2/7/2017 Doing a disappearing act with students' dreams
Texcel trade schools apparently cheated thousands | Houston Chronicle Archives Easy Print...

Houston Chronicle MAY 21, 1989 

Doing a disappearing act with students' dreams  Texcel trade schools apparently cheated thousands  NANCY STANCILL  Staff  Entrepreneur Bill Merrill called his chain of trade schools Texcel, suggesting a standard of statewide excellence. But the name turned out to be a cruel joke on legions of Texas students. And when the schools closed last year, it seemed that Texcel excelled mostly in disappearing acts. Merrill and millions of dollars in student loan money are unaccounted for. Texcel was a catchy name that appealed to Merrill's canny marketing instincts. When the brash Houston businessman opened his first Texcel Career Center in 1986, he bragged he had found a gold mine. And as he tapped the rich vein of easy federal student aid, Merrill expanded his empire with nine schools stretching from Port Arthur to Austin. Texcel centers sprang up near freeway exits and strip shopping centers to mine the seemingly endless lode of low­income students. Student loans were flowing so freely in 1987 that Merrill rewarded himself and a few top staffers with a lavish Las Vegas gambling trip. But last summer, state officials discovered that Texcel was running an unlicensed school on Parker Road in north Houston. The security school ­ unlicensed, unaccredited and not approved for disbursing federal aid ­ cheated hundreds of Houston students who now owe thousands of dollars in student loans for security officer training the state won't accept for certification. The unlicensed school brought to light other festering regulatory and financial problems. The federal government ­ finding similar irregularities in four other Texcel schools ­ dropped Texcel from the student loan program, and the Merrill empire crumpled in a tangle of unpaid bills and unkept promises. Now even his bankruptcy lawyers are looking for the stocky, smooth­talking Merrill. The 47­year­old Texcel tycoon missed a key Houston court hearing more than a month ago, and his whereabouts are unknown. Chronicle attempts to contact Merrill were unsuccessful. And eight months after the schools closed, investigators from three government agencies are focusing on Merrill. An audit just released by the Inspector General's Office of the U.S. Department of Education says Merrill owes $3 million in student loans unlawfully disbursed from five Texcel campuses that were unlicensed, unaccredited or both. Auditors uncovered a trail of deception, finding that Texcel had gained nearly 1,000 student loans by falsely stating that those students were attending class at two locations that had state and federal approval. In reality, students were spread among five ineligible centers from Austin to Pasadena. The audit recommended a $500,000 fine. Merrill has not responded to the audit. Further action could include civil lawsuits or criminal charges, federal officials said. http://nl.newsbank.com/nl­search/we/Archives?p_action=print&p_docid=0ED7AF16D3852F5F

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2/7/2017 Doing a disappearing act with students' dreams
Texcel trade schools apparently cheated thousands | Houston Chronicle Archives Easy Print...

