The president of Goodwin University and a trustee of the University of Bridgeport agreed to pay a $1.02 million fine after writing money orders to prevent one of his other educational institutions, Stone Academy on Burnside Avenue, from reporting an excessive default rate on student loans.
The agreement calls for Goodwin University founder and president Mark Scheinberg to disassociate himself from Stone Academy, and comes with an agreement to retire in five years from the university. The full press release issued May 27, 2022 from federal justice department is here:
As part of its Title IV eligibility, Stone Academy reports its “cohort default rate,” which is the percentage of the institution’s federal student loan borrowers who default, or are expected to default, within a specified time. Too high a rate jeopardizes an institution’s ability to continue to participate in the federal education department’s Title IV loan program. According to the settlement agreed to that Scheinberg pay $1.02 million in fines, between February 2015 and March 2019 Scheinberg and Stone Academy mailed 154 direct payments to loan providers on behalf of 102 students so they would not be classified as being in default in reporting to educational officials. The agreement issued Friday noted that Scheinberg made the payments without the students’ knowledge or consent.
The settlement also stipulates Scheinberg cease involvement in Stone Academy’s operations, and divest direct ownership, of both Stone Academy and another for-profit school, Creative Workforce LLC, doing business in the New Haven area as Paier College of Art. Scheinberg also agreed to retire as president of Goodwin University and from the board of trustees of the University of Bridgeport within five years.
In July, 2020 Scheinberg orchestrated a major deal: Goodwin University purchased the University of Bridgeport for $32 million. The Department of Economic and Community Development agreed to provide a $7.5 million low-interest loan to cover investment in the Bridgeport campus. The deal was finalized in May, 2021. As part of the merger and acquisition, Paier College of Art was renamed Paiere College and relocated from New Haven to the Bridgeport campus.
In a statement issued Friday, Scheinberg said the allegations resulted from personal funds he paid on behalf of 102 Stone Academy students over four years.
“While it’s important to note that any increase in Stone’s default rate resulting from my actions would have been minor and still well below the thresholds that could have impacted the eligibility of Stone to receive federal funding, I have chosen to settle this issue in order to put the dispute behind me,” he said.
He continued: “At 66 years old with much yet to accomplish, I have chosen to devote my remaining educational career to the important work that brings joy to my life — creating new opportunities that students with diverse talents and backgrounds can use to succeed.”
Goodwin University’s board of trustees also published a statement Friday saying it “is aware of the civil settlement agreement between the federal government, Stone Academy and Mark Scheinberg regarding a regulatory matter related to Stone Academy. Goodwin University is not affiliated with Stone Academy nor is Goodwin University a party to the settlement or involved in any way.”
The board also said it “has been planning for the eventual retirement of our founding president for several years now. The civil settlement agreement that Mark Scheinberg retire within five years does not change our plans. We will continue to work with the Board’s presidential succession planning committee to ensure a smooth transition of leadership so that we can advance Goodwin’s mission for years to come.”
Newly appointed U.S. Attorney Vanessa Avery said educational institutions that attempt to hide high student loan default rates not only risk forfeiting their and their students’ eligibility to receive federal funds, but federal enforcement action.
