Jessica Rosales was one of those kids watching TV, wondering what to do about the future, and seeing a commercial for Westwood College.
Now 21, Rosales is living that future as one of four plaintiffs in a class-action arbitration against the school and its parent company, Alta Colleges Inc., based in Denver. Alta has more than 12,000 students at 19 Westwood and Redstone College campuses in California, Colorado, Georgia, Illinois, Texas and Virginia.
“Westwood College knows exactly what the future holds because they are responsible for creating it: astronomic and insurmountable debt obtained in the pursuit of a largely useless degree,” reads the complaint filed this month before the American Arbitration Association in Denver.
The complaint alleges the for- profit school lies to students about everything from accreditation to job-placement opportunities as it loads them up with loans.
“Everything we’re seeing at Westwood is just wrong,” said Jillian Estes, an attorney with James, Hoyer, Newcomer, Smiljanich & Yanchunis in Tampa, Fla., which filed the complaint.
In April, Alta paid $7 million to settle a Justice Department lawsuit making similar allegations regarding its colleges in Texas. Despite the settlement, Alta chief executive George Burnett said the school “always acted lawfully and ethically.” Burnett wasn’t available to talk about the latest complaint but said it was without merit in a statement issued through Alta’s public-relations firm.
Rosales said that when she signed up to study criminal justice at Westwood in Upland, Calif., in 2006, she never had to take the plastic wrap off her books. “The instructors are just old police officers, and all they do is talk crazy stories — drug busts. It’s not learning at all,” she said.
Students milled about classrooms and hung out in the parking lot. “They didn’t care if you showed up or not,” Rosales said.
Deciding the school was “a joke,” she quit after four months. But the joke was on her as the school continued to charge her tuition, racking up a loan tab of more than $13,000.
Burnett used to work with former telecom CEO Joe Nacchio, who is in prison for illegal insider trading. They ran Denver-based Qwest, which paid $250 million in October 2004 to settle financial- fraud charges with the Securities and Exchange Commission.
Burnett was CEO of Qwest’s telephone-directory division, Dex. Part of the fraud, the SEC alleged, involved secretly changing publication dates of Dex’s phone books, loading revenue into quarters where Qwest fell short of Nacchio’s promised targets.
Burnett reportedly was interviewed by the SEC, but he wasn’t named in the case and walked away unscathed.
To avoid bankruptcy, Qwest sold Dex for more than $7 billion in 2002 to two buyout firms: Washington, D.C.- based Carlyle Group and New York-based Welsh, Carson, Anderson & Stowe.
Burnett went to work for them. He cut jobs, loaded the balance sheets with debt, orchestrated an initial public stock offering and then helped sell the company to R.H. Donnelley Corp. for a $3 billion profit.
Burnett then became chairman of Donnelley. He dumped most of his stock for a $22 million profit and quit in 2006.
It was a wise move for him. Donnelley, overloaded with debt, filed for bankruptcy Thursday. Having made his fortune, Burnett moved on to be an educator. So far, he sure seems to be teaching the kids.
“I was only 17,” Rosales said. “I was naive. They made it sound real nice. ‘You’ll be making $100,000’ (as a police officer), and I actually believed it.”
Al Lewis: 201-938-5266 or al.lewis@dowjones.com; read Al’s blog at
