Minnesota School of Business, Globe University accused of fraudulent practices

More than 100 Rochester students may be affected by a state of Minnesota ruling that Minnesota School of Business and Globe University fraudulently marketed and recruited students.

The Minnesota Office of Higher Education is moving to revoke the schools' authorization to operate at its six locations throughout the state after a Hennepin County District Judge ordered the two schools to stop the fraudulent practices and imposed unspecified penalties.

The 130-page decision highlighted problems in the school's criminal justice program, but OHE is moving to revoke authorization because of an applicable state statute that says the office can't provide registration, degree, or name approval to a school "if there has been a criminal, civil or administration adjudication of fraud or misrepresentation in Minnesota or another state."

"Any finding of fraud or misrepresentation triggers the part where we basically have to revoke them," said Betsy Talbot, OHE's manager of institutional registration and licensing. "There's no quantity or scale, or magnitude in the statute, it's any adjudication of fraud or misrepresentation."

Attorney General Lori Swanson sued the Woodbury-based schools in 2014, saying it enrolled students for criminal justice programs despite lacking accreditation.

The schools, owned by the Myhre family, were ordered to pay the state for legal and other costs. Swanson plans to seek restitution for more than 1,000 students affected. The for-profit schools closed its six campuses in Minnesota and Wisconsin while awaiting the court's decision. The website for the Rochester campus says classes will resume on Oct. 3.

The school will be allowed to remain open for one year, according to Talbot, but after that, it's not entirely clear what will happen.

"There's just so much up in the air," said Sandy Connolly, OHE's director of communications. "There are some moving pieces yet."

But Michelle Knoll, the school's marketing and communications director, said Monday the school has yet to receive any formal communication from OHE, she said the office hasn't yet communicated anything about revoking the school's registration.

"We are currently considering all of our legal options and our students and staff will most certainly be the first to know once an official decision has been made about the future of our schools," Knoll said.

In an email to students last week, Jeanne Herrmann, chief operating officer for Globe University and Minnesota School of Business, said she felt details released by the media weren't "reflective of the entire order."

"We are pleased to report that the Court found that our schools are currently fully compliant with state law," said the email to students. "However, the Court made some findings related to our now ceased criminal justice program. The Court ordered the State to provide additional information to complete its ruling on the matter."

The email noted the Attorney General's Office has until Sept. 22 to provide further detail to the Court before it can complete the ruling.

Opportunities for appeal, 'teach-out'

The school won't close immediately, it'll have a year to operate, which OHE is calling a "teach-out" period.

This year will allow the school's 1,700 current students a chance to finish their programs. For those unable to finish, OHE is currently working with other schools to negotiate credit transfer, Talbot said.

"Right now, our focus is the students that are going to be impacted by this. Even though the program that the verdict is in relation to, it impacts all the employees, and all the students, and it's just trying to ensure that they get to complete the program, or any program that they are trying to complete," Talbot said Friday.

The school will have two opportunities to appeal, Talbot said. It can appeal the verdict itself, through the Minnesota Court of Appeals, and it can appeal OHE's administrative decision. During that process, the schools will be able to remain open.

She said the U.S. Department of Education and Veteran's Affairs — because of the school's high number of veterans — may weigh in. "We're still finding out the particulars from the attorney general's process," Talbot said.

OHE will be consulting with the Attorney General's office and Globe University and Minnesota School of Business to "minimize disruption for students," said OHE Commissioner Larry Pogemiller, in a Sept. 12 statement on OHE's website.

Talbot said school closings are especially difficult for veterans because of how their benefits work.

"If your school closes before you use your eligibility and finish your degree, you don't get those veteran's benefits back," she said. "It's trying to ensure continuity of benefits for them. It's very important because they have earned those benefits by serving our country."

In addition to its Minnesota locations, the school also has one location in South Dakota and five in Wisconsin.

What does this mean for Rochester?

The Rochester MSOB campus currently has 112 students, and 34 instructors and staff, according to Knoll.

The criminal justice program, which the decision found fault with, was "officially ceased" in Minnesota in January 2015, according to Knoll, but she noted her records show the Rochester campus hadn't had any students in the program since October 2013.

One of the school's former students, Michael Flores, said he wasn't surprised by the news. He withdrew a few months ago because he felt like "they were wasting my time," he said.

Others, like Rochester-resident Alex Simone, said their experiences with the school were very positive.

"I had a great experience," Simone said Monday. "I was placed in my field within two quarters of starting."

One of the school's former admissions directors, Angie Helm, who worked at Globe University and Minnesota School of Business from 2005 to 2014, said, "I have nothing but the utmost respect for the school and all that they do."

"I feel very proud for the 10 years I was there with them," Helm said. "Programs were always under close watch to make sure we were doing what was in the best interest of students."

As a state, Talbot said, Minnesota supports diverse educational opportunities and business, and she said Globe University and Minnesota School of Business will be afforded due process — though, she noted, you won't see this type of court action against a nonprofit institution.

"There's just a lot of scrutiny in the for-profit industry. This is the second for-profit institution in Minnesota, or some sort of movement towards that in a week," she said, noting the closure of ITT Tech locations across the country. "It's just making sure the ones that do operate are treating students fairly."