Qwest's Burnett now running school of hard knocks
By Al Lewis, Dow Jones Newswires
Monday, June 1, 2009
Jessica Rosales was one of those kids, watching TV, wondering
what to do about the future, and seeing a commercial about 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
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
arbitration complaint filed this month before the American
Arbitration Association in Denver.
The complaint alleges that the for-profit school lies to
students about everything from accreditation to job placement
opportunities as it loads them up with loans that they may not
even know about until they leave the school.
"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.
"They're putting students into mountains of debt, and giving
them degrees they have very little opportunity of getting
careers from," she said.
In April, Alta paid $7 million to settle a Justice Department
lawsuit making similar allegations regarding its colleges in Texas, including a claim that the schools
were submitting false claims for federal student aid funds.
Despite the settlement, Alta CEO George Burnett said the school
"always acted lawfully and ethically."
"We decided to settle with the government based on the costs and
time associated with prospect of litigation, especially given
that these issues are over four years old," he said.
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.
"Westwood College has made it a priority to ensure
that each student understands the exact tuition and fees for
attending school and acquiring a degree, as well as the costs
associated with financing their tuition," the statement said.
As for accreditation: "Like any community or traditional
Westwood College does not guarantee the
transferability of its credits to any other institution."
Rosales said that when she signed up to study criminal justice
at Westwood in Upland, Calif.,
in fall 2006, she never had to take the plastic wrap off her
"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. Lunch breaks often went on for three hours.
"They didn't care if you showed up or not," Rosales said.
Rosales had spent hundreds of dollars on books, but her
instructor told her they were unnecessary, and could not be
returned because they were outdated.
Deciding the school was "a joke," she quit after only four
months. But the joke was on her as the school continued to
charge her tuition, racking up a student loan tab of more than
Today, she has a job selling auto parts, and she studies at a
community college, despite some unpaid student loans on her
credit report. She told me she complained about the school
in an Internet chat room and was approached by an investigator
who introduced her to her lawyer.
"They bring you into the school like they are selling you a used
car," Rosales said. "They're really pushy."
Estes, Rosales' attorney, said she has reviewed hundreds of
complaints about the school on the Internet.
Another student named in the suit, Tyrone Bailey of Long Beach,
Calif., claims he paid more than $60,000 for a criminal justice
degree that no prospective employer has taken seriously.
What wasn't covered by federal grants and loans was covered by
an internal loan from the school, at 18 percent interest, plus a
9 percent origination fee, the complaint said.
The complaint alleges that admissions counselors are merely
telemarketers, rewarded with gift cards, parties and exotic
vacations, to get people to sign loan documents. The sales
culture is so competitive that one sales team depicted itself as
ganstas doing drive-by shootings.
"Everyone hit the deck!" reads one internal email attached to
the case. "A drive-by just occurred."
The email, boasting about sales, sports a graphic cartoon
depicting ghetto hoodlums poking automatic weapons out a car
These are the so-called admissions counselors to scores of
vulnerable, young students. And then there's Burnett.
Burnett used to work with former telecom CEO Joe Nacchio, who is
in prison on insider-trading charges. They ran
Denver-based Qwest, which paid $250 million in October 2004 to
settle financial fraud charges with the Securities and Exchange
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 was reportedly interviewed by the SEC, but wasn't named
in the case and walked away from Qwest's scandals 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 hundreds of jobs,
loaded the balance sheets with as much debt as possible,
orchestrated an initial public stock offering and then helped
sell the company to Donnelley for a $3 billion profit.
Burnett then became chairman of Donnelly, but he soon dumped
most of his stock for a $22 million profit and quit in 2006.
It was a wise move for him. Stock of Donnelly, now
overloaded with debt from overpriced acquisitions like Dex,
trades for about 15 cents as it slouches toward bankruptcy.
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
read Al's blog at