December 30, 2015

Ex-con accused of again orchestrating Medical Assistance fraud

A Brooklyn Park woman who pleaded guilty in 2010 to defrauding Minnesota's Medical Assistance program is accused of again bilking the state out of millions of dollars in a similar scheme.

Attorney General Lori Swanson filed criminal charges this week in Ramsey County District Court against Barbara Currin and six accomplices, alleging they billed the Medical Assistance program for at least $2.6 million for in-home nursing services that often were not provided.

"Minnesotans are very generous in supporting Medical Assistance as a health care safety net," Swanson said at a Wednesday morning news conference. "When a bad-apple provider rips off the Medical Assistance program, it's really an affront to the taxpayers."

From 2012 to 2015, Currin and her co-defendants allegedly created eight home-health care agencies that billed the state for nursing services they claimed to have provided to patients. In some cases, no services were provided; in others, patients received only a fraction of the care that was billed, the criminal complaints allege.

The 51-year-old Currin, who was barred from working with the Medical Assistance program because of her previous conviction, allegedly recruited six people - five of them family members - to set up the companies in their names to conceal her involvement.

"Currin directed the companies and she profited from the companies, despite the ban," Swanson said, citing emails obtained through a search warrant.

Swanson estimates Currin received at least $300,000 in compensation from the eight companies.

As authorities began looking into each of these companies, Currin and her accomplices would close the company that was under suspicion and open a new one in its place to continue the scheme, Swanson said.

Some patients were allegedly paid kickbacks for using Currin's companies as their Medical Assistance provider, which is a violation of federal law, Swanson said.

"We believe these payments were designed to sweeten the that patients would, No. 1, join and sign up, No. 2, stay and not leave and, No. 3, not complain" about the lack of services provided, Swanson said.

Swanson did not say whether any patients would be charged, adding that her office continues to investigate whether some were "in on the scheme."

The charges outlined in this week's criminal complaint against Currin recall the three counts of Medical Assistance fraud Swanson's office brought against her in 2009.

In a four-month period ending in May 2008, Currin's company, Ometta Vent Care Services, billed the state for more than 15,000 hours of nursing care, even though timesheets showed only 813 hours of work by registered nurses. The rate for care provided by nurses was three times the rate for care provided by unlicensed personal care attendants.

Beyond the overbilling, Swanson alleged the company provided poor care to a vulnerable population of 25 patients. Ten needed ventilators to breathe. Thirteen needed round-the-clock nursing care.

"It's very, very troubling that (Currin) would come before us again," Swanson said Wednesday, adding that she "engaged in very egregious activity before and obviously did not learn from the experience."

Currin is in prison at the Minnesota Correctional Facility-Shakopee for violating the terms of her probation, which prohibited her from involvement with the Medical Assistance program. She was not in prison when the new crimes were allegedly committed.

An attorney for Currin is not listed on court documents.


December 14, 2015

Indiana company ordered to pay back Minnesota students' loans

Minnesota Attorney General Lori Swanson said Monday an Indiana company tricked at least 800 Minnesota college students into paying thousands of dollars under a promise it would quickly jumpstart their nursing careers.

The College Network signed students up for study guides to help them test out of certain college credits, Swanson said. The company also arranged loans for the students to pay for proficiency exams and promised it would pay back those test fees, but it never did.

Swanson said the company arranged $4,000 loans for the students to take the tests. Students then accrued 12 percent interest rates on financing arranged by The College Network.

Swanson said most of the students enrolled in the program were nontraditional college students. Some were single parents who thought they found a quick way to earn their degrees.

"Only it hampered their life because they weren't getting their fee money back then some couldn't take the tests, thereby it actually slowed them down," she said. "In other cases they had to go work overtime to get the money to pay the test because they thought they had the money secured with these loans."

An order issued by Anoka County District Court barred The College Network from accepting exam fees from Minnesota customers. The court also ordered the company to promptly pay exam fees to existing students.

A message left for the company was not immediately returned.

October 16, 2015

Minnesota slams nursing home tactic to keep disputes out of court

The Minnesota Attorney General has joined 14 other state attorneys in asking the federal government to prohibit nursing homes from including binding arbitration clauses in contracts with patients.

The small type in many nursing home or long-term care facility contracts often contains a requirement that any disputes with the facility be decided through an arbitrator chosen by the facility, rather than in open court.

Minnesota Attorney General Lori Swanson said taking legal protections away from an already vulnerable population, who may be sick or in crisis. She said the practice is "unconscionable."

"You're checking it at a time of high trauma in your life, it's after oftentimes a very serious injury or illness or heart attack," Swanson said. "It's not the type of situation where people are in a great capacity to say, 'Gee, I noticed here on page 32 this clause.'"

Swanson said her office hears complaints about the practice, often from consumers who didn't know they'd signed away their right to sue in court.

"The claims that occur are very, very serious claims when they happen," Swanson said. "They're typically wrongful death actions or negligent actions where the patient is alleging that the nursing home neglected them or a loved one."

