Q&A: BCTI explains its side of story, stands by its schools, methods
THE NEWS TRIBUNE
Tom Jonez and Morrie Pigott, the owners of the Business Computer Training Institute, have declined repeated
requests for interviews. They did respond to written questions submitted by The News Tribune. Here are their responses to various issues.
Former students claim BCTI
employees enticed them to enroll with tales of good-paying jobs and say they
did not get their money’s worth from a BCTI education. BCTI created and maintained clear
standards with written policies, clear curriculum with point-by-point instructional
guides as well as additional resources for both teachers and students. Every
student completed evaluations at multiple points in their training that was
purposely routed in some cases “around” direct supervisors. Any adverse report
by an individual student was immediately addressed with the student and/or
instructor and a written action plan was devised and agreed to in writing to
resolve the concern. Periodically this extensive and redundant system did not
produce a satisfied student. Although each student was and remains individually
valuable, statistically, such dissatisfaction represented a small percentage of
the approximately 28,000 students trained by BCTI over a 20-year period. In
addition, the curriculum was reviewed annually by an industry review panel, by
each state regulatory body, by the Veterans Administration and by the national
accrediting agency. It was also reviewed by Phoenix University, which, through
an articulation agreement, granted university credit to those students who enrolled
in Phoenix and paid the appropriate fees.
Instructors, administrators and
other employees speak of pressure to enroll students, to meet quotas and to
retain students until BCTI could collect their financial aid. Since BCTI’s senior leadership could
physically not be present in every location at once due to the multi-state,
multi-branch environment of BCTI, clear written policies and guidelines were
developed for the 400 plus employees of the company. Any violations, including
those alluded to in this question, were not reported to management and, if they
had been, would have been summarily curtailed and the personnel replaced by
staff who were willing to abide by the clear ethical guidelines to which every
staff member had agreed as a condition of their employment.
Why did BCTI use enrollment and
retention quotas to judge employee performance? BCTI used a variety of metrics to
judge employee performance, including enrollment and retention rates. For
example, instructors were evaluated on their ability to develop and execute
lesson plans, develop rapport with students, among other skills. Certainly for
some of our staff enrollment and retention quotas were part of the evaluation
mix, but by no means the sole factor. Over the 20 years of BCTI, we have
promoted staff with enrollment and retention numbers well below industry
standards because they had other qualities that compensated for the
shortcoming. Alternatively, we have terminated employees who were well in
excess of the industry-standard recruitment and retention numbers because of
their failure to meet other key objectives we considered essential.
Citing BCTI’s violation of
federal standards for financial responsibility, the U.S. Department of
Education in 1994 threatened to cut off BCTI’s eligibility to receive federal
aid to college students. The U.S. Department of education
did not “cut off” funding once they were provided with the information they
requested. BCTI was not at risk.
The Department of Education’s
1993 program review found BCTI did not offer a genuine 20-week program, so the
school and its students received more aid than they were entitled to receive. BCTI management provided the
department’s investigative team with written material,
published by the
department’s own training division, which contained examples and
illustrations for proper financial aid disbursement. These examples were
directly parallel to the methodology utilized by BCTI.
The surprised U.S. Education
Department investigators dropped their investigation immediately. The
investigators were not current in the methodology that their own fellow
department members were promulgating through the training division.
This incident actually resulted in
reinforcing the fact that BCTI was in full compliance at all times. We doubt
that the department’s records record this event with this level of clarity.
In 1996 the Department of
Education threatened to cut off federal funding because of BCTI’s high default
rates. This incident was created through
a computer error by a government contractor hired by the Department of
Education, which had erroneously listed BCTI as a closed school. Once the error
was corrected and pointed out to the leaders of the Department of Education in
Washington, D.C., by direct contact with BCTI’s management and political
representatives, the school was immediately reinstated. With the computer error
corrected at the contractor level, BCTI was once again provided proper
information and the default rates thereafter remained in full compliance.
