Responsive Documents - CREW: Department of Education: Regarding For-Profit Education: 8/17/2011 -...

8/6/2019 Responsive Documents - CREW: Department of Education: Regarding For-Profit Education: 8/17/2011 - 11-00026-F GE Release 8.16

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- - - - ' . . , I . . J E R N A L e B f l l M L N A B Y . D _ _ R A E I : j ) _ _ E L L B _ E B A I I ~ E ~ R O _ . C E S ~ - CQNEID..EN:...L.IL..ll-----,(b)(5)



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, ; - ; - : ; : : - ; ' - - - - - E R N A L e B f l l M L N A B Y . D _ _ R A E I : j ) _ _ E L L B _ E B A I I ~ E ~ R O _ . C E S ~ - CQNEID..EN:...L.IL..ll- ----,(b)(5)



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From: Kvaal JamesTo.: Bergeron, David

Yuan. GeocgjaChesley, Susan

CC:Date: 12/7/2010 2:36:24 PM

Subject: 120810 GE draft presentation Exec.pptxAttachments: 120810 GE draft presentation Exec pptx

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From: Kolotos JohnTo: FinkeL Jessica.

Finley. SteveHarris, NikkiWoodward Jennifer

CC: Bergeron DavidSellers Fred

Date: 9/21 /2010 2:29:16PMSubject: Comment summary for addition programs, proposed 668 .7(g)

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From: Yuan GeorgiaTo.: Canada. JuneCC:

Date: 12/6/2010 6:28:22 PMSubject: FW: 1205IO_GE_draft_presentation v2 dab.pptx

Attachments: 120510 GE draft presentation v2 dab pptx

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From : Bergeron, DavidSent: Monday, December 06 , 2010 4:35PMTo: Kvaal, JamesCc: Chesley, Susan; Yuan, Georgia; Arsenault, LeighSubject: 1205 10_GE_draft_presentation v2 dab.pptx

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From: Yuan GeorgiaTo: Finley. SteveCC:

Date: 12/7/2010 11:02:16AMSubject: FW: 1205IO_GE_draft_presentation v2 dab.pptx

Attachments: 120510 GE draft presentation v2 dab pptx(b)(5)

From: Bergeron, DavidSent: Monday, December 06, 2010 4:35PMTo: Kvaal, JamesCc: Chesley , Susan; Yuan, Georgia; Arsenault, LeighSubject: 120510_GE_draft_presentation v2 dab.pptx

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From: Yuan GeorgiaTo.: Canada. JuneCC:

Date: 12/7/2010 3: 15:06 PMSubject: FW: 120810 GE draft presentation Exec.pptx

Attachments: 12081.0 GE draft presentation Exec.pptxl(b(S) I

From : Kvaal , JamesSent: Tuesday, December 07, 2010 1:43PMTo:Kvaal, James; Bergeron, David; Yuan, Georgia; Chesley, SusanSubject: RE: 120810 GE draft presentation Exec.pptx

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From : Kvaal , JamesSent: Tuesday, December 07, 2010 1:36PMTo:Bergeron, David; Yuan, Georgia; Chesley, SusanSubject: 120810 GE draft presentation Exec.pptx


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From: Finley SteveTo: Macias, \VendyCC:

Date: 5/27/2010 1030:54 AMSubject: FW: "Socially Destmctive and M orally Bankrupt"

Interesting speech

From: Woodward, JenniferSent: Thursday, May 27, 2010 10:13 AMTo:Subject: "Socially Destructive and Morally Bankrupt"

Included below the article that Brian sent earlier this morning is the text of he speech by Steven Eisman mentioned in thearticle.http:/ www.insidehighered.com/news/2010/05/27/qt#228602High-Profile Trader's Harsh Critique ofFor-Profit CollegesSteven Eisman, the Wall Street trader who was mythologized in Michael Lewis's The Big Short as that rare person whosaw the subprime mortgage crisis coming and made a killing as a result, thinks he has seen the next big explosive andexploitative financial industry --for-profit higher education --and he's making sure as many people as possible know it.In a speech Wednesday at the Ira Sohn Investment Research Conference, an exclusive gathering at which financialanalysts who rarely share their insights publicly are encouraged to dish their "best investment ideas," Eisman started offwith a broadside against Wall Street's college companies."Until recently, I thought that there would never again be an opportunity to be involved with an industry as socially


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task.The title ofmy presentation is "Subprime goes to College". The for-profit industry has grown at an extreme and unusualrate, driven by easy access to government sponsored debt in the form ofTitle IV student loans, where the credit isguaranteed by the government. Thus, the government, the students and the taxpayer bear all the risk and the for-profitindustry reaps all the rewards. This is similar to the subprime mortgage sector in that the subprime originators bore farless risk than the investors in their mortgage paper.In the past 10 years, the for -profit education industry has grown 5-10 times the historical rate of raditional postsecondary education. As of2009, the industry had almost 10% of the enrolled students but claimed nearly 25% of he$89 billion ofFederal Title IV student loans and grant disbursements. At the current pace of growth, for- protit schoolswill draw 40%ofall Title IV aid in 10 years.How has this been allowed to happen ?The simple answer is that they 've hired every lobbyist in Washington D.C. There has been a revolving door between thepeople who work or lobby for this industry and the halls of government. One example is Sally Stroup. She was the headlobbyist for the Apollo Group- the largest for-profit company in 2001-2002. But from 2002-2006 she becameAssistant Secretary ofPost-Secondary Education for the DOE under President Bush . In other words, she was directly incharge of regulatingthe industry she had previously lobbied for.From 1987 through 2000, the amount of otal Title IV dollars received by students offor-profit schools fluctuatedbetween $2 and $4 billion per annum . But then when the Bush administration took over the reigns of government, theDOE gutted many of he rules that governed the conduct of his industry. Once the floodgates were opened, the industryembarked on 10 years of unrestricted massive growth.[Federal dollars flowing to the industry exploded to over $21 billion, a 450% increase.]At many major-for profit institutions, federal Title IV loan and grant dollars now comprise close to 90% of otal


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institutions because they can afford it more easily.The for-profit model seeks to recruit those with the greatest financial need and put them in high cost institutions. Thsformula maximizes the amount ofTitle IV loans and grants that these students receive.

With billboards lining the poorest neighborhoods in America and recruiters trolting casinos and homeless shelters (and Imean that literally), the for-profits have become increasingly adept at pitching the dream of a better life and higherearnings to the most vulnerable of society .But if the industry in fact educated its students and got them good jobs that enabled them to receive higher incomes andto pay off their student loans, everything rve just said would be irrelevant.So the key question to ask is - what do these students get for their education? In many cases, NOT much, not much atall.Here is one of he many examplesof an education promised and never delivered.This article details a CorinthianColleges-owned Everest College campus in California whose students paid $16,000 for an 8-month course in medicalassisting. Upon nearing completion , the students learned that not only would their credits not transfer to any communityor four-year college, but also that their degree is not recognized by the American Association for Medical Assistants.Hospitals refuse to even interview graduates.But let's leave aside the anecdotal evidenceof his poor quality of education. After all the industry constantly argues thatthere will always be a few bad apples. So let's put aside the anecdotes and just look at the statistics. I f he industryprovided the right services, drop out rates and default rates should be low .Let's first look at drop out rates . Companies don 't fully disclose graduation rates, but using both DOE data, companyprovided information and admittedly some of our own assumptions regarding the level of transfer students, we calculatedrop out rates ofmost schools are 50%+ per year. As seen on this table, the annual drop out rates ofApollo, ESI andCOCO are 50%-100%


