Attorney General James Announces Debt Relief for Students who Attended ITT Educational Services For-Profit Colleges

 

U.S. Department of Education Approved $3.9 Billion in Group Debt Relief including Over $78 Million for More Than 4,400 New Yorkers

  New York Attorney General today announced that as part of the U.S. Department of Education’s group discharge for borrowers who attended for-profit colleges run by ITT Educational Services, Inc. (ITT) between 2005 and September 2016, over 4,400 New Yorkers will have their federal loans cleared. ITT had college campuses in Albany, Buffalo, and Syracuse, and thousands of New York students who attended these programs will have over $78 million of federal student loan debt discharged. These borrowers will have the federal student loans they received to attend ITT discharged without any additional action on their part. Attorney General James joined with other states to file a group discharge application in 2021, which led the U.S. Department of Education to act and achieve funds for these former students.

“Students pursuing an advanced degree to open up new possibilities shouldn’t be seen as cash-cows by disreputable, for-profit colleges,” said Attorney General James. “ITT Educational Services, Inc. fleeced hundreds of thousands of students, including over 4,400 New Yorkers at their Albany, Buffalo, and Syracuse campuses. I applaud the U.S. Department of Education for helping to secure these funds to help make New York students whole. I will continue to work with my partners in local, statewide, and national government to hold bad actors accountable and to stand up for the rights of New Yorkers.” 

The Department of Education credited the coalition of attorneys general that New York Attorney General James was a part of with conducting significant and extensive work to help uncover evidence that ITT engaged in widespread and pervasive misrepresentations related to the ability of students to get a job or transfer credits and lied about the programmatic accreditation of ITT’s associate degree in nursing. The Department of Education noted that its findings are based on extensive evidence, including internal ITT policies and records; recruitment materials and brochures; recordings of interactions between ITT’s representatives and prospective students; testimony from former students, employees, and administrators; investigative files and submissions from congressional investigators and state attorneys general; and the tens of thousands of individual borrower defense applications submitted by former ITT students.

This announcement is part of Attorney General James’ ongoing effort to protect New Yorkers from predatory, for-profit colleges and disreputable student loan servicers. In May 2022, Attorney General James urged former DeVry students who were deceived by the university to apply for federal loan discharge. This past January, Attorney General James helped secure more than $110 million in debt cancellation for New York students deceived by Navient. Additionally, Attorney General James suspended collection of some student debt owed to the state amidst the pandemic to provide relief to students.

Attorney General James has also been outspoken in calling for nationwide reforms to help protect student borrowers. In May 2021, Attorney General James sent a letter to the U.S. Secretary of Education calling for significant reforms to help student borrowers and shield them from predatory for-profit colleges. In March 2021, Attorney General James sent a letter to the U.S. Secretary of Education calling for reforms to help student borrowers. In July 2020, Attorney General James and a multistate coalition sued the Trump Administration’s Department of Education and former Education Secretary Betsy DeVos to block their efforts to repeal critical protections for student-borrowers who have been misled or defrauded by predatory for-profit schools. In June 2020, Attorney General James filed a multistate lawsuit to stop the Department of Education and Secretary DeVos from repealing the “Gainful Employment” rule which helps ensure for-profit colleges and vocational schools “prepare students for gainful employment in a recognized occupation” following graduation.

Governor Hochul Updates New Yorkers on State's Progress Combating COVID-19 - AUGUST 16, 2022

 

Governor Encourages New Yorkers to Keep Using the Tools to Protect Against and Treat COVID-19: Vaccines, Boosters, Testing, and Treatment

45 Statewide Deaths Reported from August 13 to August 15

 NOTE: Beginning June 24, 2022, the Vaccine data will be updated weekly on Fridays to align with CDC's updated data refresh schedule. For additional information on COVID-19 Vaccination Data provided by CDC, see https://covid.cdc.gov/covid-data-tracker/#vaccinations_vacc-total-admin-rate-total.

Important Note: HERDS data collection from health care facilities was paused due to the weekend from 8/13/2022-8/14/2022. Data from those days were submittedin Monday's report. Where noted, totals include three days of cumulative data from 8/13/2022-8/15/2022. As a result, some data may appear higher than recent trends. Data affected is marked with an asterisk.