In the 1990s several dozen
Oregon students filed lawsuits, claiming they were misled about potential wages
and other issues. These lawsuits were all filed by
the same attorney, who also filed repetitive lawsuits against most of the
schools in his region, not just against BCTI. Apparently suing schools was/is
part of his business model. Statistically, “several dozen people” (each
individual was a valuable student of BCTI) represents a statistical
dissatisfaction of less than one one-hundredth of one percent, or a satisfaction
rate of 99.98 percent. Perspective will develop through the decision as to
which number becomes the focus of the newspaper story.
BCTI’s accrediting agency
issued a series of letters regarding substandard graduation and job placement
rates that ultimately led to BCTI losing its accreditation and the school’s
owners being debarred by the agency. In the final year of BCTI’s
operation, a dispute developed with (the agency) regarding terminology and
documentation methodology. This dispute was not resolved due to the closure of
BCTI. BCTI’s former management is confident that the issue would have been
resolved in BCTI’s favor if time had permitted.
A private investigator, Gene
Hart, found basic skills tests fraud, and the state Higher Education Coordinating
Board subsequently found more widespread testing problems.Mr. Hart was retained by BCTI
management after BCTI’s internal system of checks and balances reported an
anomaly at one campus (only one – out of eight campuses). Mr. Hart was tasked
by BCTI management to conduct a thorough investigation which, in summary,
resulted in the appropriate personnel decisions for those involved and which
also documented that this was a very isolated and “rogue” incident. The
incident had been immediately detected by the systems devised by BCTI
management to maintain ethical compliance, it was professionally investigated
by a national expert in financial aid fraud (a former police chief) and
“self-reported” by BCTI management to the Department of Education – which accepted
the report and took no further action. All funds impacted were repaid promptly.
BCTI respectfully disagrees with
the Higher Education Coordinating Board, without commenting regarding the
variance in expertise between the state employees and (our investigator’s)
national professional reputation as a financial aid fraud investigator.
Please note: it was BCTI
management’s internal system that found the problem, management’s decision to
investigate the problem and BCTI management who self-reported to the USDOE.
The state Workforce Training
and Education Coordinating Board found that a BCTI public relations
representative violated a state law that prohibits recruiting within 40 feet of
an unemployment office. It also found BCTI did not register its sales agents. BCTI learned that this single
incident occurred because the state employee who managed the state office
referenced in this question had come to know and respect the BCTI staff person
who worked in that location for over five years. The state-employed office
manager asked the BCTI staff member to stand under the awning of his office.
The awning was inside the 40-foot limit. When BCTI management was informed of
this incident, the BCTI employee was corrected and no further concern emerged.
We are unaware what action, if any, occurred with the state employee who had
encouraged this in the first place.
BCTI was informed, in writing, by
a prior Workforce Board staff member that it did not need to register its
agents. When the replacement staff member issued a new and countermanding
directive, BCTI immediately complied.
Several students complained to
the Workforce Board about BCTI over the years. Each resolved. Each person was an
important and valued former student and was treated accordingly.
The Oregon Department of
Education in 2005 placed BCTI on probation. The Oregon Department of Education
report was not answered due to the decision to close BCTI. BCTI’s former
management was confident that each concern raised would have been resolved and
those charges that were erroneous (most of them) dropped had further
documentation been provided. BCTI had a long and positive prior history of
compliance with the state of Oregon.
In a court statement, former
BCTI financial analyst Miles Goda claims the school’s complicated financial
structure allowed the owners to manipulate school finances to mislead
regulators, avoid taxes and siphon assets. Mr. Goda was dismissed from his
position due to his inability to perform even the simple task of balancing the
books. His allegations are in error, factually incomplete and based on his
limited view and understanding of the company’s operation. BCTI’s accounting
department employed multiple CPAs who were qualified to perform accurate and
appropriate accounting functions. The department was supervised by a CPA who
has provided a sworn statement to the Pierce County Superior court regarding
this matter. From its inception, BCTI was audited by an outside CPA firm who
performed a thorough financial audit
and by a specialized outside CPA
who was a former employee of the Department of Education’s Inspector General
Division and who performed an
additional CPA audit of financial aid fund
management and accounting, utilizing thorough government auditing standards. In
addition, state of Washington auditors performed routine reviews for sales and
B&O tax compliance.