The Texas attorney general's office and the State Board of Private Investigators and Private Security Agencies also are investigating. Records examined by investigators show that Texcel received about $12.5 million in federal grants and loans during its short, lucrative life from 1986­88. Yet records indicate that less than $4 million was spent on the educational operation. Supported by the federal money, the chain processed thousands of students through expensive programs state authorities eventually criticized as shoddy. The company's assets appear to be depleted. Amid the fallout, Merrill's corporation, called Broussards Schools Inc., filed bankruptcy proceedings a few months ago, listing 140 creditors and debts approaching $1 million. Beyond the investigations and legal proceedings, the magnitude of the Texcel debacle illustrates how the state's fragmented regulatory system leaves trade school students unprotected. Previous Houston Chronicle stories have detailed widespread loan defaults by students from Texas trade schools and sketchy state regulation that permits poor teaching and other endemic problems. In the Texcel case, a sizable chain was able to operate on the edge of legality for nearly two years because none of the three agencies regulating it had the total picture of how poorly the chain was running, state officials said. ``If one person had been looking at all of the schools, certainly the one that sneaked in there and wasn't licensed by anybody would have been caught,'' said Joe Price, who heads the Texas Education Agency's division of proprietary schools. TEA regulated two Texcel schools that offered a variety of subjects. As it turned out, the Parker Road school was able to operate without a license for at least six months ­ turning out hundreds of students ­ before drawing the scrutiny of the private investigators' board, which regulates security schools. But even if the agency had known about the school's existence, it would have been hard to shut it down, said Ken Nicolas, a board spokesman. Ironically, the board has no jurisdiction over an unlicensed school because it may only regulate licensed schools, Nicolas said. Nothing in the law prohibits an unlicensed school. The law authorizes the board only to refuse to certify the credentials of students from those schools. So when graduates of the Parker Road school began applying to the state board last summer for security officer certification, the board was obliged to turned them away, Nicolas said. Typical of the students who were hurt is Jesse Sanchez, 35, who lives in a housing project in east Houston. Sanchez was waiting in the unemployment line last summer when two Texcel recruiters wooed him with promises of a lucrative career as a security officer. All he had to do was walk next door, where Texcel had conveniently located its strip­center security school next to the Texas Employment Commission office. He was soon signed up for a $3,200 student loan to underwrite Texcel's 300­hour security course. Midway through the course, the Parker Road location mysteriously closed down and Sanchez and the other students were shuttled across town to another Texcel center where they finished the course. http://nl.newsbank.com/nl­search/we/Archives?p_action=print&p_docid=0ED7AF16D3852F5F

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2/7/2017 Doing a disappearing act with students' dreams
Texcel trade schools apparently cheated thousands | Houston Chronicle Archives Easy Print...

Then Sanchez applied for a job and found out that the state would not certify his expensive Texcel training. Nicolas said the Parker Road licensing problem prompted the board to begin investigating other Texcel security schools. All Texcel locations closed down in September, but the agency has continued an investigation that is expected to be completed shortly, he said. Nicolas said the board also is investigating complaints from students that Texcel and other security schools charged exorbitant prices for 300­hour security courses when the students could qualify for state certification with low­cost, 30­hour courses. Nicolas said the board could permanently bar Texcel or its principals from operating again in Texas and levy fines if the investigation shows violations at the licensed sites. But Nicolas said the best the board can do for the students who graduated at the unlicensed location is to advise them to file a lawsuit or a complaint with the attorney general's office. William O. Goodman, assistant chief of the attorney general's consumer protection division, said his office will investigate the licensing problem. ``In my judgment it would be deceptive trade practices for a company to operate if they're not registered,'' he said. But in the judgment of former students, employees and business associates of Texcel, the state's concern is too little, too late. ``The people who are really suffering are the poor kids who went there and studied so hard to become professional,'' said Leo Torres, who worked as the Parker Road school's director of training. ``The people who really need to be punished are probably taking a vacation in South America,'' he said. Torres, 50, who lives here and is unemployed, blames Merrill and several upper­level administrators in the Texcel chain. He said the Parker Road campus administrators were told that they should process guaranteed student loans by using the licensing number assigned to a Texcel campus on Wayside. Torres said that when state board officials began questioning graduates' credentials last summer, he realized he had been tricked into deceiving the federal government. ``By that time we had already run seven or eight classes through there. We ran a real good school with real good intentions, but it was a waste of time for everybody,'' Torres said. Some former students described the Parker Road location as makeshift, saying it had minimum equipment and only one restroom for dozens of students. ``It was crowded, it was noisy and our feet hurt because we marched around the parking lot in our tennies,'' said Jesse Sanchez. And as Texcel was cranking up the Parker Road location early last year, complaints were beginning to mount at the TEA about the chain's schools at 8211 Channelside and in Port Arthur. TEA files include letters from Texcel employees complaining of bounced paychecks, angry suppliers and students who were not provided with basic equipment for courses.

http://nl.newsbank.com/nl­search/we/Archives?p_action=print&p_docid=0ED7AF16D3852F5F

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2/7/2017 Doing a disappearing act with students' dreams
Texcel trade schools apparently cheated thousands | Houston Chronicle Archives Easy Print...

