Pago Pago, AMERICAN SAMOA — Argosy University’s participation in the student financial aid — Title IV — programs has been terminated by the US Department of Education, which gave an effective date of Feb. 27th, which is also the date of a USDOE letter to Mark E. Dottore, the federal court-appointed Receiver for Argosy and other institutions owned by California-based Dream Center Education Holdings (DCEH) LLC.

Additionally, Argosy has not paid more than $16 million in student-stipends, received under the Title IV programs.

Argosy- Hawaii campus oversees the American Samoa branch.

The Feb. 27th letter from Michael J. Frola, director of USDOE Multi-Regional and Foreign Schools Participation Division (MRFSPD), also denies the request for change of ownership pertaining to Argosy, which was previously owned by Education Management Corporation (or EDMC).

In the letter — which was also addressed to DCEH board chairman Randall K. Barton — Frola noted that MRFSPD has received Argosy’s application for approval of change in ownership (CIO) or structure resulting in a change of control. The CIO was accomplished pursuant to terms of the purchase agreement dated Feb. 24, 2017 between EDMC and the Dream Center Foundation, a California nonprofit corporation, and its affiliates including DCEH. The CIO’s final closing was January of last year

The parties to the purchase agreement also requested USDOE’s approval of the institution’s conversion from for-profit to nonprofit status as a result of its new ownership, said Frola, who noted that the letter addressed only USDOE’s determination in regards to Argosy — but not other institutions owned by DCEH.

USDOE “has determined that the application for the CIO and the request to convert to nonprofit status cannot be approved because the Institution does not meet certain required standards,” said Frola, who then explained in detail those standards under federal law and regulations.

“Accordingly, Argosy’s participation in the student financial assistance programs... is ended as of the date of this letter,” he said in the letter, which details DCEH’s responsibility as required by law in order for Argosy to continue to participate in student financial aid programs.

Frola said USDOE “has determined that Argosy’s failure to properly administer program funds entrusted to it, constitutes a grievous breach of its fiduciary duty” to USDOE.

He explained that when DCEH and its subsidiaries were appointed a Receiver on Jan. 18, 2019, by the federal court in Cleveland, Ohio, the USDOE placed Argosy on HCM2 — the second level under federal law for “heightened cash monitoring payment”.

However, in late January 2019, USDOE “began to hear numerous complaints from students and parents that Argosy had failed to pay credit balances owed to its students,” said Frola referring to the stipends. Therefore, on Feb. 6th, USDOE requested the Receiver to provide a list of all unpaid stipends that Argosy owed students.

The Receiver the following day provided a summary table and a zip-file of unpaid student stipends.

“The zip-file showed that Argosy had not paid [student] stipends totaling $16,299,840,” said Frola.

Details and attachments included in Frola’s letter shows that Argosy received nearly $13 million under Title IV programs during the first-two months of 2019 but Argosy paid its staff, vendors and DCEH payroll expenses while maintaining only $8.11 million in the receivership account.

Frola said Argosy paid its expenses — including payroll — “instead of ensuring that all Title IV credit balances were paid to its students and parents.” Additionally, student stipends were required to be paid under HCM2 regulations before DCEH, and now the Receiver obtain reimbursement from USDOE.

According to Frola, significant funds were released by USDOE since mid-January, which should have been used to pay the existing unpaid student stipends. Furthermore, Argosy’s “actions in failing to pay” Title IV funds to students “is a severe breach of the required fiduciary standard of conduct... and demonstrates a blatant disregard of the needs of its students.”

“As detailed in this letter, the violations involved here are serious and the potential harm to students and tax payers is severe,” according to Frola’s letter, which also gives Argosy until Mar. 11th to provide evidence to dispute USDOE’s findings.

As previously reported by Samoa News, it was on Jan. 19th that the WASC Senior College and University Commission ordered Argosy to Show Cause why its accreditation should not be withdrawn. This followed WASC concerns over Argosy’s financial situation and Argosy University remains accredited by WASC while under the Show Cause Order.