 colleges] devoted such a substantial share of its resources to a president[,]” as did Mountain State University.

After a long, drawn out process of embarrassing events featuring then President Charles Polk, which included the revelation that Polk had a salary of more than $1.84 million in 2009 (according to media accounts) – higher than his counterparts at Harvard and Yale – and had used the school’s two private planes on an excessively high number of occasions, Mr. Polk was fired as President by Mountain State University's Board on January 19, 2011. Internal employees and students of MSU have indicated to media outlets that the Board obviously should have fired him sooner.

From 2008 through July 2012, Defendants reassured students and prospective students that Mountain State University was in sound shape, when in fact, such was not true. On June 28, 2012, the Board of Trustees of the Higher Learning Commission voted to withdraw Mountain State’s accreditation, effective August 27, 2012. The HLC’s action was made public on July 10, 2012. Students found out about Mountain State’s accreditation being withdrawn by hearing it on the news. The HLC explained Mountain State lost its accreditation after years of failing to correct major problems in leadership, program evaluations, and campus-wide governance. The Class Action was filed by Charleston West Virginia lawyers Sean McGinley, Lonnie Simmons and Robert Bastress, and Rusty Webb.

  MountainStateComplaint.pdf (Size: 299.42 KB / Downloads: 3)

[Albert Hidel]

Seems to be a trend. Bridgepoint Education, the parent company of Ashford and U of the Rockies, just got hit with a class action suit too:

ROBBINS GELLER RUDMAN & DOWD LLP FILES CLASS
ACTION SUIT AGAINST BRIDGEPOINT EDUCATION, INC.

July 13, 2012 – Robbins Geller Rudman & Dowd LLP (“Robbins Geller”) (http://www.rgrdlaw.com/cases/bridgepoint/) today announced that a class action has been commenced in the United States District Court for the Southern District of California on behalf of purchasers of Bridgepoint Education, Inc. (“Bridgepoint”) (NYSE:BPI) common stock during the period between May 3, 2011 and July 6, 2012 (the “Class Period”).

If you wish to serve as lead plaintiff, you must move the Court no later than 60 days from today. If you wish to discuss this action or have any questions concerning this notice or your rights or interests, please contact plaintiff’s counsel, Darren Robbins of Robbins Geller at 800/449-4900 or 619/231-1058, or via e-mail at djr@rgrdlaw.com. If you are a member of this class, you can view a copy of the complaint as filed or join this class action online at http://www.rgrdlaw.com/cases/bridgepoint/. Any member of the putative class may move the Court to serve as lead plaintiff through counsel of their choice, or may choose to do nothing and remain an absent class member.

The complaint charges Bridgepoint and certain of its officers and directors with violations of the Securities Exchange Act of 1934. Bridgepoint is a for-profit provider of postsecondary education services. The Company’s academic institutions include Ashford University (“Ashford”) located in Clinton, Iowa, and University of the Rockies located in Colorado Springs, Colorado, as well as online institutions.

The complaint alleges that during the Class Period, defendants issued materially false and misleading statements regarding the Company’s business and prospects. Specifically, defendants concealed accreditation problems with the Company’s Ashford campus. As a result of defendants’ false statements, Bridgepoint stock traded at artificially inflated prices during the Class Period, reaching a high of $30.50 per share on July 22, 2011.

The complaint alleges that in May and June 2011, the Western Association of Schools and Colleges (“WASC”) and its eligibility review committee notified Ashford of several concerns it had regarding the institution’s future accreditation. Thus, by the Spring of 2011, at the latest, the Company had been advised that Ashford’s accreditation was at risk. Then, on July 9, 2012, Bridgepoint filed a Form 8-K with the SEC disclosing that on July 5, 2012, Ashford had received an official notice denying its accreditation application by the Accrediting Commission for Senior Colleges and Universities of the WASC. On this news, Bridgepoint stock plunged $7.25 per share to close at $14.25 per share on July 9, 2012, a decline of nearly 34% on volume of 1.2 million shares.