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[Let me just pause here for a second to discuss manipulation of statistics. There are two key statistics. No school can getmore than 90% of its revenue from the government and 2 year cohort default rates cannot exceed 25% for 3 consecutiveyears.Failure to comply with eitherof hese rules and you lose Title IV eligibility .Lose Title IV eligibility and you 'recompany's a zero.Isn 't it amazing that Apollo ' s percentage of revenue from Title IV is 8 ~ / o and not over 90%. How lucky can they be?We believe (and many recent lawsuits support) that schools actively manipulate the receipt, disbursement and especiallythe return ofTitle IV dollars to their students to remain under the 90/10 threshold.]The bottom line is that as long as the government continues to flood the for profit education industry with loan dollarsAND the risk for these loans is borne solely by the students and the government, THEN the industry has every incentiveto grow at all costs, compensate employees based on enrollment, influence key regulatory bodies and manipulatereported statistics - ALL TO MAINTAJN ACCESS TO THE GOVERNMENT'S MONEY.In a sense, these companies are marketing machines masquerading as universities. And when the Bush administrationeliminated almost all tl1e restrictions on how tl1e industry is allowed to market, the machine went into overdrive. [Let mequote a bit from a former employee ofBPI."Ashford is a for profit school and makes a majority of its money on federal loans students take out. They convenientlyprice tuition at the exact amount that a student can qualify for in federal loan money . There is no regard to whether astudent really belongs in school, the goal is to enroll as many as possible. They also go after GI bill money and currentlyhave separate teams set up to specifically target military students. Ifa person has money available for school Ashfordfinds a way to go alter them . Ashford is just the middle man , profiting off his money, like milking a cow and working thesystem within the limits ofwhat's technically legal, and paying huge salaries while the student suffers with debt that can 'teven be forgiven by bankruptcy. We mention tuition prices as little as possible .. th.is may cause the student to changetheir mind.While it is illegal to pay commissions for student enrollment, Ashford does salary adjustments, basically the same thing.


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many instances, the for-profit institutions sit on the boards of he accrediting body . The inmates run the asylum.Historically, most for profit schools are nationally accredited but national accreditation holds less value than regionalaccreditation. The latest trend of or profit institutions is to acquire the dearly coveted Regional Accreditation through theoutright purchase of small, financially distressed non-profit institutions and then put that school on-line. InMarch 2005 ,BPI acquired the regionally accredited Franciscan University of he Prairies and renamed it Ashford University .[Remember Ashford. The former employee! quoted worked at Ashford .] On the date of purchase, Franciscan (nowAshford) had 312 students. BPI took that school online and at the end of2009 it had 54,000 students.SOLUTIONSWhile the conductof he industry is egregious and similar to the sub prime mortgage sector in just so many ways, for theinvestment case against the industry to work requires the government to do something-- whereas in subprime all you hadto do was wait for credit quality to deteriorate.So what is the government going to do? It has already announced that it is exploring ways to fix the accreditationprocess. It will probably eliminate the 12 safe harbor rules on sales practices implemented by the Bush Administration.And I hope that it is looking at everything and anything to deal with this industry.Most importantly , the DOE has proposed a rule known as Gainful Employment. In a few weeks the DOE will publishthe rule. There is some controversy as to what the proposed rule will entail but I hope that the DOE will not backtrackon gainful employment. Once the rule is published in the federal registrar, the industry has until November to try to getthe DOE to back down .The idea behind the gainful employment rule is to limit student debt to a certain level. Specifically, the suggested rule isthat the debt service-to-income-ratio not exceed 8% . The industry has gotten hysterical over this rule because it knowsthat to comply, it wiii probably have to reduce tuition .[Before I tum to the impact of he rule, let me discuss what happened last week. There was a news report out that Bob


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by 5%-15%.Results for each company depend largely on the mix of students, the duration of each degree and the price of tuition ateach institution

For each company, I show the results under the two scenarios and the cotTesponding PIEs. Needless to say , the PIEmultiples look quite a bit different under either scenario.Apollo- In fiscal 2009, the company earned $4.22. The consensus estimate for fiscal 2010 is $5.07. Under scenario 1,fiscal 2009 and the fiscal 2010 estimate get cut by 69% and 57%, respectively. Under scenario 2, it gets cut 50% and41%, respectively.ESI- In fiscal 2009, the company earned $7.91. The consensus estimate for fiscal2010 is $11.05. Under scenario 1,fiscal 2009 turns slightly negative and the fiscal 2010 estimate gets cut by 74%. Under scenario 2, fiscal 2009 declinesby 75% and the 2010 estimate gets cut by 53%.COCO- In fiscal2009, the company earned $0.81. The consensus estimate for fiscal2010 is $1.67. Under scenario 1,fiscal 2009 turns negative and the fiscal 2010 estimate gets cut by 94%. Under scenario 2, fiscal 2009 declines by 79%and the 2010 estimate gets cut by 38%.EDMC- In fiscal2009, the company earned $0.87. The consensus estimate for fiscal2010 is $1.51. Under scenario1, fiscal 2009 and the fiscal 2010 estimate turns massively negative. Under scenario 2, fi scal 2009 and the fiscal 2010estimate are also massively negative, just less massively than scenario 1.The principal reason why the numbers are sobad for EDMC is that they have a lot of debt and that debt has to be serviced and cannot be cut.Washington Post - The Post's disclosure ofKaplan metrics is slight. Thus, analyzing the impact from gainful employmentis much more difficult and we have confined our analysis solely to fiscal2009. In fiscal2009, WPO earned $9.78.Under scenario 1, a loss of$33.25 per share occurs. Under scenario 2, there is still a loss of$6.19. The principal reasonwhy the numbers are so bad for the Post is that more than 100% of ts EBIDTA comes from this industry through its

The industry is now 25% ofTitle IV money on its way to 40% .I f ts growth is stopped now and it is policed, the


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problem can be stopped. It is my hope that this Administration sees the nature of the problem and begins to act now. I fthe gainful employment rule goes through as is, then this is only the beginning of the policing of his industry.But if nothing is done, then we are on the cusp of a new social disaster. I fpresent trends continue, over the next tenyears almost $500 billion ofTitle IV loans will have been funneled to this industry. We estimate total defaults of$275billion , and because of ees associated with defaults, for profit students will owe $330 billion on defaulted loans over thenext 10 years.[Bracketed Sections might be deleted during speech.]I I I I I I 1++++++++ 1 I I I I I I 1++++++++ 1 I I I I I I 1++++++++++4http 1 dealbook.blogs.nytimes.com/2010/05/26/li ve-from-the-ira-sohn-20 10-conference/?src=buslnHedge FundsLive From the Ira Sohn 201 0 ConferenceMay 26, 20l0, 3:28 pm8:29p.m. IUpdated Unlike previous years, this year's Ira Sohn Investment Research Conference didn 't have anyblockbuster revelations- certainly nothing on the orderofDavid Einhorn's bet against Lehman Brothers orWilliam AAckman ' s assault on MBIA , the bond insurer.But several themes emerged from the conference, one of he most heralded in the investing world , where top-nameexecutives deliver 15-minute presentations of heir top trading ideas. (Or inMr.Ackman's case this year, a little closerto 30 minutes.)Chief among them was the idea that the credit ratings agencies have yet to face an overhaul that addresses theirweaknesses. (For the full rundown, check out my Twitter coverage of he conference.)Mr. Einhorn, the head of GreenJight Capital reiterated his short bet against the Moody's Corporation. He argued- asdid others likeMr. Ackman ofPershing Square Capital Management and Seth Klarman ofBaupost the Group- thatthe credit ratings agencies remain beholden to the banks whose products they are supposed to analyze independently.Nearly every fund manager who spoke at the conference expressed a bearish position on Western economies, arguingthat they are simply too over-leveraged and unable to address their liabilities to stay on top . A few executives, including


