Special Reports

Q&A: BCTI explains its side of story, stands by its schools, methods

Tom Jonez and Morrie Pigott, the owners of the Business Computer Training Institute, have declined repeatedrequests for interviews. They did respond to written questions submitted by The News Tribune. Here are their responses to various issues.

Former students claim BCTIemployees enticed them to enroll with tales of good-paying jobs and say theydid not get their money’s worth from a BCTI education.

BCTI created and maintained clearstandards with written policies, clear curriculum with point-by-point instructionalguides as well as additional resources for both teachers and students. Everystudent completed evaluations at multiple points in their training that waspurposely routed in some cases “around” direct supervisors. Any adverse reportby an individual student was immediately addressed with the student and/orinstructor and a written action plan was devised and agreed to in writing toresolve the concern. Periodically this extensive and redundant system did notproduce a satisfied student. Although each student was and remains individuallyvaluable, statistically, such dissatisfaction represented a small percentage ofthe approximately 28,000 students trained by BCTI over a 20-year period. Inaddition, the curriculum was reviewed annually by an industry review panel, byeach state regulatory body, by the Veterans Administration and by the nationalaccrediting agency. It was also reviewed by Phoenix University, which, throughan articulation agreement, granted university credit to those students who enrolledin Phoenix and paid the appropriate fees.

Instructors, administrators andother employees speak of pressure to enroll students, to meet quotas and toretain students until BCTI could collect their financial aid.

Since BCTI’s senior leadership couldphysically not be present in every location at once due to the multi-state,multi-branch environment of BCTI, clear written policies and guidelines weredeveloped for the 400 plus employees of the company. Any violations, includingthose alluded to in this question, were not reported to management and, if theyhad been, would have been summarily curtailed and the personnel replaced bystaff who were willing to abide by the clear ethical guidelines to which everystaff member had agreed as a condition of their employment.

Why did BCTI use enrollment andretention quotas to judge employee performance?

 

BCTI used a variety of metrics tojudge employee performance, including enrollment and retention rates. Forexample, instructors were evaluated on their ability to develop and executelesson plans, develop rapport with students, among other skills. Certainly forsome of our staff enrollment and retention quotas were part of the evaluationmix, but by no means the sole factor. Over the 20 years of BCTI, we havepromoted staff with enrollment and retention numbers well below industrystandards because they had other qualities that compensated for theshortcoming. Alternatively, we have terminated employees who were well inexcess of the industry-standard recruitment and retention numbers because oftheir failure to meet other key objectives we considered essential.

Citing BCTI’s violation offederal standards for financial responsibility, the U.S. Department ofEducation in 1994 threatened to cut off BCTI’s eligibility to receive federalaid to college students.

The U.S. Department of educationdid not “cut off” funding once they were provided with the information theyrequested. BCTI was not at risk.

The Department of Education’s1993 program review found BCTI did not offer a genuine 20-week program, so theschool and its students received more aid than they were entitled to receive.

BCTI management provided thedepartment’s investigative team with written material, published by thedepartment’s own training division, which contained examples andillustrations for proper financial aid disbursement. These examples weredirectly parallel to the methodology utilized by BCTI.

The surprised U.S. EducationDepartment investigators dropped their investigation immediately. Theinvestigators were not current in the methodology that their own fellowdepartment members were promulgating through the training division.

This incident actually resulted inreinforcing the fact that BCTI was in full compliance at all times. We doubtthat the department’s records record this event with this level of clarity.

In 1996 the Department ofEducation threatened to cut off federal funding because of BCTI’s high defaultrates.

This incident was created througha computer error by a government contractor hired by the Department ofEducation, which had erroneously listed BCTI as a closed school. Once the errorwas corrected and pointed out to the leaders of the Department of Education inWashington, D.C., by direct contact with BCTI’s management and politicalrepresentatives, the school was immediately reinstated. With the computer errorcorrected at the contractor level, BCTI was once again provided properinformation and the default rates thereafter remained in full compliance.

In the 1990s several dozenOregon students filed lawsuits, claiming they were misled about potential wagesand other issues.

