BUSINESS

Indy test prep firm leaving thousands in limbo

Mark Alesia
IndyStar
The home page of The College Network's website.

A local college test preparation company investigated last year by The Indianapolis Star is insolvent and its owners are illegally trying to shield remaining assets from creditors, according to a federal lawsuit.

Southeast Financial Credit Union of Franklin, Tenn., filed the lawsuit in U.S. District Court in Indianapolis claiming The College Network, which operates out of a Northside office, owes it more than $12 million. The credit union wants a court-appointed receiver to take over management of the company.

The credit union holds about $35 million in loans taken out by 10,000 TCN customers nationally. It says TCN agreed to pay for loan defaults by its customers.

The Star's story detailed how TCN sent defaulted loans to a Las Vegas collection agency owned by Gary Eyler, the same person who owns TCN.

TCN customers pay up front for years worth of the company's online "learning modules." They use personal loans with payments starting immediately — not student loans with lower interest and deferred payments — because TCN is not a school. Southeast Financial was the largest supplier of the loans.

The lawsuit names TCN, Eyler, current TCN executive Mark Ivory and former TCN executive Gary Fair. Ivory said in an email that the company had not yet been served with the lawsuit.

"We will continue to support our customers, which are our main business function, and we will continue to defend our company against unfair allegations," Ivory wrote.

Attorneys general in Indiana and New York sued TCN in June. New York's attorney general said in a statement: "Hard-working New Yorkers — many of them single moms and immigrants — were duped into buying expensive, inadequate study materials and access to 'academic advisors' who were falsely touted as experts."

Indiana attorney general Greg Zoeller said TCN used "unfair and abusive practices" on customers.

The credit union says TCN's internet portal is the company's "sole remaining asset" and that the defendants are trying to move it to a newly formed company to avoid obligations to creditors.

Southeast Federal, which has had a business relationship with TCN since 2003, said that when the credit union signed a contract extension with TCN last year, it was not made aware that the company was "insolvent, financially weakened by years of dwindling and slow sales and poor business performance."

TCN, incorporated in 1995, also attracted the attention of Indiana's attorney general in 2004. The company signed an "assurance of voluntary compliance" outlining detailed requirements for notifying customers in Indiana about when and how they can cancel and how soon refunds must be delivered. It mandated contract cancellations and refunds for two people.

Web page from The College Network.

The Star's story in August 2014 described allegations of outright fraud and high-pressure sales tactics to sign up customers, often nurses, looking to improve their professional lives. "Program advisers" working on commission came to Indianapolis for training and fanned out nationally, signing up customers in places such as Starbucks restaurants and visiting the homes of prospective students.

At least 75 former TCN customers and program advisers have contacted The Star since publication of its original story. Many of them were waiting months to receive hundreds of dollars to pay fees for college credit exams. Those fees were collected up front by TCN, rolled into the original loan, with TCN promising to send the money when customers were ready to take exams.

One customer, Jamie Andrus of Phoenix, contacted the Star on Saturday, saying she had tried unsuccessfully for 10 months to recover fees for three exams.

"I fear that I will forever be robbed of my school funds," she wrote. "Hopefully other nurses who have more means than I do can help to resolve the issue. For now, I feel it is a lost cause."

The Star's original story quoted a woman from Greenwood whose complaint, contained in court records, said she "spent $3,000 for nothing, and that they sold her materials for exams she didn't need."

The story also noted another frequent allegation — TCN creating the false impression that it was affiliated with Excelsior College, an accredited school in New York.

Indiana State University has developed learning materials for TCN and was listed among "University Partners" on the homepage of TCN's website when the state of Indiana filed its lawsuit. Indiana State's general counsel said the relationship had been terminated and that the school's name should not be on TCN's website. It was later removed.

Purdue University is still listed as a university partner of TCN. Purdue's relationship involves the Lean Six Sigma certificate program, for improving business processes. Purdue was not mentioned in any of the complaints reviewed about TCN. A school spokesman said in June that Purdue's relationship with TCN is in "limited scope" and not related to any undergraduate degree credit.

Contact Mark Alesia at (317) 444-6311 and follow him on Twitter: @markalesia.