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From: Woodward JenniferTo: Thompson. LaurenCC:

Date: 9/22/2010 3:15:24 PMSubject: FW : Comment summary for addition programs, proposed 668.7(g)

l(b)(5) I-----Original Message----From: Kolotos, JohnSent: Tuesday, September 21 , 2010 2:29PMTo: Finkel, J e s s i c a Finley, Steve; Harris, Nikki; Woodward, JenniferCc: Bergeron, D a v i d Sellers, FredSubject: Comment summary for addition programs, proposed 668 .7(g)(b)(5)


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From: Woodward Jennifer


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To: Kolotos. JohnCC: Wexler. Rob

Thompson. LaurenFinkel, JessicaSellers FredGuthrie, MartyMcCullough Carney

Date:Finley, Steve9/22/2010 3:57:00 PM

Subject: FW: Comments on "Additional Programs"

John-

Here are the comments provided by Kaplan and Capella on "additional programs." ](bJ(S)(b)(S)


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Department of Education34 CFR Part 668Program Integrity: Gainful Employment; Proposed Rule


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Comments from Capella University on "Additional Programs"

NOTE: Capella University had no comments that were directly/explicitly about"additional programs" in 668.7(g). However, comments from Capella University aboutexempting graduate programs from the regulations potentially have implications forthe ''additional programs" provision. See below.Exempt graduate programs from the regulationsCapella University Comments related to Proposed 668.7(g), September9, 2010,See Section II, Page 3, of Capella's comments:

Second. these comments propose that ttleDepartment elther exempt graduateprogrnrrl$ from rts proposed rl)les or ~ i d e r an exempt1oo 1otInstitutions with ahistory of ow cohort default rates.Capella University Comments related to Proposed 668.7(g), September 9, 2010,See Section VI, Page 10, of Capella's comments:

.. In t . ~ e alternative, tne Departmentcould exemptfrom tile regulations graduate programs.CapeUa urges the Department to COrt$ldet this option because graduate tevel studentsare more likely to acquire higher debt revels and to take advantageofconsolidatedloans, or roJT41ymr.-nt plans that anew for periods of rterest..o11Jy payments. It sapp.-opriale for such students too take on m o r ~ debt-many of hese studentS atewort


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Comments from Kaplan Higher Education Corporation on "AdditionalPrograms"

SUMMARY OF KAPLAN HIGHER EDUCATION CORPORATION COMMENTS ON"ADDITIONAL PROGRAMS": Redundant because regulated by state agencies and regulatory bod ies Burdensome, leading to increased costs The number of new programs each year needing review means delay in

approval Employer documentation requirement goes beyond statutory requirement,does not explain the Department's review process and has no objectivemetrics of review (and therefore is vague and arbitrary), includes noinformation about verification by the Department of the informationsubmitted, and does not discuss how the requirement will be applied aton-line or national schools. Having the Department as the "arbiter of postsecondary offerings" won 'tbest serve students or national economic interests Frustrates innovation Should not be required for on-line or other distance learning programs

In applying the GE rules to each program rather than to an institution, theNPRM contravenes the HEA The proposed GE rules should not apply to degree programs

Department of Education34 CFR Part 668Program Integrity: Gainful Employment; Proposed Rule


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KAPLAN'S COMMENTS:Kaplan Comments related to Proposed 668.7(g), September 9, 2010,See Section II.C, Page 9 ofKaplan' s comments:

C. Th e Proposed Rules Har:na Stud&n ts nyStilling Jnnova tion and Discou ragutgNew Programs.Proprietary schools are at. t h ~ fordronl nfinnoyation, particularly innovation jn the

deli\cy ofcducatiot\. Tile)' are p i t > n U ~ : ; r s olonline education and blended academic p r o g r r u ~ ofthe use of data analysis ro support studenl retention, und ofnew method-; for measuring studentlearning. See, fot exnntple, Clayton M. Christen.


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Kaplan Comments related to Proposed 668 .7 (g) , September 9, 2010,See Section IV .A.3, Page 16, ofKaplan' s comments:3-. The DepartmentShould Nu t Requ ire }:tn ployer A f t i : r m For ~ c w Program&. Or, Espaciall) \ For Online Pr ograms.

'fheDntmw; and unduly burdensome andwiLL frustrate innO\ation and increase -costs. At the very least. the Departmentshould make clearth:n local emP"Joycr affirmations are not required whoo sthoolsareoffering Qr1 line or othe.rdistance based pt"Ograros. '11'tc local requirement simply r n a k ~ no sense in1his conLcxt sinceonl i n ~ progmms attra


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Comments from Kaplan Higher Education Corporation on"AdditionalPrograms"

NOTE: Below are two comments from Capella University that, although notdirectly/explicitly about "additional programs" in 668.7(g), potentially have implicationsfor the "additional programs" provision.

Kap lan Commen ts related to Proposed 668.7(g), Sep tember 9, 2010,See Section III.C, Page 14, of Kap lan ' s comments:C. The Department's ApptictttionOfThe Proposed Rules1'o Eacb Pogrtlm,

a t h e r Tbao To Institution, Contravenes The HEA.l'he HCA. d"'es not authorize the Department oo require all programs offered by apr


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Comments from Kaplan Higher Education Corporation on"AdditionalPrograms"

Kaplan Comments related to Proposed 668 .7(g), September 9, 2010,See Section IV.A.l , Page 15, of Kaplan' s comments:

1. 'f l:lc f .mphlyment Rules Should Not Ap))ly To DegreeProgra ms.The proposed rules should not extend to degree programs offered by proprietary schools.The benefits conferred by degreeprograms. s.uch as high to a form ulaic approach to measuring v.aluc based on early ccrre


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The valueofopportunity andstability, ~ c i a l l y in pcrxlsof e c ~ : m o m i c dowtttum,cmmolbe W1r quanrificd by lhcsc rules, The Depmmcnt seemingly recognized t h ~ e facLSwhen it excluded d e g r e ~ prognnnsat non-profit inslitu!Jon


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To: Thompson. LaurenWexler. Rob

CC:Date: 9/22/2010 4:08:50 PM

Subject: FW: Comments on "Additional Programs"Oh , good.

From : Finkel , JessicaSent: Wednesday, September 22, 2010 4:08PMTo: Woodward, JenniferSubject: RE:Comments on "Additional Programs"

From: Woodward, JenniferSent: Wednesday, September 22, 2010 3:57 PMTo: Kolotos, JohnCc: Wexler,Rob ; Thompson, Lauren; Finkel, Jessica; Sellers, Fred; Guthrie, Marty; McCullough, Carney; Finley, SteveSubject: FW: Comments on "Additional Programs"


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Jennifer

From: Wexler, RobSent \!Vednesday,September 22,2010 3:23 PMTo: Woodward, JenniferCc:Thompson, LaurenSubject: Comments on "Add itional Programs"

Jennifer, Ihave attached the comments on "additional programs" from the comments submitted by Capella Universityand by Kaplan Higher Education Corporation.