NOTE: Updates to the CDC's cumulative death data files are being delayed, as the CDC upgrades its system. Any questions about this should be directed to the CDC. During this time, total deaths and new daily deaths reported through HERDS will continue as normal.

Governor Kathy Hochul today updated New Yorkers on the state's progress combating COVID-19.

"New Yorkers have worked hard to keep each other safe from COVID-19, and as we approach the fall, we must continue to use the tools at our disposal to prepare for any potential surges," Governor Hochul said. "Make sure you and your loved ones are up to date on the vaccine and booster doses. Get tested if you have symptoms, and if you do test positive, talk to your doctor about potential treatment."

Today's data is summarized briefly below:

• Cases Per 100k - 18.72
• 7-Day Average Cases Per 100k - 25.60
• Test Results Reported - 67,649
• Total Positive - 3,658
• Percent Positive - 4.52%**
• 7-Day Average Percent Positive - 5.53%**
• Patient Hospitalization - 2,538 (+124)*
• Patients Newly Admitted - 936
• Patients in ICU - 245 (+10)
• Patients in ICU with Intubation - 92 (+15)
• Total Discharges - 331,847 (+745)*
• New deaths reported by healthcare facilities through HERDS - 45*
• Total deaths reported by healthcare facilities through HERDS - 57,375*

** Due to the test reporting policy change by the federal Department of Health and Human Services (HHS) and several other factors, the most reliable metric to measure virus impact on a community is the case per 100,000 data -- not percent positivity.

The Health Electronic Response Data System is a NYS DOH data source that collects confirmed daily death data as reported by hospitals, nursing homes and adult care facilities only.

Important Note: Effective Monday, April 4, the federal Department of Health and Human Services (HHS) is no longer requiring testing facilities that use COVID-19 rapid antigen tests to report negative results. As a result, New York State's percent positive metric will be computed using only lab-reported PCR results. Positive antigen tests will still be reported to New York State and reporting of new daily cases and cases per 100k will continue to include both PCR and antigen tests. Due to this change and other factors, including changes in testing practices, the most reliable metric to measure virus impact on a community is the case per 100,000 data -- not percent positivity.

• Total deaths reported to and compiled by the CDC - 73,294

This daily COVID-19 provisional death certificate data reported by NYS DOH and NYC to the CDC includes those who died in any location, including hospitals, nursing homes, adult care facilities, at home, in hospice and other settings.

Each New York City borough's 7-day average percentage of positive test results reported over the last three days is as follows **:

Borough	Saturday, Aug. 13, 2022	Sunday, Aug. 14, 2022	Monday, Aug. 15, 2022
Bronx	8.14%	7.87%	7.63%
Kings	3.58%	3.12%	2.74%
New York	6.08%	5.96%	5.95%
Queens	8.03%	7.72%	7.63%
Richmond	7.14%	6.72%	6.54%

Head Of Telemarketing Operation Pleads Guilty To $19 Million Credit-Card-Laundering Scheme

 

Defendant Used Phony Merchant Accounts to Obtain Credit Card Processing for His Deceptive Business

 Damian Williams, the United States Attorney for the Southern District of New York, announced that STEVEN SHORT, the former head of Florida-based E.M. Systems & Services, LLC and affiliated companies (collectively, “E.M. Systems”), pled guilty today to one count of conspiracy to commit wire fraud and bank fraud, in connection with his participation in a scheme to fraudulently obtain credit-card-processing services for his deceptive Florida-based telemarketing operation, through a California-based company called CardReady LLC (“CardReady”).  SHORT pled guilty today by videolink, before U.S. District Judge Loretta A. Preska.  His sentencing is scheduled for December 7, 2022. 

According to the Superseding Indictment, court filings, and statements made in Court:

SHORT and his co-conspirators fraudulently secured access to credit-card-processing services for SHORT’s underlying telemarketing scheme. From about 2012 through 2015, SHORT and E.M. Systems generated over $19 million from thousands of customers who received cold calls promising to reduce their overall debt burdens in exchange for fees of up to $1,495.  The telemarketing operation resulted in hundreds of complaints by customers of fraud and deceptive tactics, and requests for millions of dollars in refunds and chargebacks.  Credit-card-processing companies prohibit the processing of credit-card charges for purported “debt consolidation” and “interest rate reduction” services. SHORT and his co-conspirators fraudulently subverted those prohibitions using CardReady, which functioned as a sales agent engaged in the business of securing credit-card payment-processing services.  To execute this fraud, SHORT and others created dozens of sham merchant accounts and false merchant applications, concealing the true nature of SHORT’s telemarketing operation, and defrauding an associated credit-card-processing company and a federally insured bank into processing more than $19 million in payments for the scheme.

