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NSLDN Moves to Intervene in Lawsuit to Protect Dream Center Students

Today the National Student Legal Defense Network filed a motion to intervene in a federal lawsuit in Ohio to protect the interests of its clients, former students at the Illinois Institute of Art, in a receivership proceeding involving their school and its operating company, Dream Center Education Holdings. The motion to intervene is available here.

In December 2018, NSLDN filed a lawsuit on behalf of students, suing the Art Institute, DCEH, and DCEH’s parent company, the Dream Center Foundation, in Cook County, Illinois for concealing from students that the Art Institute had lost accreditation. As a result of this concealment, students wasted tuition money, loan eligibility, and time on unaccredited courses and, in some cases, unaccredited degrees. This mistreatment of students has already been recognized in a report prepared by the Settlement Administrator of a Consent Judgment to which DCEH is a party, which was recently produced to NSLDN in response to a public records request. The Settlement Administrator found that DCEH was “inaccurate and misleading” about the Art Institute’s accreditation, and that a corrective action plan was necessary “to provide appropriate relief to students affected by the failure to disclose the ... accreditation action.”

On January 18, 2019, DCEH, the Art Institute, and other schools operated by DCEH consented to being placed in receivership, in order to protect them against claims by creditors and continue its participation in Title IV, while attempting to sell as many of its remaining schools as possible. [The emergency motion for a receiver and the DCEH response are available here and here.] The receiver appointed by the Court was, up until that time, consulting on DCEH’s efforts to sell its schools. The Court’s receivership order stays litigation against DCEH and the schools, including those made in NSLDN’s lawsuit. (The claims against Dream Center Foundation remain pending.)

In the court papers advocating for receivership, the Court was apprised of potential claims of many creditors—such as lenders, landlords, and vendors. However, the papers omit the claims of students who were misled by Dream Center Foundation, DCEH and the Art Institute—including the class action lawsuit brought by NSLDN’s clients—and the obligations DCEH has to those students under the Consent Judgment. That’s why NSLDN has intervened: to make sure that students harmed by DCEH are represented in this proceeding.

Tags   Litigation