Binding arbitration clauses are widespread in industries like banking, cell phones and healthcare, said Swanson. She sued a company called the National Arbitration Forum in 2009, arguing that the company treated consumers unfairly and ruled against them in a disproportionate number of cases.

"It would hold itself as independent and fair and neutral, much like you'd expect from a court system," Swanson said. "But it wasn't telling consumers was that at the same time it was arbitrating claims, the arbitration firm was owned by some of the same interests bringing claims before it."

In the settlement with the state, the National Arbitration Forum agreed to stop handling consumer arbitration cases.

The attorney general's comments were filed with the Centers for Medicare and Medicaid Services. The federal government could take the step of prohibiting these kinds of arbitration clauses in nursing homes or long-term care facilities.

There are other signs that federal authorities are seeking to curtail the use of binding arbitration requirements. The Consumer Financial Protection Bureau announced last week that it was exploring new regulations to curtail the practice in the financial industry.

October 14, 2015

Minnesota attorney general: Car charity had cozy deals

Minnesota's attorney general accused one of the nation's largest vehicle-donation charities on Wednesday of putting little money toward its advertised mission while steering millions to the for-profit companies owned by the group's founders.

Attorney General Lori Swanson said about one-fifth of the Car Donation Foundation's $108 million in gross revenue over a four-year period went toward charitable grants, while the rest was used for overhead, marketing and payments to a pair of companies. The St. Paul-based foundation solicits vehicle donations under a "Wheels for Wishes" program that pledges the proceeds to local Make-A-Wish chapters to help children battling cancer.

Nearly 50,000 vehicles were donated to the foundation in 2014, amounting to $37 million in revenue. The foundation makes itself attractive to donors by arranging quick pickup of inoperable vehicles and documentation that could be used for income tax deductions.

"Donors need transparency to make informed decisions, including who they are donating to and how their money is going to be used," said Swanson, a Democrat. "Transparency wasn't given to donors here."

The foundation referred calls for comment to the founders, William Bigley and Randy Heiligman. The Associated Press left phone messages seeking comment from both men.

Swanson's investigators said the foundation would pay one of the founder's for-profit companies for managing the charity's operations and fundraising, and another associated company for towing, scrapping or reselling donated vehicles. The two companies, owned by Bigley and Heiligman, reaped a combined $36 million in payments from the foundation between 2011 and 2014, according to the office's review of tax records. Swanson said $23 million went to the charitable mission over that time.

The foundation has a presence in about 40 states and has come under prior IRS scrutiny for its cozy ties to private firms. The founders left the charity's board of directors in response but maintained a hands-on role in daily operations. Regulators in South Carolina and Oregon have highlighted the group in reports of charities with unusually high administrative costs.

Mishele Cunningham of Brooklyn Park donated her 12-year-old car in 2013 after searching for a charity benefiting kids with cancer. It was subsequently re-sold for more than $1,000 but she was disappointed to learn of allegations that little of that filtered down to Make-A-Wish, an organization known for sending ill children on amusement park trips or arranging one-of-a-kind outings.

"I would have sold the car outright and given the money to Make-A-Wish myself," she said. "They advertise they are part of Make-A-Wish, and they are not."

According to internal documents released by Swanson, the Make-A-Wish Minnesota chief executive resigned in June amid an independent probe. The charity told Swanson's office he was paid $70,000 by the private companies to help line up deals between local chapters around the country and the car-donation charity, receiving $5,000 for every contract arranged.

Minnesota law gives the attorney general jurisdiction over charities. Swanson said that details of her office's investigation were in a compliance report, which can be a precursor to litigation or other enforcement actions if the deficiencies identified aren't corrected. They have 30 days to respond.

Swanson also forwarded her findings to the IRS, which could examine the foundation's charitable tax status.


October 7, 2015

Minnesota Supreme Court upholds constitutionality of Minnesota's payday lending law

Out-of-state payday lenders will have to follow Minnesota's strict lender law for Internet loans, the state Supreme Court ruled Wednesday.

The ruling sides with Attorney General Lori Swanson, who filed suit against Integrity Advance, LLC in Delaware in 2011. The company made 1,269 payday loans to Minnesota borrowers at annual interest rates of up to 1,369 percent.

In 2013, a district court concluded that the company violated Minnesota's payday lending statutes "many thousands of times" and awarded $7 million in statutory damages and civil penalties to the state. The company appealed to the Supreme Court, arguing that the state payday lending law was unconstitutional when applied to online lenders based in other states.

In Wednesday's opinion by Justice David Stras, the court rejected that argument, holding that Minnesota's payday lending law is constitutional.

"Unlicensed Internet payday lenders charge astronomical interest rates to cash-strapped Minnesota borrowers in contravention of our state payday lending laws. Today's ruling signals to these online lenders that they must abide by state law, just like other "bricks and mortar" lenders must," Swanson said.

The ruling is significant as more commerce moves to the Internet. Minnesota has been a leader in combating online payday lenders, which can charge extremely high interest rates. Swanson has filed eight lawsuits against online lenders since 2010 and has obtained judgments or settlements in all of them.

