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Rutledge Settles with ITT Tech and CUSO for High Pressure Tactics

Rutledge Settles with ITT Tech and CUSO for High Pressure Tactics

Fri, Jun 14, 2019

Affected Arkansans to receive $1,073,688 in student debt relief

LITTLE ROCK – Arkansas Attorney General Leslie Rutledge today has reached a settlement with Student CU Connect LLC (CUSO) for former ITT Tech students resolving a multistate investigation which alleged that ITT and CUSO used high pressure tactics to accept CUSO loans. These student loans carried higher interest rates than federal loans, ultimately resulting in a high number of loan defaults.

“ITT and CUSO deceived Arkansans by using illegal and high pressure tactics and they must be held responsible for their actions,” said Attorney General Rutledge. “This settlement provides relief to Arkansans who attended ITT Tech and incurred debts for a questionable education that they could neither repay nor discharge.”

Attorney General Rutledge and other states’ attorneys general alleged that ITT, with CUSO’s knowledge, offered students temporary credit upon enrollment to cover the gap in tuition between federal student aid and the full cost of the education. The temporary credit was due to be repaid before the student’s next academic year, although ITT and CUSO knew or should have known that most students would not be able to repay the temporary credit when it became due. Many students complained that they thought the temporary credit was like a federal loan and would not be due until six months after they graduated.

When it became due, however, ITT pressured and coerced students into accepting loans from CUSO, which for many students carried high interest rates, far above rates for federal loans. Pressure tactics used by ITT included pulling students out of class and threatening to expel them if they did not accept the loan terms. Because students were left with the choice of dropping out and losing any benefit of the credits they had earned – ITT’s credits would not transfer to most other schools – most students enrolled in the CUSO loans. Neither ITT nor CUSO made students aware of the true cost of repayment for the temporary credit until after the credit was converted to a loan.

Not surprisingly, the default rate on the CUSO loans was extremely high (projected to exceed 90%) due to both the high cost of the loans as well as the lack of success ITT graduates had getting jobs that paid enough to make repayment feasible. The defaulted loans continue to affect students’ credit ratings and are usually not dischargeable in bankruptcy.

Under the settlement, the CUSO, under threat of litigation, has agreed that it will forego collection of the outstanding loans. The CUSO, which was organized for the sole purpose of providing the ITT loans, will also cease doing business. Under the Redress Plan, CUSO’s loan servicer will send notices to borrowers about the cancelled debt and ensure that automatic payments are cancelled. The settlement also requires the CUSO to supply Credit Reporting Agencies with information to update credit information for affected borrowers.

ITT filed bankruptcy in 2016 amid investigations by state attorneys general and following action by the U.S. Department of Education to restrict ITT’s access to federal student aid. The CUSO Loan program originated approximately $189 million in student loans to ITT students between 2009 and 2011.

The settlement includes $1,073,688.40 in debt relief for 128 Arkansans.

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Rutledge Announces 5th Former PFH Employee Arrested
Rutledge Welcomes Summer Session I Law Clerks

Rutledge Welcomes Summer Session I Law Clerks

Thu, Jun 13, 2019

Says ‘The clerks perform essential research and writing projects’

LITTLE ROCK Arkansas Attorney General Leslie Rutledge welcomed a new class of law clerks during the first summer session to the Attorney General’s office. These law students work in various departments assisting with legal research, drafting memos and legal documents and accompanying lawyers at trials, client meetings and hearings.

“The Attorney General’s office law clerk program gives law students the opportunity to work with some of the state’s top attorneys,” said Attorney General Rutledge. “The clerks perform essential research and writing projects which provides invaluable experience in a service-driven learning environment.”

Lauren Ford, a second-year student at the University of Arkansas a School of Law, is clerking in the Criminal Department. She graduated from Ouachita Baptist University with a major in political science in 2018. Ford is from Cabot and graduated from Vilonia High School in 2014.

Grace Lee, a third-year student at the University of Arkansas a School of Law, is clerking in the Public Protection Department. She graduated from Hendrix College in 2017 with a degree in politics. Lee is from Gosnell and graduated from the Arkansas School for Mathematics, Sciences and the Arts in 2013.

Jessica Lowery, a third-year student at the Texas Southern University Thurgood Marshall School of Law, is clerking in the Public Protection Department. She graduated from the University of Arkansas – Little Rock in 2016 with a Bachelor of Arts in psychology. Lowery is from Turrell and graduated from Marion High School in 2013.

Clayton Rowe, a third-year student at the University of Arkansas a School of Law, is clerking in the Medicaid Fraud Control Unit. He graduated from John Brown University in 2015 with a Bachelor of Science in construction management. Rowe is from Hope and graduated from Siloam Springs High School in 2011.

Cheston Wright, a third-year student at the University of Arkansas a School of Law, is clerking in the Civil Department. He graduated from Henderson State University with a Bachelor of Arts in political science in 2014 and a Masters of Business Administration in 2015. Wright is from Arkadelphia and graduated from Arkadelphia High School in 2010.

