Attorney General Lockyer Announces $500,000 Settlement With Operators Of Phony High School

(NORWALK) – Attorney General Bill Lockyer today announced he has reached a $500,000 settlement with the operators of California Alternative High School (CAHS) to resolve a lawsuit that alleged the defendants provided worthless diplomas to mainly Latino victims who paid hundreds of dollars to attend CAHS classes.

"The victims of this scam are hard-working immigrants who paid hundreds of dollars to obtain an education and improve their families' lives," said Lockyer. "They wanted to get closer to realizing the American dream, but what they got was a closeup look at greed and fraud. They never can be completely compensated for the harm they suffered. But this settlement at least will provide them a measure of justice."

Lockyer today filed the proposed settlement of the consumer protection lawsuit with Los Angeles County Superior Court Judge Brian F. Gasdia, who must approve it before it becomes final. That approval could come as early as today.

The settlement calls for the defendants to pay $400,000 in restitution to victims. The defendants must work with Lockyer's office to identify consumers eligible for restitution. Additionally, the defendants must pay $50,000 in civil penalties and $40,000 to reimburse Lockyer's office for its costs. Another $10,000 will reimburse the Los Angeles County Department of Consumer Affairs (LADCA), which investigated the case jointly with Lockyer's office. The settlement also includes "injunctive relief" provisions that prohibit the defendants from committing the fraudulent practices alleged in the lawsuit.

Aside from CAHS, the defendants who are parties to the settlement include: Daniel A.D. Gossai, "principal" and founder of CAHS; and Janet H. Gossai, wife of Daniel Gossai, who helped hide the couple's CAHS-related assets.

Lockyer filed the lawsuit on August 2, 2004, and quickly obtained a court order that effectively shut down CAHS and froze the defendants' CAHS-related assets. Three days later, agents from Lockyer's office seized evidence from CAHS facilities and the Gossais' home, including $550,000 in U.S. and foreign currency and cashier's checks made out to the Gossais.

CAHS operated mainly out of Paramount and Huntington Park, and conducted classes at about 26 locations in California. The defendants targeted Latino immigrants and told consumers CAHS diplomas would help them win admission to college, obtain financial aid and get higher-paying jobs, according to the complaint. The defendants charged consumers about $500 for a 10-week, 30-hour course, and told victims they would earn a high school diploma, Lockyer's complaint alleged.

In reality, the CAHS diplomas – handed out at "commencement ceremonies" – were useless for any purpose, the complaint alleged. The school was not recognized either by the federal or state government. Additionally, CAHS' program did not help students meet the requirements of accredited colleges, including California State University and the University of California, according to the complaint.

The LADCA brought the case to the attention of Lockyer's office after receiving numerous complaints from CAHS "diploma" recipients who were rejected for admission to vocational programs or fired from their jobs for not having a high school diploma. The defendants' business practices violated state laws prohibiting unfair competition, and false or deceptive advertising, the complaint alleged.

Declarations filed with the court evidenced the woefully inadequate education received by CAHS students. According to the declarations:

CAHS did not use textbooks, but instead gave consumers a 54-page workbook; the workbook contained numerous factual errors, including a statement that the U.S. government has four branches (executive, legislative, judicial and administrative); and in classes, students were taught the United States has 53 states, that the flag has not been updated to reflect the additional three states, and that Congress has one house for Democrats and a second for Republicans.

The injunctive relief provisions of the settlement permanently prohibit the defendants from representing: they operate a high school; they offer educational services that will lead to a high school diploma; they offer educational services that will "substantially" prepare students for high school, college or the GED exam, or help consumers obtain financial aid; and that any educational services they offer are recognized or approved by any governmental agency.

Lockyer today also filed with Judge Gasdia a separate, smaller settlement with Noel Brito, director of West Side Education Corporation (West Side), which operated CAHS sites throughout Southern California. The settlement requires Brito to pay a $2,500 civil penalty. Additionally, Lockyer on February 17, 2005 obtained court approval of a third settlement with West Side and its president David L. Soto. That settlement requires the defendants to pay $31,000 for consumer restitution, a $5,000 civil penalty, $5,000 in cost reimbursement to Lockyer's office and $9,000 in cost reimbursement to the LADCA.

Lockyer's office continues to try and reach a settlement with the one remaining defendant, Fabricio Sandoval, a teacher and director of admissions at CAHS. Lockyer previously dropped from the lawsuit an eighth defendant, CAHS teacher Janira Jacobs.