Marina Awed, 27, has little hope of ever receiving the $15,000 in financial aid she was due in January. The third-year law student borrowed the money to cover her rent, utilities, food and a prep course for the bar exam.
No one at her school, Western State College of Law at Argosy University in California, could explain what happened to the money. As the semester went on, administrators became preoccupied with finishing out the term as Argosy seemed destined to close.
Still, Awed has questions. She wants answers.
On Friday, Awed joined two other Argosy students in filing a motion seeking information from the school’s court-appointed receiver about how more than $13 million in federal financial aid went missing.
“What happened to us is a crime, and no one is doing anything about it,” Awed said. “I’m committed to seeing this through and figuring out what happened.”
Argosy’s chain of 22 career schools stretching from Virginia to California was thrown into chaos in February when the Education Department cut off federal student loan and grant funds. The agency accused Argosy’s parent company, Dream Center Education Holdings, of illegally using millions of dollars owed to students for payroll and other expenses.
Neither Dream Center nor its receiver, Mark Dottore, have provided a comprehensive account of who exactly misappropriated the money or where each of those dollars went.
In a letter sent in February to Dream Center Chairman Randall K. Barton and Dottore, the Education Department said it was requesting information about the money — student loan funds left over after tuition was covered, known as credit balance refunds. But the records submitted have been incomplete or inconsistent with other information on file at the department, according to the agency.
Eric Rothschild, an attorney at the National Student Legal Defense Network who is representing the students, has asked the court for an expedited discovery process to learn who benefited from the diverted funds, which could determine whether students can recover the money.
“If the money went to pay electric bills . . . that’s going to create one set of circumstances. If it went to the perpetrators’ banks accounts, that would create another set of circumstances in terms of recovery,” Rothschild said. “We need answers quickly because the chances of getting the money back would be greater.”
The Education Department’s inspector general is looking into the Argosy matter, according to the department, which declined to provide additional information.
In handling federal loans and grants, the department requires that more than one office and more than one individual be involved in processing student aid at any college or university. Typically, staff members within a school’s financial aid office award aid to students, and the bursar’s office is charged with receiving and disbursing federal funds to student accounts. That means there were probably several people involved in handling the money that the Education Department sent to Argosy to pay students.
"Money came from the Department of Education. It had to go to a bank account. There is no wire transfer to a mattress,” Rothschild said. “There should be an electronic record.”
Dottore has filed conflicting court reports on the whereabouts of the money. Initially, he said the Education Department never provided the financial aid dollars, but weeks later Dottore said Dream Center falsified records to show the loan refunds had been paid.
Krista Kotalik, who works for Dottore Companies, said, “There is still a very thorough and active investigation. While we have a lot of the information, we have to be careful to ensure that we are 100 percent correct before we disclose anything.”
Dream Center entered into receivership, a form of bankruptcy, in January to keep Argosy, South University and Art Institutes campuses running while sorting out its finances. The Los Angeles company struggled to turn the for-profit colleges into thriving nonprofit schools after purchasing them in 2016 and spent months trying to close and sell campuses to meet financial obligations.
Without the critical source of revenue from federal student aid, Dream Center had a slim chance of keeping Argosy open. Campuses across the country closed in late March, but Western State was given a reprieve because of the efforts of Awed. She petitioned the courts to extend enough funding to allow the law school to remain open through the end of the semester. That way, she and her 76 classmates could complete their legal studies and graduate.
A federal judge in Ohio ordered the receiver last month to keep Western State open until May 29 and gave the law school until April 26 to find a new owner. It was a bittersweet victory for Awed. She will graduate. But without the financial aid refund, she was forced to give up her apartment and move in with her parents who live an hour away from campus.
“Law school is hard on its own, but this semester has been horrifying for me and everyone else at our school,” she said. “I’ve been very stressed and spread very thin because of all of this.”
Awed said she is frustrated with the lack of information from the Education Department. Intervening in the receivership seems like the only way to find out why millions of dollars in federal aid never made it into the hands of students who needed the money, she said.
“Everyone is blaming the other person, and still to this day no one is explaining what happened,” Awed said. “There are a lot of interests involved, but no one is taking students’ interests into account.”