The benefit of payday loans is that they allow borrowers to pay their basic living expenses in advance of their next paycheck. However, many borrowers rely on the loans as their main source of long-term credit and don't repay them on time, incurring extra charges.

State law requires payday lenders to be licensed with the Minnesota Department of Commerce. It caps the interest rates they may charge and prohibits them from using the proceeds of one payday loan to pay off another.

Some online payday lenders try to evade state lending and consumer protection laws by operating without state licenses and claiming that the loans are only subject to the laws of their home state or country. In 2013, the Internet payday loan industry had estimated loan volume of $15.9 billion.

"We compliment Attorney General Swanson on winning this case and protecting the consumers of Minnesota," said Chuck Armstrong, chief legislative officer for Burnsville-based Payday America. "Like her, we don't want the bad guys operating outside the law. We are more than happy to work with regulators to stop these offenders."

Fifteen states and the District of Columbia have effectively banned payday lenders. The U.S. military bans payday lenders from its bases. Nine of the 36 states that permit payday lending have tougher standards than Minnesota.

Tighter rules sought:

Minnesota Commerce Commissioner Mike Rothman plans to push again for tighter rules during the 2016 legislative session, including limiting some fees and the number of loans made to one borrower. The moves have been supported by church and consumer groups but opposed by the payday industry, which has had clout with key legislators.

The Commerce Department says lenders like Payday America can charge 100 percent or more in effective annual interest rate through multiple loans, rollover fees and other charges. Fees can amount to more than the original loan and lead to perpetual debt.

"The Attorney General should be commended for obtaining the Minnesota Supreme Court's solid affirmation that the Minnesota law … does not violate the Commerce Clause," said Ron Elwood, supervising attorney for the Legal Services Advocacy Project in St. Paul.

Meanwhile, Sunrise Community Banks of St. Paul recently won a $2.2 million national award for an alternative product that provides emergency, unsecured loans through employers that must be paid back within one year at a maximum effective rate of 25 percent. Larger banks say they are working with regulators to devise similar small-loan products.

July 1, 2015

Minnesota alleges firm's student loan 'forgiveness' a rip-off

Minnesota Attorney General Lori Swanson sued a Florida-based company Wednesday saying it baits student borrowers with promises of loan forgiveness, charges exorbitant fees and misrepresents what it can do.

The Student Aid Center charges borrowers $500 to $1,500 to sign them up with the federal Department of Education for student loan repayment plans or consolidation loans - but borrowers can apply for those on their own for free, Swanson's office said.

She alleged the company has misrepresented to some borrowers that it will "take over" or otherwise pay off outstanding loans or that the firm can qualify them for student loan forgiveness.

"In fact, it is the United States Department of Education that determines whether a borrower might qualify for loan forgiveness, not Student Aid Center," the attorney general's office said in a statement announcing the lawsuit. "Loan forgiveness is available only in certain limited circumstances and can require decades of payments before a final decision is made on whether loans will be forgiven."

There was no immediate comment available from the company.

Swanson also alleged that Student Aid Center persuaded some borrowers to provide it with their confidential loan personal identification codes and other information and submitted to loan servicers power of attorney forms that borrowers did not sign or did not sign in front of a notary.

Besides the suit filed in Hennepin County District Court seeking an injunction and restitution against the company, Swanson's office also issued a blanket warning to Minnesotans about companies that "charge high fees for what you can do for free."

It also maintains a webpage with advice on avoiding student loan assistance scams.

June 25, 2015

Savers settles Minnesota lawsuit, agrees to pay $1.8M to charities

National thrift store chain Savers has agreed to change its business practices in settling a lawsuit filed last month by Minnesota's attorney general alleging the company's marketing misled donors and shoppers.

Savers will publicly disclose how much it gives to various charities from the sales of donated items. It also will pay six local nonprofits $1.8 million, according to a settlement filed Thursday in Hennepin County District Court.

"The settlement will give donors the transparency they need to decide whether and how they want to donate," said Attorney General Lori Swanson. "This is one of the biggest markets nationwide for Savers, which is why this agreement is significant. Minnesota is the first state to put in place these donor transparency reforms."

In response to the settlement, Ken Alterman, the president and CEO of the Bellevue, Wash.-based Savers, said that the company was pleased to have reached the agreement.

"Although we disagree with allegations advanced by the Attorney General in the past, we are satisfied that the Attorney General has resolved her differences with us," Alterman said in a statement. "We will return to devoting our full energy to serving the best interests of the charities and donors of this state as we have proudly done for the last 25 years."

Savers is the largest for-profit thrift store chain in the United States, with 290 locations nationwide and $1 billion in annual revenue as of 2012, according to Swanson's complaint.

Twelve of Savers' 15 Minnesota stores are in the Twin Cities, some operating under the names Unique Thrift and Valu Thrift. Under its business model, Savers solicited donations of used clothing and household goods with what it calls its nonprofit partners at its stores and through phone calls, curbside pickup and donation boxes in the community.

Swanson filed a lawsuit against Savers on May 21 alleging that while the company solicited donations in the name of nonprofit organizations, the nonprofits only received a small fraction of the proceeds from clothing sales and none of the proceeds from the sale of other items such as toys, furniture and dishes.

