<< ARI Watch
The End of Barney’s Second Career
Carl Barney’s first career was managing Scientology missions – you know, L. Ron Hubbard and squeeze the cans – swindling the gullible and ignorant.  His second career was managing for-profit colleges, taking advantage of the poorly overseen federal student loan program. He couldn’t lose. Help any more or less warm body get a guaranteed loan to pay for his trade schools’ shabby degree programs, then whether or not the person defaults he gets to keep the money.
In this way, over the course of twenty years or so, he amassed a fortune, hundreds of millions of dollars. Lucrative as running Scientology missions had been, the new career was vastly more so. For all its faults, Scientology was never plugged into the federal handout machine.
The beginning of the end of Barney’s second career can be traced back to late 2012, when he converted his for-profit colleges to non-profits to avoid more stringent financial oversight of the guaranteed loans. The umbrella foundation for the newly designated non-profits was the Center for Excellence in Higher Education. (For a time Yaron Brook of the Ayn Rand Institute and Mr. Brook’s associate C. Bradley Thompson of Clemson University were on CEHE’s board of directors.) If Barney had remained for-profit, per new legislation, no more than 90% of his schools’ revenue could have come from federally guaranteed loans. Apparently 90% wasn’t enough for him. He avoided the restriction – or tried to – by converting to non-profit. (He denies this was why he converted, saying the timing was purely coincidental. He says nothing about how the conversion accords with his earlier praise of for-profit schools over non-profit ones.)
Highlights of subsequent events:
2013 February 11: The conversion from for-profit to non-profit draws the attention of investigative journalist and lawyer David Halperin. He begins writing about Barney and his schools, revealing that the schools continue to be run as if they were for-profit. In the first article he points to the high student loan default rates and quotes a letter from one employee describing the lack of integrity in recruiting: “Our admission representatives are required to enroll anyone and everyone. All entrance and diagnostic testing has been eliminated … Toothless and homeless people are not marketable and will never pay back student loans. We still enroll them. ... Our director said, ‘Get 40 people and I don’t care what you say or do to get them.’ ” 
2013 September 27: Two former employees file a whistleblower lawsuit against CEHE, claiming that it paid commissions to recruiters for signing up new students, in violation of CEHE’s agreement for participating in the federally guaranteed loan program. (For what it’s worth,  the following year the U.S. Justice Department ratifies the whistleblower’s claims and joins the lawsuit.) The case has not yet gone to trial. 
2014 December 1: The Colorado attorney general (a Republican) files a lawsuit against CEHE, Carl Barney (chairman), and Eric Juhlin (CEO). The complaint claims that Barney’s CollegeAmerica misled students about the selectivity of the school, the transferability of credits, the jobs they could obtain and the salaries they could earn, systematically fleecing students and taxpayers. 
2015 March 2: The New York Times publishes an article about the for-profit to non-profit conversion, saying that Barney would acquire a lot of money as a result. Barney denies it. 
2016 August 11: The Education Department rejects CEHE’s application to be treated as a non-profit. Then-Secretary John King writes: “This should send a clear message to anyone who thinks converting to non-profit status is a way to avoid oversight while hanging onto the financial benefits: Don’t waste your time.” 
2016 August 30: CEHE files a lawsuit against the Department of Education accusing it of pursuing a political agenda.
2017 mid-October: The trial regarding the Colorado lawsuit begins in Denver District Court.
2018 December: Then-Education Secretary Betsy DeVos, whose top aide once served as a paid consultant to CEHE, reverses the decision of 2016 August 11 (see above). 
2018 December 19: CEHE withdraws its lawsuit of 2016 August 30 (see above).
2019 April 12: The federal Consumer Financial Protection Bureau, which tries to prevent abuses of private student loans, begins investigating CEHE. 
2019 May 2: The Accrediting Commission of Career Schools and Colleges (ACCSC) places CEHE on probation.
2020 August 21: The Denver District Court (see 2014 December 1 & 2017 mid-October above) finds that CEHE, CollegeAmerica, Stevens-Henager, Carl Barney, and Eric Juhlin violated the Colorado Consumer Protection Act, fining them $3 million and issuing an injunction against further infractions.  (Barney et al are appealing the decision.) Not long afterwards Barney tries to prevent public access to the trial transcript. 
2021 April 22: By this time all of Barney’s brick and mortar schools are closed or in the process of closing, with only the entirely online school Independence University still functioning normally. Now the Accrediting Commission of Career Schools and Colleges (ACCSC) terminates Independence University’s accreditation. 
