[co-author: Stephanie Kozol]*
On October 23, an amended complaint was filed by the Connecticut Office of the Attorney General (AG), alleging that Stone Academy, a nursing school, and its owners, Joseph Bierbaum and Mark Scheinberg, used millions of dollars from nursing student tuition and fees to finance personal luxuries and other businesses operated by Stone Academy’s owners.
As a result of COVID-19, from 2019 to 2020, the number of nursing students greatly increased, and Stone Academy’s net income increased as well by more than $2 million in 2020, staying consistent in 2021, according to the complaint. The complaint alleges that by taking on more students than Stone Academy could handle, students missed out on promised clinical experiences, adequate teaching, and textbooks they had already purchased from the academy.
The Connecticut AG claims that while the owners used the $30,000 per-student tuition plus material fees to purchase luxury cars, a mansion, and to siphon money into their other business, students were struggling with photocopied materials, campuses in disrepair, and a lack of sufficient preparation to pass the national exam to obtain a nursing license. According to the complaint, the facilities themselves were rented from companies that Scheinberg owned directly and indirectly, with Stone employees also performing work for other businesses owned by Bierbaum at Stone’s expense. The school closed in February, resulting in some students being ineligible to be licensed.
The Connecticut AG is seeking restitution, civil penalties, disgorgement, and attorneys’ fees, alongside the appointment of a receiver for Stone Academy and the prevention of defendants further violating General Statutes § 42-110b(a).
Why It Matters
The investigation into Stone Academy demonstrates the attempts by state AGs to shine a spotlight on alleged predatory practices. AGs are focused on practices that they believe prioritize personal gain of higher-ups over the purpose and goals of a business. Scrutiny is particularly tough in industries perceived as crucial to public health and safety, and populations perceived as vulnerable.
*Senior Government Relations Manager