SHORT controlled E.M. Systems.  Beginning in 2012, SHORT sought to use E.M. Systems to carry out a telemarketing scheme targeting people with outstanding debt, and to offer them purported financial services.  In order to charge for such purported services via credit cards, SHORT sought access to the credit-card-processing market through CardReady, a Los-Angeles based company acting as a sales agent in the credit-card-processing industry.  As part of its business as a sales agent, CardReady found merchants who wanted credit-card-processing services, such as SHORT, and submitted merchant applications on behalf of those merchants to a Manhattan-based Independent Sales Organization (the “New York ISO”).  The New York ISO then evaluated the merchant applications, and referred acceptable merchant accounts up the chain to a payment processor (“Payment Processor-1”) and a bank (“Bank-1”).  Bank-1 and Payment Processor-1, in turn, processed payments to merchants for purchases by customers who had used credit cards.  Under E.M. Systems’ deal with CardReady, CardReady kept approximately one-third of the credit card sale transactions of SHORT and E.M. Systems, in exchange for providing them access to the credit card processing network.  

From approximately 2012 through 2015, SHORT and E.M. Systems carried out a telemarketing scheme in which they used telemarketers to cold-call consumers, targeting consumers with outstanding credit card debt.  The cold-callers offered the customers services, including debt consolidation and interest-rate reduction on their debts, which were prohibited by the applicable guidelines from Bank-1 and associated processing entities (the “Guidelines”), and which — as SHORT knew — would produce chargebacks from dissatisfied customers far in excess of the number and rate of chargebacks permitted under the Guidelines.

In securing credit-card-processing for E.M. Systems to process the fees paid by its customers, SHORT and CardReady concealed that E.M. Systems was the true underlying merchant.  Instead, SHORT and his co-conspirators, over a period of more than twenty months, created approximately 26 sham merchant companies, each headed by a “signer” (the “Sham Merchants” and the “Sham Merchant Accounts”).  The 26 signers for the 26 Sham Merchants typically had no business of their own, and knew little or nothing about E.M. Systems’ business.  In return for signing paperwork, the signers were paid a nominal fee by CardReady.  These false merchant applications also concealed the Sham Merchant’s true association with E.M. Systems.

By steering E.M. System’s payment processing through these Sham Merchant Accounts, SHORT and CardReady accomplished a number of fraudulent purposes.  First, the use of these Sham Merchant Accounts made it possible for E.M. Systems to conceal its identity from Payment Processor-1 and Bank-1 and to maintain payment card processing.  This was particularly relevant as Payment Processor-1 repeatedly required CardReady to close individual Sham Merchant Accounts because of excessive chargebacks and reports of sales of prohibited services. SHORT and CardReady then quickly replaced the closed Sham Merchant Accounts with new Sham Merchant Accounts, precluding Payment Processor-1 from shutting down its processing of Telemarketer-1 and other high-risk merchants.  Second, the fraudulent processing scheme enabled E.M. Systems to spread out its charges, refunds, and chargebacks across multiple Sham Merchant Accounts.  SHORT and CardReady thus enabled E.M. Systems to evade chargeback monitoring programs operated by Bank-1, Payment Processor-1, and the New York ISO.

SHORT, 45, of Tampa, Florida, pled guilty to Count One of the Superseding Indictment, which carries a maximum sentence of 30 years in prison, and a maximum fine of $1 million or twice the gross gain or loss from the offense.

Also charged in the superseding Indictment is Brandon Becker, 51, of Los Angeles, California, whose trial is scheduled to begin on November 14, 2022 before Judge Preska.  Becker is presumed innocent unless and until proven guilty.

The maximum potential sentence in this case is prescribed by Congress and is provided here for informational purposes only, as any sentencing of the defendants will be determined by the judge.

Mr. Williams praised the extraordinary work of the FBI and thanked the Federal Trade Commission for its assistance.