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Rutledge Releases Statement Following Raveendran Guilty Plea

Rutledge Releases Statement Following Raveendran Guilty Plea

Wed, Jun 12, 2019

Says, ‘egregious criminal conduct underscores our decision to charge him initially’

LITTLE ROCK – Arkansas Attorney General Leslie Rutledge today released the below statement following the news that Robin Raveendran, former Preferred Family Healthcare Director of Program Integrity and Director of Operations has pleaded guilty to conspiracy to commit bribery in U.S. District Court for the Western District of Missouri. Raveendran is also currently charged in Arkansas with two counts of Medicaid fraud.

“Raveendran’s plea based on his egregious criminal conduct underscores our decision to charge him initially for Medicaid fraud following our extensive investigation involving millions of documents,” said Attorney General Rutledge.

Separate from the federal charges, Raveendran was arrested by the Arkansas Attorney General’s office Medicaid Fraud Control Unit in June 2018 and is charged with two counts of Medicaid fraud, one Class A felony and one Class B felony. He is accused of coordinating an effort which reimbursed his company for 20,109 illegally billed mental health services for a total of $2,277,816.05 from January 1, 2015, to October 19, 2017.

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Rutledge Announces Additional Charges for New Beginnings Health Services Owner

Rutledge Announces Additional Charges for New Beginnings Health Services Owner

Thu, Jun 6, 2019

Bazzelle lied during investigation

LITTLE ROCK – Arkansas Attorney General Leslie Rutledge announced today an additional and related charge against the owner and CEO of New Beginnings Behavioral Health Services LLC, Chirie Bazzelle.

Bazzelle, 46, of Benton, is accused of giving a false statement to the Medicaid Fraud Control Unit during the course of an investigation. During a June 2018 interview, Bazzelle stated that she had no prior knowledge of a letter sent by then-Sen. Jeremy Hutchinson on behalf of New Beginnings Behavioral Health Services to the Department of Human Services Division of Behavioral Health requesting she be allowed to operate in Cleveland County. Email documentation proves that Bazzelle reviewed the letter and sent edits to the letter prior to its submission.

In April, Bazzelle was arrested for failing to report contracts with Milton “Rusty” Cranford, Robin Raveendran, and her former husband Michael Grimes who is a convicted felon. She was also accused of continuing the employment of individuals who had been convicted of Medicaid fraud and ignoring additional Medicaid fraud claims of other employees. Bazzelle has been listed as the sole owner of New Beginnings Behavioral Health Services in Pulaski County since 2010. Bazzelle was also accused of attempting to evade taxes from January 2014 through February 2019.

“Criminals who steal from Arkansans and lie during investigations must be held accountable,” said Attorney General Rutledge.

In June 2018, Rutledge announced the arrest of Raveendran, former Preferred Family Healthcare Director of Program Integrity and Director of Operations for scamming the Arkansas Medicaid Program of $2.2 million. Raveendran is also a former Senior Auditor with Arkansas’s Medicaid Program Integrity Unit. In August, Rutledge announced the arrest of former Preferred Family Healthcare Director of Billing, Helen Balding, for similar actions. In October, Rutledge announced the arrest of Vicki Chisam who is accused of being an accomplice to Raveendran, Balding and other individuals known and unknown to the Office of the Attorney General.

The Office of the Medicaid Inspector General assisted the Attorney General’s office in this investigation, which will be prosecuted in cooperation with 6th Judicial Prosecutor Larry Jegley.

Medicaid fraud occurs when providers use the Medicaid program to obtain money to which they are not entitled. To report Medicaid fraud or abuse or neglect in residential care facilities, contact the Attorney General’s Medicaid fraud hotline at (866) 810-0016 or oag@arkansasag.gov.

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Rutledge Announces Nearly $72,000 Restitution for Social Security Fraud

Rutledge Announces Nearly $72,000 Restitution for Social Security Fraud

Tue, Jun 4, 2019

Says, ‘punish criminals who receive Social Security benefits based on deception and deceit’

LITTLE ROCK – Arkansas Attorney General Leslie Rutledge today announced a Sebastian County man has been sentenced for social security fraud.

Carl Smith, 43, from Fort Smith, pleaded guilty in February to one count of making a false statement. He has been sentenced to 13 months in prison, three years on probation and ordered to pay $71,946 in restitution to the Social Security Administration.

“I will not tolerate individuals who commit fraudulent activities to steal from taxpayers,” said Attorney General Rutledge. “Investigators in my office work closely with federal authorities to crack down and punish criminals who receive Social Security benefits based on deception and deceit.”

Law enforcement officers from the Arkansas Cooperative Disability Investigation (CDI) Unit conducted the investigation. The CDI Unit is a cooperative effort supported by the Social Security Administration, Social Security Administration – Office of Inspector General (SSA-OIG), the Arkansas Attorney General and Arkansas's Disability Determination for Social Security Administration (DDSSA). The case was prosecuted by Assistant U.S. Attorney Carly Marshall from the Office of United States Attorney Duane (DAK) Kees.

Two special agents and an analyst from the Attorney General’s Office are assigned to Arkansas’s CDI Unit which began operation in October 2015 as a state and local cooperative effort funded by the Social Security Administration. The mission of the CDI Unit is to combat fraud by investigating questionable statements and activities of claimants, medical providers, interpreters or other service providers who facilitate or promote disability fraud.

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