According to the complaint, the true facts, which were known by the defendants but concealed from the investing public during the Class Period, were as follows: (a) the Company had failed to implement plans, procedures and practices to sufficiently assist students in staying with the programs they enrolled in and complete the courses; (b) the Company failed to align resources with educational requirements such that students were not benefitting from the resources available and were therefore not progressing to an acceptable level; ( c) Ashford failed to maintain a sufficient core of faculty and programs to develop faculty, leading to poor teaching and poor completion rates by students; (d) Bridgepoint had inadequate review procedures such that shortfalls were not quickly identified and remedied; and (e) Ashford failed to maintain an empowered and independent governing board.

Plaintiff seeks to recover damages on behalf of all purchasers of Bridgepoint common stock during the Class Period (the “Class”). The plaintiff is represented by Robbins Geller, which has expertise in prosecuting investor class actions and extensive experience in actions involving financial fraud.

Robbins Geller represents U.S. and international institutional investors in contingency-based securities and corporate litigation. With nearly 200 lawyers in nine offices, the firm represents hundreds of public and multi-employer pension funds with combined assets under management in excess of $1.5 trillion. The firm has obtained the largest recoveries in history in six of the eight categories of shareholder class action settlements and has been ranked number one in the number of shareholder class action recoveries in MSCI’s Top SCAS 50 every year since 2003. According to Cornerstone Research, the firm’s recoveries have averaged 35% above the median for all firms over the past seven years (2005-2011). Please visit http://www.rgrdlaw.com for more information.

[Martin Eisenstadt]

Things are getting nasty at Mountain State. More lawsuits threatened, allegations of criminal conduct made. As CCNH students discovered, once these class action suits finish up the lawyers collect all the real money and the students get pennies on the dollar.

...A Charles Town law firm also said it would file a lawsuit against MSU if it does not make an offer to settle with nursing students.

Stephen Skinner with the Skinner Law Firm said before the recent announcement of the HLC's decision, the firm sent a formal notice to MSU stating it would file a suit.

"Under a portion of the West Virginia Consumer Credit and Protection Act, you have to give MSU the opportunity to make an offer in order to file suit and be able to collect all the damages. And we have not heard back from them yet," he said.

Skinner said the firm will file its lawsuit July 24 if the university has not yet responded.

"We are also hearing from a lot of other students who are considering other suits," Skinner said. "We believe that this is a criminal enterprise and (former MSU President) Charles Polk needs to be held personally liable."

Skinner also said he and his clients are worried about issues they think they could encounter if they win the suit.

"We're afraid we will get to the end of it and there is no insurance assets left and there will be nothing," he said. "So of course, Dr. Polk needs to empty out all of his coffers to pay these students back. I hope that he doesn't spend money on lawyers rather than trying to make these students whole."

"When you think about someone who has spent three years of their life in the nursing program and all of those credits don't transfer and they have to start all over again, looking at just in the loss of future wages three years at $50,000 a year. You have to start over again," Skinner added. "Most can't afford it because they maxed out student loans. Most of my people are not getting the same degree — they're getting a lesser degree because they can't afford anything else. I really hope that the U.S. Attorney in the Southern District looks into this."

http://www.statejournal.com/story/190550...enrollment

The statue of former Mountain State University President Charles Polk is adorned with a paper towel scarf Tuesday. Polk was fired in January, and one school employee said Tuesday she thought he was the root cause of the university's loss of accreditation.

...[Charles] Polk had served as president of the university since 1990. The board fired him in January. Toilet paper was draped around the neck of Polk's statue still standing in a building on campus.

A woman -- who would only give her middle name, Elizabeth, for fear she might be fired -- said the board should have fired Polk sooner. She thinks the statue should be removed as well.

"It's a daily reminder of our situation," said Elizabeth, who has worked in the building for about three years. "It's like pouring salt in our wounds."

http://www.dailymail.com/News/201207100067