During the good times, investigators have learned, Merrill hosted a May 1987 Las Vegas gambling trip for some of his close associates. But those good times didn't roll down to rank and file employees. Clo and Bill Durant of Groves taught at the Port Arthur location and complained of difficulties getting paid. Finally, Clo Durant recalled, they traveled to Houston in a last­ditch effort to shame Merrill into paying them back wages and reimburse them for money they had spent buying supplies. They confronted Merrill in his office ­ without success. ``My husband and I both felt like he was just a con man,'' said Clo Durant. ``He was very calm about the whole matter. He didn't seem upset that he couldn't pay us.'' TEA officials issued several critical inspection reports after finding that the two Texcel sites it regulated lacked such basic necessities as books and proper lighting. One report filed last year said Texcel should be denied any new applications ``under the ownership of Bill Merrill and any new courses requested be denied until it can be shown that corporate has the finances and desire to offer training of good quality to the students of Texas.'' Merrill responded by complaining to the TEA that his financial enemies had set him up. ``I am going to take care of my business the best that I know how and will depend on the integrity of the various agencies to fairly judge me on my own actions and merit ­ and to consider the source when confronted by slander,'' Merrill said in a letter to TEA. TEA records are unclear as to how the issue was resolved, but when Texcel closed its doors it was in good standing with TEA, records indicate. ``We thought they had worked their way out of the problems,'' Price recalled. ``When they went under, it was something of a jolt to us. ``Merrill called us one day and said they were going to get a hearing with the federal government and everything was going to be fine. The next day they were all closed.'' And as late as last summer, the Texas Cosmetology Commission was unaware of any serious fissures in the Texcel empire. When Merrill abruptly transferred ownership of his Pasadena cosmetology campus last summer to Neal Sumner, a business associate, the commission did not ask many questions. Sumner, who was on probation for conspiracy to defraud the federal government, changed the Pasadena school's name to American Institute of Technology. It operated amid chronic financial problems until it closed a few months ago, leaving 51 students stranded, as detailed earlier in the Chronicle. Several other Texcel schools also offered cosmetology, but the commission's inspections director, Larry Perkins, said field inspectors never detected any difficulties. ``We weren't aware at all that they were shaky or had financial problems,'' he said. ``The problem in a nutshell is that there's no networking of the agencies, accreditation boards, education department or loan institutions that deal with the schools.'' And though cosmetology officials did not know it, the Southern Association of Colleges and Schools began looking critically at Texcel last summer. http://nl.newsbank.com/nl­search/we/Archives?p_action=print&p_docid=0ED7AF16D3852F5F

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2/7/2017 Doing a disappearing act with students' dreams
Texcel trade schools apparently cheated thousands | Houston Chronicle Archives Easy Print...

The accrediting agency issued a letter in August citing the chain for failing to seek accreditation for several branches and failing to submit an independent financial audit. The accrediting agency formally dropped accreditation in October. October was when Jesse Sanchez discovered he had received a worthless education from Texcel. By that time, he had gotten a security officer job at minimum wages. His modest job was threatened when the state refused to recognize his Texcel certificate, and Sanchez eventually had to go back to school to get the required credential. He's licensed now but bitter and hard­pressed to pay back his $3,200 loan on meager wages. ``I'm real upset for what they did. When I graduated, I was so excited. Then I walked in real big with my Texcel certificate and found it wasn't worth anything.''   Copyright 1989 Houston Chronicle 

http://nl.newsbank.com/nl­search/we/Archives?p_action=print&p_docid=0ED7AF16D3852F5F

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Doing a disappearing act with students' dreams_BR_Texcel trade ...

Feb 7, 2017 - Texcel tycoon missed a key Houston court hearing more than a ... Sanchez was waiting in the unemployment line last summer when two Texcel recruiters wooed him ... apparently cheated thousands _ Houston Chronicle.pdf.

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