The agreement was welcome news to the Epilepsy Foundation, which received about half its revenue from a contract with Savers last year and faces its own attorney general lawsuit for continuing to do business with Savers.

"We're encouraged," said executive director Vicki Kopplin. "Now that they've been able to resolve their issues, we hope it's going to be fairly easy for us to resolve our suit."

Under the settlement, Savers must register with the state of Minnesota as a professional fundraiser and clearly state it is a for-profit professional fundraiser in any signs, postcards or phone calls.

The settlement also requires that Savers:
-- Disclose its contract with each charity, including the percentage of a donation's value that goes to the charity and whether the rate for donations picked up at the curb differs from donations dropped off at stores or donation boxes.
-- File annual reports with the attorney general's office on the gross value of donations received, expenses and payments to each charity.
-- Stop mixing donations solicited on behalf of one charity with donations intended for another.
-- Pay charities directly for nonclothing donations. Savers previously dealt with so called "hard goods" by offering charities a slightly higher bulk clothing rate.

In a statement, Savers said it had "paid more than $7.5 million to Minnesota charities, kept over 40 million pounds of goods out of local landfills and provided great value to customers by selling items in our stores at an average price under $4."

"We have agreed to further enhance disclosures to charitable donors, including reiterating through signs and written materials we operate as a for-profit professional fundraiser in the state of Minnesota," the company said of the changes it would make as a result of the agreement.

Savers will continue to accept clothing and household items while it registers as a fundraiser, but dropped-off donations are not currently tax deductible.

Swanson's office began investigating Savers in late 2013 after receiving complaints. She released the findings of the investigation in November 2014 and publicly criticized the company's business practices. At that point, three of the six charities mentioned in the suit dropped their contracts with Savers, including Courage Kenny Foundation, Lupus Foundation and True Friends.

Disabled American Veterans Department of Minnesota receives about 60 percent of its revenue from its Savers contract and small car vehicle donation program, said director of operations Joshua Vrtacnik. The Epilepsy Foundation last year received $730,000 from its Savers contract, Kopplin said.

While some nonprofit organizations contract with Savers to handle all aspects of the solicitation and pickup, the Epilepsy Foundation employs 30 people to run its own curbside pickup program. After sending postcards or calling to ask for donations, Epilepsy Foundation employees drive through the neighborhood to pick up donated goods. Used clothes are sold to Savers at a bulk rate of 43 cents per pound. The contract requires the Epilepsy Foundation to include household goods, as well.

"It's been a steady source of reliable and unrestricted funding," Kopplin said. "I believe the majority of donors just want their items picked up conveniently and want the donation to go to a good cause, but we have no problem being absolutely transparent."

May 21, 2015

Minnesota attorney general sues Savers, calls chain's marketing deceptive

ST. PAUL - Minnesota's attorney general is accusing secondhand retail chain Savers of lying to donors about what it does with the money it makes from selling their used goods.

In a lawsuit filed Thursday in Hennepin County District Court, Attorney General Lori Swanson alleges that while the for-profit company publicly claims to donate a significant portion of all its sales to nonprofit charity organizations, it donates only a small fraction of proceeds from clothing sales and none of the proceeds from the sale of other items.

"Savers has seriously misled the public about the extent to which donated clothes and merchandise benefit the for-profit retailer vs. the charity,” Swanson said in a news release.

Bellevue, Wash.-based Savers is the largest for-profit thrift store chain in the United States, with 290 locations nationwide and $1 billion in annual revenue as of 2012, according to Swanson's complaint. Twelve of Savers' 15 Minnesota stores are in the Twin Cities, some operating under the names Unique Thrift and Valu Thrift.

Swanson's office first began investigating Savers in late 2013 after receiving a series of complaints. She released the findings of the investigations in November 2014 and publicly criticized the company's business practices.

Representatives of Savers and the attorney general's office met several times in the months leading up to the lawsuit's filing. Although Swanson said Savers refused to make sufficient changes to its business practices, Savers CEO Ken Alterman said in an emailed statement that it has "begun implementing operational changes to address the AG's concerns.”

"We are disappointed by the decision of the Minnesota Attorney General's office to take this action because we have made multiple attempts to work collaboratively on a resolution that benefits everyone involved,” Alterman said. "The money we pay our charitable partners furthers medical research and supports veterans and their families across Minnesota.”

The Pioneer Press reported on Savers' business practices in 2011.

Savers accepts donations of used clothing and household goods and sells them to shoppers at a mark-up. The company tells its Minnesota donors that a portion of the proceeds from each sale go to benefit Disabled American Veterans, Epilepsy Foundation of Minnesota or Vietnam Veterans of America.

None of three organizations returned phone calls seeking comment on the lawsuit.

The company's marketing claims, "Savers pays local nonprofits every time you donate,” Swanson said.

However, Swanson's complaint alleges the company pays charities as little as 50 cents for each pound of clothing it receives and nothing for nonclothing items. These terms are laid out in the company's agreements with affiliated nonprofits.