These lawsuits were all filed bythe same attorney, who also filed repetitive lawsuits against most of theschools in his region, not just against BCTI. Apparently suing schools was/ispart of his business model. Statistically, “several dozen people” (eachindividual was a valuable student of BCTI) represents a statisticaldissatisfaction of less than one one-hundredth of one percent, or a satisfactionrate of 99.98 percent. Perspective will develop through the decision as towhich number becomes the focus of the newspaper story.

BCTI’s accrediting agencyissued a series of letters regarding substandard graduation and job placementrates that ultimately led to BCTI losing its accreditation and the school’sowners being debarred by the agency.

In the final year of BCTI’soperation, a dispute developed with (the agency) regarding terminology anddocumentation methodology. This dispute was not resolved due to the closure ofBCTI. BCTI’s former management is confident that the issue would have beenresolved in BCTI’s favor if time had permitted.

A private investigator, GeneHart, found basic skills tests fraud, and the state Higher Education CoordinatingBoard subsequently found more widespread testing problems.

Mr. Hart was retained by BCTImanagement after BCTI’s internal system of checks and balances reported ananomaly at one campus (only one – out of eight campuses). Mr. Hart was taskedby BCTI management to conduct a thorough investigation which, in summary,resulted in the appropriate personnel decisions for those involved and whichalso documented that this was a very isolated and “rogue” incident. Theincident had been immediately detected by the systems devised by BCTImanagement to maintain ethical compliance, it was professionally investigatedby a national expert in financial aid fraud (a former police chief) and“self-reported” by BCTI management to the Department of Education – which acceptedthe report and took no further action. All funds impacted were repaid promptly.

BCTI respectfully disagrees withthe Higher Education Coordinating Board, without commenting regarding thevariance in expertise between the state employees and (our investigator’s)national professional reputation as a financial aid fraud investigator.

Please note: it was BCTImanagement’s internal system that found the problem, management’s decision toinvestigate the problem and BCTI management who self-reported to the USDOE.

The state Workforce Trainingand Education Coordinating Board found that a BCTI public relationsrepresentative violated a state law that prohibits recruiting within 40 feet ofan unemployment office. It also found BCTI did not register its sales agents.

BCTI learned that this singleincident occurred because the state employee who managed the state officereferenced in this question had come to know and respect the BCTI staff personwho worked in that location for over five years. The state-employed officemanager 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 ofthis incident, the BCTI employee was corrected and no further concern emerged.We are unaware what action, if any, occurred with the state employee who hadencouraged this in the first place.

BCTI was informed, in writing, bya prior Workforce Board staff member that it did not need to register itsagents. When the replacement staff member issued a new and countermandingdirective, BCTI immediately complied.

Several students complained tothe Workforce Board about BCTI over the years.

Each resolved. Each person was animportant and valued former student and was treated accordingly.

The Oregon Department ofEducation in 2005 placed BCTI on probation.

The Oregon Department of Educationreport was not answered due to the decision to close BCTI. BCTI’s formermanagement was confident that each concern raised would have been resolved andthose charges that were erroneous (most of them) dropped had furtherdocumentation been provided. BCTI had a long and positive prior history ofcompliance with the state of Oregon.

In a court statement, formerBCTI financial analyst Miles Goda claims the school’s complicated financialstructure allowed the owners to manipulate school finances to misleadregulators, avoid taxes and siphon assets.

Mr. Goda was dismissed from hisposition due to his inability to perform even the simple task of balancing thebooks. His allegations are in error, factually incomplete and based on hislimited view and understanding of the company’s operation. BCTI’s accountingdepartment employed multiple CPAs who were qualified to perform accurate andappropriate accounting functions. The department was supervised by a CPA whohas provided a sworn statement to the Pierce County Superior court regardingthis matter. From its inception, BCTI was audited by an outside CPA firm whoperformed a thorough financial audit and by a specialized outside CPAwho was a former employee of the Department of Education’s Inspector GeneralDivision and who performed an additional CPA audit of financial aid fundmanagement and accounting, utilizing thorough government auditing standards. Inaddition, state of Washington auditors performed routine reviews for sales andB&O tax compliance.