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};;> Docket ID: ED-2010-0PE-0012 Gainful Employment in a Recognized OccupationReference: 34 CFR 668.7, 668.13,668.90

The University embraces the objective of full transparency to encourage students to borrow responsibly.In addition to the clear and intrinsic value of higher education which provides a more broadly anddeeply educated citizenry, students obtain a postsecondary education fo r many reasons: to begin acareer, change careers or gain additional knowledge and skills to advance in their current career. In1976, most proprietary schools offered vocational and occupational train ing programs leading torecognized occupations at that time. Today, regionally accredited proprietary schools provide highereducation in academic programs and confer baccalaureate and post-baccalaureate degrees. If theultimate objective is to encourage students to borrow responsibly, additional student protections shouldbe debated by Congress and new legislation adopted before any new regulations are proposed. For thereasons outlined below, these proposed regulations are discriminatory, overly complex, non-verifiablewith no ability to cure, administratively burdensome, too vague to properly assess the impact oreffectiveness, and have many unintended consequences. We are concerned that the rule as currentlyproposed does no t achieve public policy objectives, and we respectfully request the Department towithdraw the regulatory proposal until congressional intent has been revisited and established.The proposed regulation fo r determining eligibility of programs that lead to gainful employment is:DiscriminatoryIf the Department is truly concerned about high debt and ability to repay, any proposed rules shouldapply to all students. The recently released loan repayment rate data indicates the problem is no tlimited to proprietary schools. If the proposed rule applied across all sectors and programs, one third ofcommunity colleges, nearly one half of schools with the largest concent ration of Hispanic enrollment,


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should be transparent and simple enough that all stakeholders can clearly gauge how they are impactedby the regulation.Non-verifiable with no ability to cureWe are concerned about the dependency on Social Security Administration or other federal agency fo rincome verif ication. The proposal lacks due process because the income data provided by the SocialSecurity Administration is non-verifiable. Additionally, legal uncertainty exists whether or not theDepartment could obtain confidential income information without a release from the taxpayer.Furthermore, under the proposed regulations, institutions have no ability to view draft rates andchallenge the data integrity prior to official public release, as afforded under the cohort default rateregulations. Moreover, the proposed regulation timeframe has a retroactive application with noopportunity fo r institutions to cure any problem. If the intent of the proposed rule is to reign in debtincurred by students, a longer phase-in period of restrictions and ineligibility may be warranted toenable schools to get programs "into shape". If the intent is simply to get rid of programs, then theproposed implementation schedule is probably effective. Reasonable and prudent public policyimplementation should be forward looking to allow corrective action plans to be effectuated.Administratively burdensomeConsidering the significant economic impact of these proposed regulations, the overall cost benefi tanalysis is debatable. We believe the Department is significantly underestimating the data collectionburden and cost on insti tutions a1nd the government. For instance, in order to capture the necessarystudent level loan detail information, the IPEDS file record layout wil l require extensive modification andtechnical review. In turn, institutions need to develop new software, customize queries and performvalidation procedures to ensure data integrity. The complexity of multiple government agenciescapturing and exchanging student specific earnings data with personal identifier information is


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Post-baccalaureate, graduate and professional programs seem to fa II outside of the concept of trainingprograms. Many non-degree programs enable an individual to refine their expertise or obtain aspecialization associated with a recognized occupation; however, the intent of the program is no tnecessarily training to move the individual into the job market or basic career field (e.g. teacher'scertificate). Therefore, post-baccalaureate degrees and certificate programs should be excluded fromthese regulations.Congress created many viable alternatives fo r students facing economic hardship. In fact, theDepartment encourages loan consolidation and promotes the income based repayment plan. Theproposed regulations would have an undesirable effect on students if schools steer students away frombeneficial repayment plans, deferments or forbearances because it does not reduce principal balance.The proposed regulation is an impediment to market adjustments by requiring prior approval from theDepartment fo r additional programs. The criteria and timeframe fo r program approval by theDepartment are vague at best. The proposal provides no guidance fo r how programs may be evaluated,allows no ability to challenge the rulings of the Department, provides no timing assurances on reviewperiods, and ultimately may disadvantage the American higher education system compared to othercountries due to the lack of innovative higher education programs. For example, technology changes ata rapid pace and the business industry mandates adjustments to educational programs to meet thesedynamic changes. Also unclear in the proposal are t h ~ expectations of employer affirmations fo rnational and/or global distance-learning academic programs. The proposed regulation will stifleinnovation and has a crippling effect on the marketplace agility that could potentially eliminate highquality programs, yet no t impact programs of questionable value.Economists have demonstrated it takes well beyond three years after graduation fo r those with higherdegrees to begin to experience the real financial advantage of additional education. Current or futureeconomic recessions are unpredictable and adversely affect the debt to income ratio. Can the value of a


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The treatment of loans fo r students who obtain multiple degrees from the same school. CIPcodes will be used to link specific students with specific programs at an institution. If aninstitution has multiple programs with the same CIP code, how will the Department performprogram-level calculations?

What will be the impact of hese rules on tradi tional ly low-paying jobs with existing shortages ofqualified individuals that have cost intensive preparation?

Consolidation loans are excluded from loans paid in full, but the proposed rule does not explainhow to treat them in reduced principal balance.

The proposal uses the terms "earnings" and "income" interchangeably and each has differentmeanings.

An unaffiliated employer is no t clearly defined and, on the surface, certainly no t qualified todetermine if a program's curriculum aligns with occupations at those employers' business.

The proposed regulation is opaque in so many ways. Without further clarification and definit ion, wecannot determine if the rule is fair and equitable. Public policy should not be created arbitrarily.Recommendation

The mission of the Education Department is to promote student achievement and preparation fo r globalcompetitiveness by fostering educational excellence and ensuring equal access. The core mission of theFederal Student Aid department is to ensure that all eligible Americans benefit from federal financialassistance fo r education beyond high school. If there are statu tory constraints to achieving this mission,the debate belongs in Congress. We recommend the Department withdraw the proposed regulationdefining gainful employment until such time that Congress carefully considers an education quality indexfo r higher education that includes learning outcomes.

From: ne.greg09


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Public comment related to credit hours-----Original Message-----

To.: Finley, SteveCC:

Date: 6/1/200910:20:20AMSubject: FW: Definition ofUSC 20 1088

From :White Leeland [mailtoJb)(G) [email protected]]Sent: Wednesday, May 27, 2009 10:36 PMTo: negreg09Subject: Definition ofUSC 20 1088This is a united states statute. It is not the 12 hour rule. 24 semester credit hours, 30 weeks of instruction. The committemust define a semester credit hour as 15 hours of instruction. This is because no one knows that a semester is halfof anacadem ic year.Therefore, 20 USC 1088 must be recoded. See my court case that I am reopening, due to fraud on the court; andwhy there is a necessity to redefine this rule. For profit schools provide 4 hours of instruction per week for 5 weeks for 3semester credit hours. However the law states 45 hours of instruction for 3 semester credit hours.What the for profits have done, is they provide 20 hours of instruction for 40 weeks being 800 , when the law states 15 x120 for the average bachelor of science degree program . There is a huge difference between 800 instructional hours atPhoenix vs other Title IV schools that must provide 1 800 hours of nstruction. The fraud is so bad at Phoenix, that edpays 1800 hours of nstruction for only 800 hours while all non profits must provide 1,800 for the average bachelor ofscience degree.


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I 02CV0237-TABLEOF AUTHORITIES& EXHIBITS I


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I FED. R. CIV. P.Rule 4 Fetl R Civ. P. SERVICE. Kemp Smith and counsel cou ld notAll amendments made by Plaintiffmade before service. plead September 5, 2002, there is no return ofservice to plead on until September 6, 2002.Judge Martinez's unauth01ized falsified service[17] Pleadings: [14], [15] & [16] and Order(30] lack jurisdiction due to timeliness.Rule 12(a)(4)(B) Fed. R . Civ. P. DEFINITE STATEMENT. - D efendant de-faulted a n n u l l i n ~ M o t i o n to Dismiss[42l.

