Federal Judge Approves Landmark Settlement Holding For-Profit College Executives Personally Accountable for Fraud
FOR IMMEDIATE RELEASE
February 12, 2025
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Federal Judge Approves Landmark Settlement Holding For-Profit College Executives Personally Accountable for Fraud
Student Defense today announced the final approval of a classwide settlement agreement with former executives of the Illinois Institute of Art, Dream Center Education Holdings (DCEH), and the Dream Center Foundation, finally holding them accountable for concealing the Illinois Institute of Art’s loss of accreditation from students in 2018 — an action that devalued students’ degrees and impeded their ability to transfer credits. Under the terms of the settlement, former Dream Center school owners executives would contribute $4.25 million to students. This amount is on top of the loan discharges and other recoveries by students through the litigation and related actions.
We believe this order is the first time individual executives of a national for-profit college chain had to pay students after being sued personally.
“This is a warning to for-profit college owners and executives that if they deceive and defraud students, they won’t be able to escape the consequences,” said Student Defense Litigation Director Eric Rothschild. “Higher education will be better for all students when the leaders of colleges and universities know they have to tell students the truth or be held accountable. This settlement makes that clear.”
This ruling comes after the United States Court of Appeals for the Sixth Circuit reversed and remanded a lower court ruling that barred students from suing owners and executives of the Illinois Institute of Art for hiding the school’s loss of accreditation. The settlement vindicates former Art Institute students Emmanuel Dunagan, Jessica Muscari, Robert J. Infusino, Stephanie Porreca, Keishana Mahone, and Lakesha Howard-Williams for their persistent pursuit of justice for themselves and their classmates over six years, in multiple forums.
In addition to this settlement, Student Defense sued Education Secretary Betsy DeVos on behalf of former Dream Center students in 2018 for continuing to provide federal funds to the schools after they lost their accreditation and eligibility to participate in the Title IV loan program during a change in ownership process. As a result, the Department of Education canceled approximately $11 million in debt incurred by students. Student Defense also represented students intervening in the Dream Center Receivership, leading the government to cancel over $13 million in student aid to Argosy students after financial aid living stipends were not accounted for.
Last year, the Biden administration canceled more than $6 billion in debt for 317,000 former students of the Art Institutes.