For example, the complaint says, a 1-pound suit sold for $100 in a Savers store would result in a 50-cent donation to an affiliated nonprofit, while Savers would keep the other $99.50. In the case of a $250 television, the complaint says Savers would keep the entire sale price.

Some who donated items through Savers believed they were donating directly to a nonprofit and were unaware Savers was involved.

After the deaths of her husband, mother and aunt, Sue Kirchoff of Minneapolis decided to donate many of their possessions to Disabled American Veterans. She had received a post card purportedly from DAV, offering to pick up any items she wished to donate.

Kirchoff grew suspicious after reading that the attorney general was investigating Savers and felt betrayed when she discovered it was actually Savers who had picked up her items.

"Should you have to be suspicious?” Kirchoff said. "You just kind of assume that it's legitimate.”

Additionally, those who donate items for the benefit of charitable organizations are eligible for tax write-offs, but many Savers donors who claimed such write-offs never actually donated to charity because Savers pocketed the proceeds, Swanson said.

However, Swanson assures Minnesotans who wrote off their Savers donations that they're not in any tax trouble because they claimed the deductions in good faith.

April 28, 2015

Don't deregulate landline telephone service in Minnesota

A man in northern Minnesota struggled to breathe late one night. His wife called 911 from their landline telephone. Because the couple must climb a hill outside their home to get cellphone reception, they fear what might have happened if they had no landline.

An elderly rural woman sends pacemaker readings to her faraway heart doctor using her landline phone. She can't do this with a cellphone.

A southern Minnesota woman uses her landline phone to operate her medical-alert system. She lives on a fixed income. These and other Minnesotans - including many senior citizens and rural residents - need and deserve local landline phone service that is accessible, affordable and reliable.

To that end, for 100 years, Minnesota has regulated the price and service quality of local telephone service. Minnesota law also requires phone companies to extend service to all Minnesotans, no matter where they live. These laws have served Minnesota well.

Unfortunately, the Legislature is considering bills - H.F. 1066 and S.F. 736 - to eliminate these price and service quality regulations. The bills would allow phone companies to charge higher rates with degraded service and access. Capitol insiders have dubbed the measure the "CenturyLink bill." A similar deregulation measure in another state is called the "AT&T bill." It speaks volumes that these bills are named after the phone companies that are pushing them. In one state, prices more than doubled after local telephone service was deregulated.

As representatives of AARP-Minnesota, the Minnesota AFL-CIO and the Minnesota attorney general's office, we call on the Legislature to reject these bills.

Under the bills:
-Price protections would end. Telephone companies would be able to charge and raise prices as they desire.
-Quality would be unregulated. Service quality - such as how often people get a "busy" signal, how long the telephone company has to repair outages and how quickly operators answer calls for assistance - would no longer be regulated.
-Companies could drop or refuse to take customers, for any reason. This would be especially tough on rural residents, since it costs phone companies more to serve these customers.

The telecommunications industry argues that overturning 100 years of state legal protections won't matter because cellphones, Voice over Internet Protocol, texting and e-mail can compete with landlines. Baloney. In many parts of Minnesota, cellphone coverage and broadband Internet is spotty or nonexistent. Try e-mailing 911 if you're having a stroke.

There are many good reasons why people still need access to affordable, reliable landlines. When someone calls 911 in an emergency from a home phone, first responders can automatically detect the address. Many home-security alarms and medical- alert devices operate through landlines. Some people use landlines for dial-up Internet access where broadband is not yet available or affordable.

The phone companies say they will keep up service if they are deregulated. Yet, these same companies right now are lobbying the Minnesota Public Utilities Commission to let them out of basic quality of service standards, such as having to fix 95 percent of service outages in 24 hours. Against this backdrop, their claims at the State Capitol should ring hollow.

Will Phillips is state director of AARP-Minnesota. Shar Knutson is president of the Minnesota AFL-CIO. Lori Swanson is Minnesota's attorney general.

March 31, 2015

Scam overcharges seniors for subscriptions, Minnesota AG says

Minnesota Attorney General Lori Swanson is accusing four companies of swindling the state's residents with a magazine and newspaper subscription renewal scheme.

In a lawsuit filed Tuesday, Swanson alleges the Oregon-based companies contacted magazine and newspaper subscribers to solicit inflated renewal payments. Believing the companies were acting on behalf of the publishers, many subscribers complied, paying two or three times the actual cost of their subscription, the lawsuit says.

"They are unauthorized agents," Swanson said. "They have not been hired by the newspapers, by the magazines to be selling subscriptions in their name."

Most subscribers still got their publications, because the companies were subscribing on their behalf - at the lower, legitimate, rate - and then pocketing the difference. Subscribers realized something was amiss when they subsequently received another renewal notice from the publication itself, Swanson said.

The companies named in the suit are Orbital Publishing Group, Liberty Publishers Service, Associated Publishers Network and Express Publishers Service. None of the companies could be reached for comment.

Attorneys general in four other states have filed similar lawsuits against these companies alleging consumer fraud and deceptive trade practices. The other states are New York, Texas, Missouri and Oregon. In November, the Wisconsin attorney general's office filed a consumer protection action against Orbital alleging similar deceptive practices.

