Former Students Win $9 Million Settlement in Fraud Case

May 14, 2007

Washington students who alleged they were defrauded by the defunct Business Computer Training Institute have won a $9 million settlement and may get tens of millions more.

An insurance company for BCTI, once based in Gig Harbor, Wash., agreed on Friday to pay $9 million to settle claims that the school preyed on low-income students, charging them almost $11,000 for 30 weeks of basic computer training that some instructors argued wasn’t worth it.

A tentative agreement the students reached with BCTI could yield an additional $55 million from a second insurance company, The News Tribune of Tacoma reported Saturday.

If approved by Pierce County Superior Court Judge Thomas Larkin, the settlement would close one phase of a class-action lawsuit filed two years ago, just before BCTI closed its seven campuses in Washington and Oregon.

The lawsuit claims BCTI targeted low-income students with promises of high-tech training and good-paying jobs. Instead, students say they got substandard training and low-paying jobs at fast-food restaurants, retailers, convenience stores and telemarketing firms.

A News Tribune investigation last year found that BCTI recruited students outside welfare and unemployment offices, sometimes in violation of state law. BCTI pressured recruiters to meet enrollment quotas and fired them when they fell short.

Instructors said they were pressured to keep unqualified students enrolled so the school could collect their financial aid from federal and state governments; Some said the curriculum was flawed and riddled with errors, the newspaper reported.

The News Tribune could not reach BCTI attorney Thomas Merrick for comment late Friday, and The Associated Press’ attempts to reach him Saturday were not immediately successful.

In written statements and in court filings, BCTI owners Tom Jonez and Morrie Pigott and their attorneys have denied any wrongdoing.

They said the school sought to help troubled students, that they held recruiters to high ethical standards, and that many BCTI graduates are happy. They also said students signed disclaimers acknowledging that BCTI could not guarantee employment or wages.

Some details of Friday’s settlement have yet to be worked out, including how the money will be divided among the former students. Some 28,000 students who attended BCTI from 1985 to 2005 could potentially benefit.

Tony Nguyen, one of more than 600 former students who sued, was ecstatic when he learned about the settlement. “I’m like, God bless, man!” Nguyen said. “They’ve got it coming.”

Darrell Cochran, an attorney for former BCTI students, said the parties have an “agreement in principle” on a stipulated judgment for an additional $55 million. The figure represents one-tenth of the estimated economic damages for the 28,000 students who attended BCTI.

Cochran said that money would have to come from a second insurance company, which he declined to identify, that has refused to acknowledge that its policy would cover such damages.

Scores of former students told The News Tribune they borrowed thousands of dollars to attend BCTI. Many ended up defaulting on their student loans and got hounded by collection agents. The federal government has garnished income tax returns of some former students.

News of the settlement comes as Gov. Chris Gregoire prepares to sign legislation imposing tougher requirements on for-profit vocational schools, a measure inspired by the closure of BCTI and other vocational schools.

The bill, which Gregoire is scheduled to sign into law on Monday, will establish minimum financial standards for the schools and minimum standards for their instructors and administrators.

It also would allow the state Workforce Training and Education Coordinating Board to place schools on probation and demand changes if they don’t meet standards.

Topics Fraud Training Development

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