Rule 60(b)(3) Fed. R. Civ. P. FRAUD UPON THE COURT- Kemp Smithin collusion w ith Jude.e Martinez.

STATUTES18 usc 1505 OBSTRUCTIONOF JUSTICE18 usc 2071 CONCEALMENT/FALSIFICATION byM arlinez137] and [17120 usc 1088 ACADEMIC YEAR mandating 15 hours ofinstruction ve r credit hour20 usc 1088 Phoenix providing only 6 hours and 34 min-utes per credit hour rather than 15 hours as

mandated by law . 20 hrs per 3 credit hoursproviding 20 hours of instruction and charg-ing Title IV program fo r 45 hours of instruc-lion.

CASESHerring v. United States, 424 F. 3d 384 Bar in de(lning fraud upon the courtKenner v. C.I.R., 387 F.3d 689 (1968); 7 Moore's Federal . A decision produced by fraud uponP ractice, 2d ed. P 512, 60.23. the court is not in essence a decision atall a.nd never becomes final . .USA v. Poindexter, 725 F.Supp. 13: 1989 Concealment, falsi(lcation statute applies toeverv_ne.USA v. Sciuto, 521 F.2d, 842,845(7th, 1996) A judge wh o does no t recuse is in violation ofthe due process Clause of th e U.S. Con-stitution. Jude.e B1iones. 18 USC S 1


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123

IN THE UNITED STATES DISTRICT COURTWESTERN DISTRICT OF TEXAS, EL PASO

4 1Leeland 0.White5 Plaintiff

MOTION TO SET ASIDEJUDGMENT6789

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vsApollo Group, Inc., doing business as,University of PhoenixsMJArthur Andersen, et al

Defendant

Rule 60(d)(3) Fed. R. Civ. P.Fraud upon the court

Based on Falsification [ 17]and Concealment of theOtiginal Setvice Docket ent1y [137],October 15, 2004

Case No. 02CV0237DB

The Motion to Set Aside Judgment should be granted and must be granted. 02cv0237 isan action which indubitably has been plagued by fraud upon the Court committed by culpableparty, Kemp Smith, law firm of the Defendant, in collusion with the recused Honorable JudgeMartinez, a former partner of Kemp Smith. The Counsel for the Defendant in this matter accepted the original service [137] (Certified Service 7000-1530-0003-3784-0692 delivered to theGeneral counsel of the Apollo Group, Inc., Lynn Campbell, August 5, 2002 being concealed untilOctober 15, 2004) by its pleading on September 5. 2002, acquiescing to default, without question; too late to Motion the Court for a Definite Statement [16]. The day of default was notSeptember 5. 2002 but rather August 27, 2002. The lie of remark is, if the Defendant were notlying it would have ignored the application to the clerk for default entry in its entirety, waiting


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Statement which effectively annulled every Pleading by the Plaintiff in the court, including the Jthree amended complaints by order of Judge Martinez on September 25, 2002. It also pre-cluded any Final Judgment in the future, especially the one that Judge Briones ruled on. As afact the Defendants never responded to the Definite Statement [42] on October 7, 2002 the dayJudge Martinez recused. Awaiting the mandatory 10 day period for the Defendants to respondto the Definite Statement would be October 21, 2002 proving that Defendant's motion to dis-miss on October 22, 2002 was untimely and void causing Judge Briones Final Judgment to failin its entirety on January 30, 2003.

There is little citing to go with when identifying Fraud Upon the Court or how to tem-plate it. This citing is derived on the standard applied in a reopened 50 year old case in UnitedStates u. Reynolds, 345 U.S . I , in which the government claimed military secrets of family mem-bers killed in a B-29 crash. Years later documentation was discovered showing that no militarysecrets had been compromised. One family commenced a new suit entitled Herring u. UnitedStates, 424 F.3d 384, claiming fraud upon the court. Of little importance is this case, but of sub-stantial importance is the standard used in defining fraud upon the court.

Speaking for the 3rd Circuit Justice Aldisert found, that the bar in defining fraud upon theCourt must be set very high, stating that:"In order to meet the necessari{y demanding standard for proof of fiaud upon the cow'twe conclude that there must be: (1) an intentional fi-aud; (2) by an o{f!cer of he cow't; (3)which is directed at the cowt itself; and (4) in fact deceives the cowt,"Aldisert wrote in anopinion joined by Circuit Judges Samuel A. AIito Jr . and Franklin S. Van Antwe1pen.

In affirming Herring u. United States, 424 F.3d 384, and Rule 60(d)(3) Fed. R. Civ . P., if1i!applying this standard to 02cv0237 are the following facts:

(1.) an intentional fiaud to conceal [137] by Judge Martinez caught in collusion with for-


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action. The motive of Judge Martinez was to entertain business for his former law firm Kemp JSmith that represented the Defendant, Apollo Group, Inc., doing business as the University ofP h o e n i x that went into default on August 26, 2002 [137-1] and by falsifying that service on the3rd day of default by docket [17] to deny the Plaintiff a default entry. This concealment has costthe United States government billions of dollars every year since the year 2002, which meansover 7 billion dollars to date. Defendant violates 20 USC I 088, which mandates a semestercredit hour as 15 hours of instruction in the Title IV Federal Student Loan Program. Because ofthe mechanical nature of this regulation this case is only an overpayment issue; in which theUnited States of America could immediately collect without trial.

Federal District Court Judge Briones knowingly and willingly continued to conceal theoriginal service in collusion with Federal District Court Judge Martinez, and Law Clerk Amandaproving default. Even though Judge Martinez pathologically lied about his recusal as to recusing perhaps violating 18 USC 1001 to Judge Briones; his ProSe Clerk Amanda affirms the lieby continuing on now becoming a conspirator in the [willful] obstruction, concealment and falsification of documents manipulated in the United States Court House and is equally involved.See United States ofAmerica vs John Wrlliam Simpson, aka Brother John Simpson, 460 F.2d 515:1972 (9th Cir), which the Ninth Circuit States, that the statutory requirement of willfulness is satis-fied if the accused acts intentionally, with knowledge that he is breaching the statute. Both of theaccused Federal Judges and the Pro Se Clerk Amanda acted with knowledge that they hadconcealed [137] on September 5, 2002 as written on affidavit in support of Default Entry, page13. By October 1, 2002 document [35] informed the Court for the second time. Judge Brioneswillfully concealed this document till October 15. 2004. When Judge Martinez recused heshould have docketed [137] which should have been docket [8] instead he and his ProSe ClerkAmanda anted the count of concealment to obstruct justice.


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An affidavit made on September 30, 2002, summarizes a conversation with Plaintiff and JGerald Giordano, Jr. on September 6, 2002, that establishes that the Apollo Group, Inc.,through Gerald Giordano, Jr. received the original service on August 6, 2002. This is the sameGerald Giordano who reversed the truth and deliberately violated 18 USC 1001, lying to a ju-dicial officer, Judge Briones, in open court, in order to get docket entry [123] into the recordduring the Void Judgment Hearing enumerated by hyphen [- -] on May 20, 2004. The tran-script works against the interests ofGerald Giordano as well. Gerald Giordano in admitting thatservice was made on August 6, 2002 means that the Apollo Group, Inc., was in default byAugust 26, 2002 .