2021 April 23: The Department of Education suspends CEHE from participating in contracts or other programs of the federal government, including Title IV guaranteed loans, Pell and GI grants. From the notice of suspension addressed to Eric Juhlin, Barney’s right-hand man: “... you were well aware of, and complicit in, the fraudulent practices upon which the court based its findings. Your suspension from participation in federal procurement is necessary both to avoid the erosion of public confidence in the integrity of governmental programs and to protect federal funds from misuse.” [12 again]
The notice of suspension contains a summary of the complaints against Barney and his schools. By this time Barney has stepped down as chairman of CEHE though still on the board of directors, calling himself chairman emeritus, and Juhlin is now chairman. Both Barney and Juhlin may have received the same letter; I only have a copy of one to Juhlin:
November 2020: CEHE produces a video titled “Town Hall with Your Host Eric Juhlin” and sent it to all CEHE employees. In it Juhlin denounces the recent Colorado decision against CEHE and the people who are attacking CEHE. This stands out:
“There are certainly individuals out there who are violently opposed to career education, to private enterprises operating colleges and universities. And any opportunity they can to seize upon something where they can criticize, they can try to advance their ideological agenda, they’re going to take advantage of that.”
In other words “they hate us for being good.” No, Barney – for this is Barney’s work – at least in this quarter we despise you for (1) pretending you are an “entrepreneur” and champion of the free market while your are almost entirely dependent – willingly and eagerly dependent – on cash from the state, and (2) getting rich cheating students and the state, the latter after the state’s theft from the taxpayer.
2021 May: Juhlin is suspended from his CEO position. Because of the fraud verdict and subsequent DOE ruling (see 2020 August 21 and 2021 April 23 above) neither he nor Barney can administer the use of federal funds which existing students are using.
2021 July 1: Paul Gardner, interim CEO, sends a memo to employees in the Admissions Department saying “we will be unable to enroll new students for some time” and that CEHE must make staff reductions.
2021 July 19: The appeal hearing is held for ACCSC’s termination of accredidation (see 2021 April 22 above). They have 60 days to make a decision.
2021 July 20: Paul Gardner, interim CEO/CFO, writes employees that the U.S. government has not sent CEHE “any cash” since early May and that most staff will be terminated in 60 days. He tells employees not to advise students to withdraw at this point. Two days later David Halperin tweets: “Where in the world is Carl Barney? His office is telling various people that he is traveling, out of the county, away for a long time.”
2021 July 28: The registrar of Independence University emails employees: The school, per Eric Juhlin (who apparently is still running things despite being nominally gone), will close August 1st, but don't tell students yet. Students will be given options including transferring “to one of our teach out partners.” Employees who had been told their jobs would end September 18 now are told August 1.
2021 July 29: The Department of Education emails a letter to the CEO of CEHE as a
“follow up on our conversation earlier today where you confirmed that CEHE is closing all its locations effective August 1, 2021. ...
“... the information that we have received from students suggests that CEHE is not providing students complete information regarding all of the options available to them when an institution closes. As you are aware, when an institution closes, students who are attending the institution at the time of closure, and students who withdrew within a set time period prior to the closure, are eligible for a closed school loan discharge. ... students are not obligated to take a teach-out ... . ... To the extent CEHE has provided incomplete information to students about their options, CEHE must update and correct those communications immediately ...
“[We have] also learned that students are being pressured to agree to transfer to South University and Miami International University of Art and Design based on the agreement entered into between CEHE and those entities. ... [This arrangement] is not a typical teach-out agreement for anticipated school closures.”
The letter goes on to say that they are concerned
“about the terms of the arrangement which make it appear that the students will only have the choice of transferring to these institutions in order to continue their education. That is not an accurate representation of student options.”
“with what appears to be a sale of student enrollments to the teach-out/transfer entities. This is certainly not the purpose of a teach-out arrangement. Furthermore, this arrangement, which could position CEHE to profit from student transfers, heightens our concern about students not being advised of all options available to them.
“The Department has other serious concerns, including that the proposed transfer institutions may not currently offer all of the programs necessary to accommodate all of CEHE’s students. The Department is also concerned that there may be privacy issues with student information being transferred without full disclosure and consent of the students. It is also our understanding that the accreditor and state licensing bodies have not approved the arrangement, which is required. Based on all of these factors, the Department does not believe that the arrangement as currently written, is in the best interest of the students.”
The letter concludes by demanding that before this time tomorrow CEHE provide for its approval “a draft of an updated, accurate, and complete communication” for affected students, and that failure to do so may result in “alerting state Attorneys General of potential unfair, deceptive, and abusive acts and practices. ¶ The Department appreciates the full cooperation of CEHE to ensure that students have complete and accurate information, and to assist them in completing their education.”
It appears that Barney is trying to milk the system for every last dollar regardless of his clients. In other words, business as usual.
2021 August 2: A class-action lawsuit is filed on behalf of employees claiming insufficient notice of termination, seeking wages covering the legal notice period.
2021 August 16: The chairman of the U.S. House Committee on Education and Labor sends the DOE a letter urging it to exercise its authority “to hold owners, executives, and board members of defunct for-profit and converted for-profit colleges individually responsible for liabilities of the institution to the federal government.” The letter mentions CEHE among several other institutions that had benefited from the Title IV federal loan program. The letter laments that it appears the DOE has never exercised this authority despite the for-profit college industry having “a long history of fraud” against students and taxpayers. That combined with the letter’s “being mindful of the ... statute of limitations” – which would apply to a substantial period in Barney’s case – suggests that Barney will get away with at least most of what had been judged fraud.
