Weld asserts vendetta led to college’s failure

By Glen Johnson
Associated Press / December 16, 2009

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A federal official upset about losing a previous job gained revenge by triggering the 2005 bankruptcy of a Kentucky college run by former Massachusetts Governor William F. Weld, two attorneys contend.

Former White House counsel Lanny Davis, now representing Weld, said an Education Department official harbored a vendetta because Weld led a criminal probe against his former employer while serving as a federal prosecutor during the 1980s.

Davis spoke as another attorney filed a lawsuit yesterday in Kentucky. The lawsuit alleges that an Atlanta-based accreditation agency, the Council on Occupational Education Inc., unjustly withdrew its stamp of approval for Decker College in Louisville after pressure from the federal official, Ralph LoBosco.

A Decker official claims in a sworn affidavit that LoBosco told him the demise of his previous employer, Wilfred American Education Corp., diminished his lifestyle.

LoBosco, who works in an Education Department regional office in Kansas City, Mo., that supervised Decker, did not return a call seeking comment. A spokesman at the Department of Education in Washington was reviewing specifics before responding.

Decker’s loss of accreditation led the Department of Education to shut off $30 million in Pell Grants and other student financial aid, forcing the school to file for bankruptcy. That stranded 3,700 students who had been participating in its carpentry, electrical, and heating and air conditioning repair classes in Louisville, Ky.; Atlanta; Indianapolis; and Jacksonville, Fla.

About 500 employees lost their jobs.

The collapse not only cost Weld professionally and personally - he had guaranteed a $3 million loan in a last-ditch move to keep Decker open - but also politically. The Republican sought to stage the rare feat of serving as governor of two states, but his 2006 campaign in New York was undercut by conservative opposition. It also was stung by questions about his management skills following stories about Decker’s demise.

Critics said the school was a diploma mill that falsified attendance records and preyed on poor students who had been encouraged to seek federal loans.

Weld served as a Decker board member, and as chief executive for its final 10 months, after his private equity firm took a stake in the school in 2002.

FBI agents raided Decker in October 2005, but the US attorney’s office in Kentucky closed the case this year without bringing criminal charges. Weld was never accused of wrongdoing, although he’s being sued for repayment of the $3 million loan.

Weld could be relieved of that debt if Decker wins its case.

Davis said he plans to ask Congress and the Education Department’s inspector general to investigate whether LoBosco had a conflict of interest or exerted unjust pressure.

The accreditation agency said it decertified Decker because it had been unaware of the extent to which the school taught its courses online.