The activity of Judge Martinez is very similar, in part, to the case in United States us JohnPoindexter, 725 F. Supp. 13; 1989 U.S. Dist. LEXIS 12572; where Poindexter believed he couldfalsify and conceal with impunity, 18 USC 2071; and in the same light obstruct justice, 18 USC 1505 no different than Judge Martinez colluding with Judge Briones mentioned through outthe proceeding of 02cv0237 in which prima facie evidence works against the best interests ofboth judges. Judge Martinez was caught in the act of entertaining business for a former lawpartner that represented the Defendant; even a federal district court judge shall be held ac-countable for "obstruction of Justice" at least by the Plaintiff who believes that truth, justiceand the American way is not dead. In Poindexter: The Court determined in its count 1 argu-endo activity that which parallels the activity ofJudgeMartinez, to wit:

Count 1 Argument, 18 USC 2071. Defendant's argument regarding "custody" suf-fers fiom similar artificiality. There is no wanant for supposing, an d no legislativehisto1y suggesting, that Congress meant to subject to punishment under section2071 only those who are the custodians of records in the technical sense, such asclerks or librmians, but to permit others working in a govemment agency who haveaccess to sensitive documents to destroy or alter them with impunity [Judge Marti-nez]. The obvious pwpose of the statute is to prohibit the impairment of sensitivegovemment documents by those officials who have access to and control over them,and no court has euer held to the contrmy. See generally, Coplon, supra, where thedefendant was found to have custody of classified documents to which she gained


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1 I Those issues addressing 20 USC I 088 by the Plaintiff, can be investigated by the United J2 I States. In case 04cv0452. the United States never specifically investigated 20 USC 1088 or the3 I averment of fraud stated with particularity pursuant to Rule 9(b) Fed. R Civ. P. The Court had4 I imposed a safe harbor sanction pursuant to Rule 1I Fed. R. Civ. P., based on the concealed serv-5 I ice of this case; and never ever addressed the violation of the Academic Year by Defendant6 I Phoenix. Judge Briones being compromised by his remarkable temperament allowed the Defen-7 I dant to steal billions from the Title IV Student Loan Program by hiding his ignorance in doing sim-8 I ple multiplication. Unfortunately, Judge Briones knows that the University of Phoenix only pro-9 I vides 800 instructional hours on a 120 semester credit hour BS degree while his University of

10 I Texas at El Paso has to provide 1800 instructional hours or 120 hours x 15 hours of instmction11 I mandated by law. For example why should Phoenix at $300 a semester credit hour in a 120 se-12 1mester credit hour bachelor of science program receive $54,000 (I8000 x $300) when it has only13 I done $ 24,000 worth of work (800 x $300). The law is 15 hours of instruction for each semester14 I credit hour course pursuant to 20 USC I 088. Almost 3 billion dollars in the Title N Student15 I Loan Program, 2008, last year went to the University of Phoenix!16 I The Plaintiff intends on amending this complaint, serving the United States Attorney GenJ7 I era! the complaint in camera, seeking an order to seal the case, and changing the captioning to18 I United States ex rei Leeland 0. White vs the Apollo Group, Inc., doing business as University of19 I hoef1ixSM.20 In light of all the animus of the Court, all sanctions, bonds and penalties against the Plaintiff


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1 I Martinez, Amanda the ProSe Law Clerk, Gerald Giordano, Jr. -counsel for the Apollo Group, J2 I Inc., James Mackie- counsel for the Apollo Group, Inc., represented by Snell & Wilmer, LLP and3 I Jeanne C. Collins, Counsel for the Apollo Group, Inc., doing business at the University of Phoe-4 1n.ii'M who manipulated Judge Martinez with Kemp Smith, they have forever earned their identity5 I by their clandestine behavior which neither opens the door by scripture nor closes the door by6 I the law. Need more be said, they have their rewards.7 I The disservice by Judge Martinez, the Counsel for Defendant and others requires this8 I Court to Set Aside the Final Judgment of January 30, 2003. Fraud upon the Court by Judge9 I Martinez in collusion with Kemp Smith and the Defendant has been proven and perfected as

10 I well as the double-bubble, double trouble criminally concealed document [137], the original11 I service and the falsified service [17] pursuant to the double-bubble, double trouble law known as12 I 18 USC 2071. Can't have one without the other!13 I Respectfully submitted,141516]7

Leeland 0. White, Plaintiff815 La ClUzEl Paso, Texas 79902

18 (915) 694-0144 lA true and correct copy of this Motion to Set Aside Judgment pursuant to Rule 60(d) (3) Fed. R. Civ. P. , was served to19 court, May 20, 2009 and mailed to all other parties on May 21, 2009.20


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LEELAND 0. WHITE, Pro Se, }Plaintiff }vs }} .WESTER}-!'DIST .OFTEXASTHE APOLLO GROI..iP dba }

UNITED ~ : r A T E S ~ ! if(:0'8RT"t ' . I ! t ! ~ T E X A ~ UNIVERSITY OF PHOENIX, and '}

RTHUR ANDERSEN, et al, }1Defendant1". '"EP02CA0237

Docket Number' . ~ \ .. - ,.1

, IJ . >MOTION FOR RECUSM.$


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financial aid issues affecting Plaintiff. It is important for Defendant to quash this complaint, atany cost, as any judicial decision may adversely affect defendant.

Judge Martinez is a President Bush appointee. Because Plaintiff entered en formapauperis, the scope of the judge would be limited to the narrow scopes of the Republican Party.The policy of the republican party stands opposed to anyone who is in a position appearing to beor requiring public assistance. There is no question to partiality in this instance, it is a given.

Pursuant to Plaintiff's case is the !mown history based on the record ofJudge Martinez'spartiality.

On September 5, 2002, instructing the clerk to violate Rule 55( ), obstructing dueprocess and justice, by ordering the clerk to impede Plaintiff's entry ofdefault topreventing the entry from ever getting on the docket The clerk stated that JudgeMartinez had given them orders not to sign the default entry.

Most of he communication from Defendant in the form of ex parte. Thedefendant is not the Plaintiff and should not be courted as such.

Not answering the Motion to Compel the Government to investigate. Defendant on the record objecting to the letter of recusal By allowing the untimely denial for the Motion to Compel Discovery, knowing

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Deliberately with holding evidence from the record . As of September26. 2002the default entry by the clerk had not been entered by the clerk or inserted into the

record. By allowing entryofDefendant knowing that Defendant had already defaulted Knowing that all ofDefendants material should have been rejected after default By permitting Defendant to perjure itself in the Objection to the Default

Judgment. knowing that the citing were not based on 1.-w but distortion. By arbitrarily annulling the original summons and proofof service usurping the

Plaintiffof its rights. By instructing the clerk, without Plaintiffs permission tosend out a new summons and proofof service after the old rcmm receipt hadcome in on August 8, 2002

By witholding and not inserting the return receipt August 29. 2002Plaintiffprays that given the above that the judge should recuse himself and must recuse

himself in the interest of ustice and impartiality.