Swanson's office has received hundreds complaints about the companies from Minnesotans, spokesman Ben Wogsland said.

"We do believe they're targeting senior citizens in particular with these scams," Swanson said. "I don't think a day goes by that we don't hear from someone who's been targeted."

Joan Eggert, an 83-year-old Woodbury retiree, is a longtime subscriber to The Word Among Us, a religious periodical. She received a renewal notice in October 2014 offering an annual subscription rate of $69.95. The magazine's actual annual subscription rate is $23.70, according to its website.

"It looked very legitimate," Eggert said of the renewal notice. "I felt foolish - that I'd been taken advantage of."

Eggert and others have received refunds after contacting Swanson's office.

The attorney general's office does not know how the Oregon companies got the subscriber information.

Swanson's lawsuit says subscribers of the Minneapolis-based Star Tribune, the Minneapolis-St. Paul Business Journal, the New York Times and other publications have reported being targeted by these companies. Swanson's office has not received complaints from Pioneer Press subscribers, but Wogsland said that doesn't mean none have been contacted.

Pioneer Press subscribers who believe they have been contacted by an unauthorized third party should contact the newspaper's customer service department at 651-717-7377, and the attorney general's office at 651-296-3353.


March 31, 2015

The big legislative fight over a fading technology

The debate in the Minnesota legislature comes down to a simple question: Are century old regulations on landline telephones obsolete - or do they remain necessary to protect consumers? 

The telecommunications industry most definitely comes down in favor of the former, and is pushing hard for change, claiming that Minnesota's current regulations regarding landlines are unnecessary, burdensome and stifling competition. The industry also says that de-regulation won't really change anything for people who still rely on landlines.

But opponents of legislation that is now moving through the Minnesota Legislature say that if the current bill is passed, consumers will face higher prices and reduced service - or even no service at all. Senior citizens and those living in rural Minnesota will be particularly vulnerable, they say. The fears are such that groups as disparate as the Attorney General's office, the state's Department of Commerce, the AARP, the AFL-CIO, Legal Aid and the Twin Cities Metro Business Alliance all oppose the bill.

And yet, the telecommunication industry seems to be winning the day. With bi-partisan support, the bill is quickly moving through committees, thanks to the backing of both rural and metro legislators.

A lesson in how the Legislature works

In many ways, this bill is a classic case of how the legislative process works. During session, media attention invariably ends up being focused on a handful of large issues - this year it's the budget, transportation and education - even while scores of both good and terrible bills are quietly passed.

It's easy to figure why a bill about old-school telephone lines hasn't gotten much attention. To many, of course, landlines have become a relic of the past, the horse and buggy of the 21st Century. And yet, according to the AARP, 90 percent of seniors still rely on landlines, though many of those people also own cell phones.

There's a good reason for the belt-and-suspenders approach, however, especially among rural Minnesota residents. As Attorney General Lori Swanson points out, in many areas of the state, cell phone coverage remains spotty. Additionally, Swanson said, many people with health issues rely on landlines to transmit health data to their physicians.

For a century, there have been strict rules on companies offering landline telephone services. Through the Public Utilities Commission, landline companies are required to provide universal service at affordable prices. They also must provide repairs to out-of-service phone lines within 24 hours about 95 per cent of the time. In return, the PUC regulates pricing so that landline companies are guaranteed a profit.

The new bill would change the PUC's oversight of landline providers in a couple of fundamental ways: First, instead of going through the commission, the bill would allow the telecom companies to set their own rates for landlines, though the PUC could react to those rates. Secondly, the bill would mean less tightly controlled service and repair requirements for the providers.

The telecommunications companies say the new law is needed to free up money for investment in "new technologies" that the market demands, and so that they can continue to give reliable and affordable service to consumers. Without getting out from under onerous and century-old regulation, bill supporters say, telephone service providers will not be free to invest in those new technologies in Minnesota - as they are in 29 states, including Wisconsin and Iowa.

The bill is modeled on legislation that was first drawn up in 2007 by CenturyLink, AT&T and Verizon, with the help of the controversial group ALEC (the American Legislative Exchange Council), according to the Huffington Post.

Why legislators support the bill

Sen. Dan Sparks, DFL-Austin, is from a district that has many rural constituents, yet he's also the author of the bill to change the regulatory process. "I would never move forward legislation that would potentially harm my friends and neighbors,'' Sparks said following a hearing last week before the Jobs, Agriculture and Rural Development committee, which he chairs.

He went on to say he's been working on the issue for four years and believes the time has come to pass the legislation. "We are in competition with other states,'' he said of his belief of the need for change. He fears without change, Minnesota will become a technological "outlier."

At a brief hearing of Sparks' committee last week, committee members treated members of the public who oppose the legislation with deference. Judy Schaffhausen of Rosemount told the committee of how she has a pacemaker and must have a landline to transmit heart data to her physician on a monthly basis, and she fears that de-regulation could put her landline in jeopardy. In response, Sen. Karla Nelson, R-Rochester, assured Schaffhausen that, "I will be working to make sure you continue to have the ability to do that."