2021 August 26: Paul Gardner, interim CEO/CFO, writes employees. He blames the closure of CEHE on the DOE’s failure to act on CEHE’s “reimbursement request” of $29 million, also that the DOE is preventing it from liquidating certain assets, not on CEHE’s abuses and fraud discovered in the Colorado lawsuit (unmentioned in the letter). “As a result, CEHE does not have the funds to pay your retention bonus and severance payment at this time. ... Unfortunately, I cannot provide you with a date that process will be completed. I do not anticipate it will occur any time soon. ... ... filing a lawsuit to collect what is owed to you will not result in your being paid.”
Heaven forfend Barney should pay out of the hundreds of millions he is walking away with.
2021 August 27: The Colorado Court of Appeals affirms the trial judge’s decision (see 2020 August 21 above) that CEHE violated the Uniform Consumer Credit Code by engaging in abusive practices in its high-interest “EduPlan” private student loans; it orders a new trial for an aspect of the Consumer Protection Act charges, saying the trial judge made an error. Quoting David Halperin:
“CEHE used some of your tax dollars to hire as its lawyer in the appeal one Sean Connelly, who formerly was a judge on the Colorado Court of Appeals, i.e., the court that heard the appeal. Barney and Juhlin, meanwhile, were represented by Gombos Leyton ...” 
Barney’s second career is coming to an ignoble end, but not to worry. He has a third career in the making as the power behind the wanna-be successor to the moribund Ayn Rand Institute, Craig Biddle’s the Objective Standard Institute. 
1 At first Barney was evasive about his Scientology career, then when it was fully exposed he became self-righteously unrepentant. See Barney’s Big Lie and other articles on this website.
2 “If a For-Profit College Becomes a Non-Profit, Is That Good? Not Necessarily”
by David Halperin, Republic Report 11 February 2013
3 It isn’t worth much considering the DOJ’s long history of corruption. See the work of Rodney Stich, the presidential term of Donald Trump, or just the last election, better described as a coup. However it must be said, it’s an ill wind that blows nobody good: at least the faux president got rid of Betsy DeVos.
4 “Katie Brooks, Nannette Wride, and the United States vs. Carl Barney et al”
5 Though filed on 1 December 2014 the decision was sealed (not public). It was unsealed 17 February 2015.
“Colorado vs. Carl Barney et al”
6 “Some Owners of Private Colleges Turn a Tidy Profit by Going Nonprofit”
by Patricia Cohen, The New York Times 2 March 2015
(Barney’s case is near the end of the article. The subject is also mentioned in the reference cited in footnote 8.)
7 “Education Department Denies Request for Chain of For-Profit Colleges to Convert to Non-Profit Status”
U.S Department of Education, 11 August 2016
8 The existence of CEHE’s December 2018 agreement with the Trump administration wasn’t made public until April 2020.
“How a For-Profit Tycoon Turned His Colleges Into Nonprofits”
by Dan Bauman and Michael Vasquez, The Chronicle of Higher Education April 12, 2020
(To read all the text without subscribing, right-click the beginning text, click “select all,” and copy-paste to your word processor.)
9 “CFPB Launches Investigation Against College Chain Owner”
The College Post 2 October 2019
10 “Colorado Court Slaps Carl Barney Colleges With $3 Million Fraud Verdict”
by David Halperin, Republic Report 21 August 2020
(Contains a link to the court decision and order.)
From a letter by three U.S. senators to the Department of Education, 2 August 2021 (we leave off our external quote marks):
On August 21, 2020, a Colorado state court found that CEHE defrauded students and violated Colorado’s consumer protection law. CEHE’s Chairman Emeritus Carl Barney and CEO Eric Juhlin were found individually liable.
[*] The court identified that institutions run by CEHE used deceptive trade practices to make “false and misleading representations about the potential wages and types of employment” a student could expect after completing a program at these institutions.
[§585] Further, the court identified that between 71 percent and 81percent of students attending CollegeAmerica in Colorado were receiving financial aid through Title IV.
[§409] Examples of the kinds of fraud identified by the court included: advertising potential wages twice that of CEHE graduates,
[§585] intentionally withholding data showing CEHE graduates earnings were lower than national averages,
[§§641-648] and advertised programs such as training for X-Ray Technicians, which would not be acceptable for a state licensing exam, or a sonography program hat never existed.
* Colorado v Center for Excellence in Higher Education
, 14cv34530, Finding of Fact, Conclusions of Law, and Judgement (hereinafter, “Order”), filed Aug, 21, 20120, available atrepublicreport.org/wp-content/uploads/2020/08/FINDINGS-OF-FACT-CONCLUSIONS-OF-LAW-AND-JUDGMENT.pdf
11 “Independence University Operator Seeks to Conceal Record of Trial it Lost”
by David Halperin, Republic Report 5 March 2021
12 “Citing Performance Failures, Accreditor Dumps Independence University”
by David Halperin, Republic Report 23 April 2021
13 “Shuttered CEHE College Chain Gets Mixed Appeals Verdict”
by David Halperin, Republic Report 27 August 2021
14 See The Center of Mass Shifts Further.