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I02Cv0237DB ANNOTATED DOCKET7/18/027/24/027/26/028/08/028/08/02

8/12/029/5/02

9/5/029/5/02

9/5/02

5 Complaint filed. I.F.P. Motion granted (Pages 9) (aq)[Entry date 7/18/02]6 Amended complaint by Leeland 0. White. Amending complaint[5-1) (dll) [Entry date 7/25.02)2 Amended complaint by Leeland 0. White, amending complaint See the initials (aq)[5-1] {Q(lges 7) (aq) [Entry date 7/29/02]8 Motion by Leeland 0. White to compel discovery Gm)[Entrydate 8/08/02]

137 Return of Service executed as to the Apollo Group on (aq) did the service8/5/02 Re: document #7 (rna) [Entry date 10/15/04] on this. See returnreceipt 7000-1530-THIS IS THE ORIGINAL SERVICE CONCEALED BY JUDGE 003 -3784-0692 andMARTINEZ UNTIL OCTOBER 15 , 2 004 ESTABLISHING THE the name (aq) anno-APOLLO GROUP, INC., BEING IN DEFAULT SINCE AUGUST tated on the return21, 2002 ESTABLISHING THE FACT THAT ON SEPTEMBER S, service addressed to2002 THE APOLLO GROUP, INC. HAD BEEN IN DEFAULT Lynn Campbell , Gen-SINCE AUGUST 2 7, 20 02 . era! Counsel for thePROOF OF VIOLATION OF 18 USC 2071 BY JUDGE MARTINEZ Apollo Group Inc.

9 Motion by Lee and 0. White to compel an Officer of heUnited States to do his duties (aq) [Entry date 8/12/02]10 Motion by Lee and 0. White for default Judgment againstThe Apollo Group, Arthur Andersen (aq) [Entry date 09/05/02]11 Affidavit by Leeiand 0 . White in support of motion forDefaul t judgment aga inst the Apollo Group. Arthur Andersen[10-1 ] (aq) [Entry date 9/05/02]12 Notice of filing by Leeland 0. White. Affidavit of AmountDue upon Application for Default Judgment to Clerk (aq)Entry date 09/05/02]13 Notice of filing by Leeland 0. White. Application to Clerk See Exhibit C - this is anFor Entry of Default (aq) [Entry date 9/05/02] Application to Clerk for-THIS IS NOT A NOTICE , THIS IS AN APPLICATION TO THE Enuy of Default and Ex-CLERK (aq) WHO DID THE ORIGINAL SERVICE [137]; AND AT- hibit D - with the At-tached received

TACHED TO IT IS AN ENTRY OF DEFAULT THAT (aq) REFUSED Stamped Enuy the clerkTO SIGN IN VIOLATION OF RULE 55(a) Fed. R. Civ. P. was supposed to make ,THE DEFENDANT THE APOLLO GROUP, INC, HAD ALREADY Exhibit D. (aq) is the

I E X ~ B r r I

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LEELAND 0. WIDTE, Pro Se,:PlaintiffvsTHE APOLLO GROUP dbaUNIVERSITY OF PHOENIX, andARTHUR ANDERSEN, et al,

}}}}}}}Defendants }

UNITED STATES m s n l ~ T WESTERN D I S ~ p ) E J E P A ' 1 . EL PAS&>,=WXAS 49W's ,. C. .. ..

TERiv ~ A . > i l j E P 0 2 ~ 7 T E Docket N u m b e ~

Application to Clerk for Entry of DefaultThe clerk ofthe above entitled court will enter default against the Apollo Group, Inc., of

America , a corporation, in the above cause, for failure of he said defendant to plead, answer orotherwise plead in said cause, as required by law, and oblige.

eeland 0 . White, Plaintiff ProSe815 La CruzEI Paso, Texas 79902(91 5) 276-0704

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RECEIVEDLEELAND 0. WffiTE, ProSe,

SEP 0 5 ZOOZ PlaintiffC ~ E R K , U.S. DISTiliCl\f&lUATWESTERN DISTRICT OF TIOXASsv T ~ ~ G R O U P dba

UNIVERSITY OF PHOENIX, andARTHUR ANDERSEN, et al,

}}}}}}}

UNITED STATES DISTRICT COURTWESTERN DISTRICT OF TEXASELPASO, TEXAS

EP02CA0237Defendants } Docket Number

Entry ofDefault

It appearing that the defendant herein the Apollo Group, Inc., a Corporation ofAmerica,is in default for failure to plead or otherwise defend as required by law.

Default is hereby entered as against the said defendant this the day of

Clerk

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LEELAND 0 . wmTE, Pro Se,PlaintiffvsTHE APOLLO GROUP dbaUNIVERSITY OF PHOENIX, and

}}}}}}

UNITED STATES DISTRICT COURTWESTERN DISTRICT OF TEXASEL PASO, TEXAS

ARTHUR ANDERSEN, et a!, }Defendants }EP02CA0237Docket Number

Affidayit of Failure to Plead or Otherwise Defend inSupport of Application for Entu of Default

State of Texas }County of El Paso }

I, Lee/and 0. White, beingduly swom deposesand says:l. That be is the plaintifi: pro se, and has personal knowledge of facts set forth in thisaffidaviL2. That the plaintiff herein, on the 22 day of July 2002, filed in this cause his complaintagainst the defendants herein.3. That examination of he court files and record in this cause shows that the defendantsherein were served by certified mail, 7000-1530-003-3784-0692 with a copy of summons,together with a copy of plainti.frs co.mplaint, on the 5th Day of August, 2002.4. That more than 20 days have elapsed since the date on which the said defendantsherein were served with summons and a copy of he complaint, excluding the date thereof.5. That the defendants herein have failed to answer or otherwise defend as to plaintiff'scomplaint, or serve a copy of any answer or othe r defense which it might have had, uponLeeland 0, White, Pro Se, Plaintiffof ecord.

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City ofEI PasoCountry ofEl PasoState ofTexas

AFFAPAVIT OF LEET.AND 0. WHITEI, Leeland 0 . White, state under penalty of pe!jwy that on Septembcc 6, 2002 I called

Tuscon. AriZDna to the Law rum ofSnell and Wilmer, LLP . I requested to speak with James K.Mackie, and theperson answering the phone stated that James K. Maclcie were outof own.

I then asked to speak to Gerald F. Giorano, Jr., disclosed who I was, and I was connectedto Gerald F. Giorano, the outof own attorney representing The Apollo Group. 1 talked at lengthon the telephone over several issues.

I then iltfuireJI ti S to whidt dille thilt theApoflo Group lttul received the SUJrulfOIIS andcomplilint. Mr. Giorano stilted. tlud he was answering the compuunt distedAugust 6, 2002.

We tallced a littlemore and then theboth of us bungup the phone. ItwasFriday evening.

Signed this _;2Q dayof Jtpt-e;4 q.o 2002. / ~ ~ - 1 1 2 = : . = - Leeland 0.Whlte

e ~ ~ ( 1 ~ 1 1 . ( 0 c61t(hQ)k 30 aoo.;)..Pip '

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12 18 USC 2071. Concealment, removal, or mutilation generally (Criminal)3 (a) Whoever willfully and unlawfully conceals, removes, mutilates, obliterates, or destroys,4 attempts to do so, or, with intent to do so takes and carries away any record, proceeding,ap, book, paper, document, or other thing, filed or deposited with any clerk or officer of5 lany court of the Unjted States, or in any public office, or with any judicial or public officer of6 f he United States, shall be fined under this title or imprisoned not more than three years, oroth .7 l(b) Whoever, having the custody of any such record, proceeding, map, book, document, pa

er, or other thing, willfully and unlawfully conceals, removes, mutilates, obliterates, falsiies, or destroys the same, shall be fined under this title or imprisoned not more than threeears, or both; and shall forfeit his office and be disqualified from holding any office under

89

10 F,he United States. As used in this subsection, the term "office" does not include the office eld by any person as a retired officer of the Armed Forces of the United States. [137]1112 0 USC 1088 Academic Year13 (a) Academic and award year14 (1) For the purpose of any program under this subchapter and part C of subchapter I of chap-15 34 of title 42, the term "award year" shall be defined as the period beginning July 1 and16 1ending June 30 of the following year.11 r(2J18 1{A) For the purposeo fany program under thissubchapterandpart Cofsubchapter I of19 (chapter 34 o f itle 42, the term "academicyear" shall20

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Case 3:02-cv-00237-DB Document 38 Filed 10/07/2002 Page 1 of 1

IN THE UNITED STATES DISTRICT COURTFOR THE WESTERNQISTRICT OF TEXAS.ELPASODMSION~ : J

. ,., ' )\) .JLEELAND 0. WHITE,Plaintiff, 8 '( !! "I"I '>IIT Vv.