BCTI’s financial statements were
provided routinely to state agency regulators in Washington and Oregon, to the
accrediting agency and to the federal Department of Education. Each of these
agencies performed additional reviews.
Miles Goda is simply an example of
a partially informed or ill-informed disgruntled former employee who was not
technically qualified to address these issues conclusively. As an example, the
formation date for an affiliated company of BCTI recorded at the Secretary of
State’s office, Educational Management and Financing Corporation (“EMF”),
provides documented evidence of one of Goda’s errors. Goda states in his
declaration that EMF was formed
after the limited partnership was formed
in order to manipulate finances. The limited partnership was formed in 1986 and
began operations in 1987. Even using external sources it is relatively easy to
demonstrate that his “facts” contain numerous errors and his purported
conclusions run contrary to the testimony of professional accountants who had
full access to the company’s accounting records, including source documents.
James Stremme, a former BCTI
accountant, said in a court statement that he processed unjustifiable business
expenses, including more than $10,000 to charter three yachts for a week. Stremme’s memory is either poor
regarding this matter or he did not have access to all of the information
necessary to draw his conclusion. He has been a close friend of Miles Goda.
Did any of your companies
charter yachts? No. On several occasions the
company chartered local charters similar to Argosy Cruises’ ‘Spirit of Seattle’
for company-wide events including manager training sessions. We also hired a
similar vessel for a company-wide year-end dinner cruise to Blake Island from
the Old Town Dock in the Port of Tacoma.
If the News Tribune has been led to believe anything else, it is in
error. Any other charters were done by individuals, and paid for with personal
funds.
The News Tribune asked a
certified public accountant and fraud investigator to review BCTI’s audited
financial statements from 1996 to 2004. He raised serious questions about the
statements. BCTI’s internal and external CPAs
had access to and performed audits with source-level documentation and signed
off on every transaction and/or audit as legitimate and within the bounds of
Generally Accepted Accounting Principals (GAAP).
The CPA believes affiliates
receivable were misclassified as short-term assets, when the statements show no
evidence the money was repaid. The CPAs who performed our annual
audits and our internal CPA’s all disagree.
He says it appears BCTI’s
owners transferred more than $6.2 million to affiliates from 1996-2004. The question spans a period of 11
years, or an average of $563,636 per year, utilizing the numbers provided in
the question. As a simple overview, the affiliates provided all of the
accounting, advertising, financial aid management and supervision for those
employed by the limited partnership. The affiliates employed up to 80 people
who served in these capacities. The amount transferred represents the
reasonable costs associated with providing these services to the limited
partnership over this period of time. The CPAs who audited BCTI agree with the
normal and reasonable nature of these costs.
The apparent misclassification
had a big impact on BCTI’s net worth. If the transfers had been properly
classified, BCTI would have met federal standards for financial responsibility
only once year since 1996, according to the CPA’s analysis. There was no misclassification.
There was no favorable or adverse impact. The unnamed “CPA” who conducted the
review mentioned in this question stands alone, and he stands against the bevy
of professionals hired by BCTI who performed accurate and ethical accounting
work and/or audits.
The various investigations and
accusations seem to paint a portrait of a troubled school. Private vocational schools were
under an enormous period of change during BCTI’s 20-year existence. Many
schools closed or were sold to large institutional companies. Examples include
Knapp College, Trend College, Griffin College and Eton College, to name a few
at the local level. BCTI was able to navigate the climate of change while
maintaining externally verified quality throughout its existence.
Can you speak about your
perceptions of BCTI and its mission? BCTI was in the business of
enabling qualified men and women to acquire the skills necessary to meet the
needs of employers. The focus of BCTI’s training was strictly aimed at
preparation for entry-level employment and was represented carefully as such to
all interested parties. It was the mission of the company to help those who
wanted to change their lives “learn how to fish.” In order to maximize the
opportunity provided by BCTI’s training, it remained incumbent upon each
student to work hard and then to personally seek a starting job position that
would begin to break the cycle of dependency. Many graduates were very
successful and their lives were changed for the better. Others were not. BCTI
provided the opportunity if they were willing to do the part that only they
could do.