Nelson voted for the measure.

Why the attorney general opposes it

There was far less deference for members of the AG's office. Among those who oppose the bill, perhaps none has been more vocal that Swanson, who says the proposed de-regulation would undermine the consumer protections that have served the state well for a century. In states that have passed similar laws, she points out, consumers have seen skyrocketing prices for landline service (as much as 150 percent increases in California, according to Swanson).

In the worst case scenario, service to some consumers could be dropped entirely. "We're not opposed to technology,'' Swanson said. "But if you're going to change 100 years of law, it ought to be fully debated.''

At the hearing last week, Sen. Gary Dahms, R-Redwood Falls, could barely hide his disgust of James Cannady, who represented the AG's office before the committee. Among other things, Dahms wondered why the AG's office did not participate in a working group that modified some of the original language in the Senate bill. (The Commerce Department, AARP representatives as well as representatives of the industry were involved in the working group. Those who initially opposed the bill still oppose the amended version.)

Cannady pointed out that there was a good reason the AG's office did not participate in the working group: they weren't invited. "This is not a bill [with] any easy fix,'' he said. "This is a bill that will hurt consumers and rate payers.'' Dahms, Sparks and other committee members were not impressed. After two people from the public voiced opposition, the committee ended the hearing with a vote to support the bill and move it on to the next Senate committee.

Even as the legislation makes its way through the legislative process, however, myriad side issues to what's become known as "The Century Link" bill have been raised. For example, though the industry has been implying that landlines are nearly obsolete, CenturyLink continues to promote an ad campaign pushing the need to hold on to a landline.

"Stick with a phone line that works just like it should," the ad reads. "Works with 911 and when the power is out or the internet goes down...Excellent call quality with no delays or lag time."

Moreover, while the industry was pushing for the de-regulation at the Capitol - arguing that nothing will really change for the consumer - CenturyLink is also seeking waivers from the PUC over the requirement that repairs to out-of-service lines be made within 24 hours.


March 20, 2015

Globe U accused of making illegal student loans with 'usurious interest rates'

Attorney General Lori Swanson is expanding her legal battle against Globe University, accusing the company of violating state law by offering unlicensed college loans to thousands of students and charging "usurious interest rates" of up to 18 percent.

On Friday, Swanson asked a Hennepin County court to invalidate those loans, known as Educational Opportunities and Student Access loans, and to order the company to reimburse students for all payments on them since 2009.

"It’s not a bank, it’s not a credit union, it’s not a credit card company," Swanson said. But Globe made "illegal loans" to nearly 6,000 Minnesota students, according to the court filing, which was an amendment to a 2014 consumer fraud lawsuit against the company.

According to the complaint, Globe was charging interest on some loans at "a staggering rate of 18%," more than twice the 8 percent maximum allowed by state law.

"Accordingly, these students are under no obligation to pay any amount owing and are entitled to recover all amounts paid," the lawsuit asserts.

Officials at Globe University, a for-profit college system based in Woodbury, issued a statement denying the new claims, saying they would try to get them dismissed.

"We continue to express our desire to come to an amicable resolution with the Attorney General," the statement said. "Unfortunately ... rather than working with us toward a resolution, the Attorney General appears to be continuing to solicit publicity for her own political agenda."

Last July, Swanson filed a consumer-fraud lawsuit against Globe and its affiliate, the Minnesota School of Business, accusing them of luring students into criminal justice degree programs with misleading claims and high-pressure sales tactics.

Globe, which has campuses in Minnesota, South Dakota and Wisconsin, has denied those charges. The case is slated to go to trial in November. Swanson said she learned about Globe’s lending program from students who said they were pressured into taking out the private loans after their federal aid or other student aid ran out.

In some cases, she said, students were called out of class and told they’d have to drop out of school if they didn’t sign up for those loans. "[They] were caught between a rock and a hard place," she said. Many told her they were rushed through the process so fast that they had no paperwork on the loans.

That may be one reason, Swanson said, that Globe was able to continue making the loans for so many years without attracting notice.

"We were interviewing many many students, trying to figure out what kind of loans they have," she said.

Unlike other types of college loans, these required students to make payments while they were still in school, Swanson said. In some cases, she said, students were threatened with expulsion if they fell behind in their payments.

If the court rules that the loans were illegal, Swanson said, it could render them invalid and allow students to recoup their money.

But for now, she said, she’s not advising students to stop payment. "Because I don’t know what the school will do to them."

March 12, 2015

State needs to make for-profit colleges more transparent - By Lori Swanson

The history of American higher education is a tour of enlightened self-regulation. Professors, alumni, parents and students nurtured a higher education system that made our citizens the living pillars of our democracy. Each generation’s children had the opportunity to climb the ladder of economic opportunity.

But things have changed. Billboards, television commercials and radio broadcasts now herald a different culture for higher education, with for-profit colleges purporting to be the vanguard. Let’s look at the results to date.

For-profit colleges enrolled just 12 percent of students but accounted for 44 percent of student loan defaults in 2013 nationwide. The U.S. Department of Education determined that 72 percent of for-profit college graduates earn less than those who drop out of high school. Nearly 90 percent of for-profit graduates have student loans. Taxpayers ultimately pick up the cost of federal loan defaults when these students can't find jobs.