BCTI’s financial statements wereprovided routinely to state agency regulators in Washington and Oregon, to theaccrediting agency and to the federal Department of Education. Each of theseagencies performed additional reviews.

Miles Goda is simply an example ofa partially informed or ill-informed disgruntled former employee who was nottechnically qualified to address these issues conclusively. As an example, theformation date for an affiliated company of BCTI recorded at the Secretary ofState’s office, Educational Management and Financing Corporation (“EMF”),provides documented evidence of one of Goda’s errors. Goda states in hisdeclaration that EMF was formed after the limited partnership was formedin order to manipulate finances. The limited partnership was formed in 1986 andbegan operations in 1987. Even using external sources it is relatively easy todemonstrate that his “facts” contain numerous errors and his purportedconclusions run contrary to the testimony of professional accountants who hadfull access to the company’s accounting records, including source documents.

James Stremme, a former BCTIaccountant, said in a court statement that he processed unjustifiable businessexpenses, including more than $10,000 to charter three yachts for a week.

Stremme’s memory is either poorregarding this matter or he did not have access to all of the informationnecessary to draw his conclusion. He has been a close friend of Miles Goda.

Did any of your companiescharter yachts?

 

No. On several occasions thecompany chartered local charters similar to Argosy Cruises’ ‘Spirit of Seattle’for company-wide events including manager training sessions. We also hired asimilar vessel for a company-wide year-end dinner cruise to Blake Island fromthe Old Town Dock in the Port of Tacoma.



If the News Tribune has been led to believe anything else, it is inerror. Any other charters were done by individuals, and paid for with personalfunds.

The News Tribune asked acertified public accountant and fraud investigator to review BCTI’s auditedfinancial statements from 1996 to 2004. He raised serious questions about thestatements.

 

BCTI’s internal and external CPAshad access to and performed audits with source-level documentation and signedoff on every transaction and/or audit as legitimate and within the bounds ofGenerally Accepted Accounting Principals (GAAP).

 

 

The CPA believes affiliatesreceivable were misclassified as short-term assets, when the statements show noevidence the money was repaid.

 

The CPAs who performed our annualaudits and our internal CPA’s all disagree.

 

He says it appears BCTI’sowners transferred more than $6.2 million to affiliates from 1996-2004.

 

The question spans a period of 11years, or an average of $563,636 per year, utilizing the numbers provided inthe question. As a simple overview, the affiliates provided all of theaccounting, advertising, financial aid management and supervision for thoseemployed by the limited partnership. The affiliates employed up to 80 peoplewho served in these capacities. The amount transferred represents thereasonable costs associated with providing these services to the limitedpartnership over this period of time. The CPAs who audited BCTI agree with thenormal and reasonable nature of these costs.

 

The apparent misclassificationhad a big impact on BCTI’s net worth. If the transfers had been properlyclassified, BCTI would have met federal standards for financial responsibilityonly 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 thereview mentioned in this question stands alone, and he stands against the bevyof professionals hired by BCTI who performed accurate and ethical accountingwork and/or audits.

 

The various investigations andaccusations seem to paint a portrait of a troubled school.

Private vocational schools wereunder an enormous period of change during BCTI’s 20-year existence. Manyschools closed or were sold to large institutional companies. Examples includeKnapp College, Trend College, Griffin College and Eton College, to name a fewat the local level. BCTI was able to navigate the climate of change whilemaintaining externally verified quality throughout its existence.

Can you speak about yourperceptions of BCTI and its mission?

BCTI was in the business ofenabling qualified men and women to acquire the skills necessary to meet theneeds of employers. The focus of BCTI’s training was strictly aimed atpreparation for entry-level employment and was represented carefully as such toall interested parties. It was the mission of the company to help those whowanted to change their lives “learn how to fish.” In order to maximize theopportunity provided by BCTI’s training, it remained incumbent upon eachstudent to work hard and then to personally seek a starting job position thatwould begin to break the cycle of dependency. Many graduates were verysuccessful and their lives were changed for the better. Others were not. BCTIprovided the opportunity if they were willing to do the part that only theycould do.

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