Court: For-profit colleges misled criminal justice students.

Byline: Barbara L. Jones

The Minnesota Supreme Court approved a path for financial recovery from two defunct for-profit universities recently when it found that the state had established a consumer fraud claim even though it did not have direct evidence of reliance by each damaged student.

The court said a causal nexus under the Minnesota Consumer Fraud Act,Minn. Stat. 8.31, could be established by statements and other conduct by the Minnesota School of Business and Globe University that misled students about the value of criminal justice decrees offered by the school.

The 5-2 opinion in Minnesota v. Minnesota School of Business, Inc., et al., was written by Justice Paul Thissen. Justice G. Barry Anderson concurred in part and dissented in part, joined by Chief Justice Lorie Gildea.

Criminal justice program

The schools have found themselves the object of controversy in recent years, but this case focuses on their criminal justice program. The program was touted as preparing students to be a police or probation officer.

The court said that the schools' claims about the value of their criminal justice degrees were false. To become a police officer in Minnesota, one must have either a criminal justice degree from a program approved by the Police Officer Standards and Training Board or a bachelor's degree in any field and complete a certified professional peace officer education program offered by a college. Theschools were not P.O.S.T. Board approved, and theschools' credits did not transfer to any college that offered certified P.P.O.E. programs.The schools' curriculum also did not meet the criteria for probation officer employment.

The District Court held a 17-day bench trial that featured more than 60 witnesses, including 15 students who had enrolled in the criminal justice program. The court ruled that the schools violated the Consumer Fraud Act where theattorneygeneral proved a causal nexus between theschools'misrepresentations and the harm suffered by the criminal justice program students required under the MCFA.

The court also established a process for both the testifying and nontestifying students to submit claims for restitution, including a rebuttable presumption of injury and causal nexus. The parties were to agree on restitution amounts and if they could not, submit the claim to a special master.

The Court of Appeals upheld the order on behalf of the students who testified but reversed as to the nontestifying students. It called...