El'-02-CA-237-PRMTHEAl'OLW GROUP, dba,THE UNIVERSITY OF PHOENIX, andARTHUR ANDERSON , et al.,Defendants .

ORDER OF RECUSALOn this day, the Court considered Plaintiff's "Motion for Recusal," filed October 1, 2002,

in the above-captioned cause. PlaintiffLeeland White filed aComplaint with the District Clerkon July 18, 2002, alleging various fraud claims against Defendants. The case was subsequentlyassigned to this Court.

On October 1, 2002, Plaintiff filed aMotion for Recusal requesting that the currentdistrictjudge, the Honorable Philip R. Martinez, recuse himself from the case due to his pastemployment with Defendant'sattorneys, Kemp Smith, P.C.

Although this Court disagrees with the assertions made in the Plaintiff's Motion, theCourt, outofan abundance ofcaution, recuses itself from this matter.

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USDOJ: OLP: MartinezBio Page 1 of2

c~ ~ - ','!: ---

U.S. Department of Justice. . Office ofLegal Policy

About Us History Functions Staff Bios

Resources JudicialNominations

Employment/Internships. omHomepage

[ t i-ome I Judicia l Nomination s I Contact Us IDOl IPhHp R. Martinez

BiographyPhilip Ray Martinez is currently serving his third term as Judge of the 327thJudicial District Court in E'l Paso, Texas. He was first elected to judicialoffice in November of 1990 as Judge ofCounty Court at Law No. 1 at theage of33. Ten months a.fier assuming office, he was appointed to hiscurrent position, a position to which he has been re-elected withoutopposition on three separate occasions.

La


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USDOJ: OLP: Martinez Bio Page 2 of2

In addition to his professional accomp lishments, Judge Martinez has beenactive in community organizations throughout his life. He currently servesas a member of he El Paso Holocaust Museum and Study Center Board ofDirectors. Other cornmunjty organjzations in which he has been involvedinclude the Hispanic Leadership Institute, the UTEP Alumni Association,the National Conference of Christians & Jews, the El Paso CancerTreatment Center, and the Ascarate Junior GolfTouman1ent.Judge Martinez is a frequent author and lecturer at continuing educationconferences and has been honored with munerous awards, including theOutstanding Ex at Burges l.Jigh School (2000), the UTEP College of LiberalArts Gold Nugget Award (1995), the Law Enforcement AchievementAward (1995), and was named El .Paso's Outstanrung Young Lawyer(1992). .Born and raised in El Paso, Judge Martinez received his high schooldiploma from Burges High S c h o o ~ graduating in the top two percent of hisclass. He received a B.A. Degree from the University of Texas at El Paso,graduating with Highest Honors. He earned his Doctorate of JurisprudenceDegree in 1982 from Harvard Law School.He is married and bas two daughters.

[FOI-A]Privacy and Security Notice I

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DOCKET YEAR 2002Note concealment of Original Service which later becomes [137] after [8]Note [11], Exhibit E, page 13 , making Court Aware of Original ServiceSeptember 5, 2002

Proceedings include a l l events.3:02cv237 White v. The Apollo Group, e t a l INTAPP6/7/026/7/02 17/8/02 27/12/02 37/18/02 47/18/02 57/24/02 67/26/02 78/8/02 88/12/02 99/5/02 10

Case assigned to Judge Phi l ip R. Martinez (aq)[Entry date 06/10/02)Motion by Leeland 0 . White to proceed in forma pauperis (jm)[Entry date 06/10/02]Order denying motion to proceed in forma pauperis [1-1) (aq)[Entry date 07/09/02)Motion by Leeland 0 . Whi t e fo r reconsiderat ion of motionto proceed in forma papueris (aq) [Entry date 07/12/02)Order grant ing motion fo r reconsiderat ion of motion toproceed in forma papueris [3-1) (aq) [Entry date 07/18/02)Complaint f i led. I .F .P . Motion Granted (Pages: 9) (aq)[Entry date 07/18/02)Amended complaint by Leeland o. White , amending complaint[5-1) ) (dl1) [Entry date 07/25/02]Amended complaint by Leeland 0. White , amending complaint[5-1] (Pages: 7) (aq) [Entry date 07 /29/02]Motion by Leeland o. White to compel discovery (jm)[Entry date 08/08/02)Motion by Leeland 0. White to compel an Off icer of theUnited States to do his duties (aql [Entry date 08/12/02]Motion by Leeland 0. White for defaul t judgment againstThe Apol lo Group, Arthur Andersen (aq) [Entry date 09/05/02]

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EXHIBITSA- K


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Falsified Docket [17] by Judge Martinez, Concealed [137]To make business for Kemp Smith, when Defendant was already 3 days in default.

Proceedings inc lude a l l events .3:02cv237 White v . Th e Apollo Group, e t a l INTAPP9/6/02 179/6/02 18

9/9/02 199/9/02 20

9 /1 2/02 21

9/16/02 229/16/02 239 /1 6/02 24

9/16/02 259/16/02 26

9 / 16/02 27

Return of serv ice executed as to Th e Apol lo Group on8/29/02 (aq) [Entry date 09/09/02)Order grant ing mo t i on fo r James K. Mackie and Gerald F.Gi ordanto, J r . to appear pro hac vice [14 - 1) (aq)[Entry date 09/09/02]Ex Par te Motion by Leeland 0 . White to Correc t Cle r i c a lEr ro r (aq) [Entry date 09/09/02]Motion by Leeland 0 . White to s t r i ke Motion fo r moreDef in i te Statement (aq) [Entry date 09/09/02][Edi t date 09/09/02)Amended Motion by Leeland 0 . Wh i t e to s t r i ke Defendant ' smotion fo r more de f in i e t s ta tement (aq)[Entry date 09/12/02]Response by Leeland 0 . White motion fo r more de f in i t es ta tement [16-1) (aq) [Entry date 09/16/02}Response by Leeland 0 . White(aq) [Entry date 09/16/02} to motion response [15-1}Response by Leeland 0 . White motion fo r James K. Mackie andGerald F. Giordanto, J r . to appear p ro hac vice [14-1] (aq)[Entry date 09/16/02)Response by Th e Apol lo Group motion to Correc t Cle r i c a lEr ro r [19-1} (aq) [Entry date 09/17/02]Objec t ion by Th e Apol lo Groupo Pla in t i f f ' s Appl ica t ion toCle r k f o r Entry o f Defau l t and Pla in t i f f ' s Motion fo rJudgment by Defaul t by the Court [10-1] (aq)[Entry date 09/17/02]Memorandum by The Apol lo Group in suppor t of motion fo r

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EXHIBITS A - K


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Proof of Concealed original service [137], October 15, 2004. However court was awareof document on September 5, 2002 by affidavit [1 1] establishing willful concealment.

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Proceedi-ngs include a l l e v e n ~ s . ._3:02cv237 White v. The Apollo Group, e t a l \ A P ~ ~ 6/ 7 / 026/7/02 1

7/8/02 27/12/02 37/18/02 47/18/02 57/24/02 67/26/02 78/8/028/8/02 1378/12/02 99/5/02 109/5/02 11

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