Some for-profit "career schools" have saddled students with tens of thousands of dollars of loan debt by misrepresenting job placement rates and the transferability of credits, and by enrolling students in programs that will not even qualify them for employment in their field. Seven of the top eight for-profit colleges that receive GI Bill benefits are under investigation by state or federal regulators for deceptive recruiting or other potential law violations, according to a U.S. Senate Report. Attorneys General in over 25 states have sued, settled with, or are investigating for-profit colleges for their recruiting, marketing, enrollment and/or job placement practices.

Against this backdrop, the Attorney General's office drafted Senate File 696/House File 234, a bill pending at the State Capitol. The measure would give students better information about job placement rates, graduation rates and limitations on credit transferability. In short, a pretty innocent bill that would cost taxpayers no money but would interject some transparency and basic fairness for students.

Yet, the bill faces a steep climb at the Capitol. Few deny that students are getting hurt. Instead, detractors claim that in 2014 the Minnesota Legislature allowed state regulators to largely outsource their oversight of out-of-state online, for-profit colleges to the school's home state via an "agreement". The "agreement", however, was never designed to fix - nor does it fix - the abuses carried out by for-profit schools. It merely is an excuse to protect the industry by claiming that the state cannot regulate how online schools treat Minnesota students.


The tsunami of student loan debt has crushed the hopes and dreams of far too many young people. Minnesota has a responsibility to defend these students against abuses by for-profit colleges.

State and federal laws require companies that sell securities to inform potential investors of significant information about the company and the investment - including its risks - so that they can make informed judgments about whether to invest. We should require no less for our students. After all, these companies are selling their programs as investments too - investments in young people's futures.


March 12, 2015

Attorney general: Landline deregulation would raise prices, cut service

A proposal that would change how local phone companies are regulated at the Minnesota State Capitol is facing opposition amidst concerns that it would lead to higher prices and less service in rural areas.

The bill's advocates say less regulation would allow them to stay competitive with newer technologies.

Attorney General Lori Swanson said the proposal that's being pushed by telecommunication companies would "eviscerate" 100 years of state law protecting consumers, including a requirement that phone companies provide access in far-flung rural areas.

"We're very concerned that they'll just drop people who are too expensive to serve," Swanson said. "And we're very concerned that if they don't drop you, they'll say, 'Great, it will be $250 a month.'"

The bills are opposed by former Minnesota Attorney General Skip Humphrey and Mike Hatch, who called it a "metro-centric" bill that would hurt the elderly and the poor.

Minnesota Telecom Alliance President Brent Christensen said he views the proposal more as re-regulation than deregulation. The bills would change the threshold under which landline phone companies are required to provide service and remove some price caps.

"That would allow incumbent carriers to be regulated the same as their competitors if they pass a competitive test," Christensen said. "It's a really, really small step."

But Swanson said the threshold under which phone companies could ask for a change in their regulation status was broad enough that it would include more than 90 percent of phone companies in the state. She said it would allow companies to claim that internet and cell phones qualify as competition for landlines.

"Landline is a very unique product market, it's an exclusive product market, it's one that you can't fill in the gap with a cellphone or a computer," Swanson said. "Try emailing 911 if you're having a heart attack."

Federal Communications Commission figures show that the number of landlines in the United States decreased by half between 2006 and 2013. Christensen said landline carriers are already regulated by a number of state agencies and the FCC. He said the proposal would allow companies struggling with consumers who are unplugging to compete on more equal footing with newer technologies.

"Landline service as a standalone service is going away," Christensen said. "Consumers are making the change, we're just trying to get regulations that fall in line with that."

CenturyLink, a large landline provider in the state that has supported the bills at the Capitol, filed a request last year asking the Public Utilities Commission to grant a waiver to a requirement that landline companies service to out-of-service phone lines within 24 hours about 95 percent of the time.

"Imposing an expensive and outdated service quality metric is unnecessary," according to the waiver request. "This petition carries little risk for the customer. If CenturyLink provides service customers consider inadequate, they will move to a competitor. The market, and not government rules and regulations, should dictate how providers behave."

Other states have already deregulated phone companies. Swanson said her office has found that some of those states, like California, have seen an increase in prices.

"Since California eliminated price regulations, prices have gone up 150 percent," Swanson said. "This is not something the public wants, it's something that companies want."

The Minnesota chapter of the AARP also opposes the bill. Sandi Hagglund, from Stearns County, said she used her landline to call 911 while caring for her husband during a long illness, including one time that he had very low oxygen levels. "Because my home is surrounded by trees and hills, the cell reception there is limited, sometimes non-existent," Hagglund said. "If I had to drive that ten minutes to get cell phone reception, my husband would have died."

Versions of the bipartisan bill have already received first hearings in both the state Senate and the House. Neither of the bills' main authors, Sen. Dan Sparks, DFL-Austin, nor Rep. Ron Kresha, R-Little Falls, immediately responded to a request for comment.