Gateway College, Fraud?, Feilmeier, Queen, Omaha, NE
jam...@radiks.net
All of the following (except comments) are either from the Omaha
World-Herald newspaper or are summaries of articles that appeared
in the Omaha World-Herald. (Jim Clemetson 8/30/96 - jam...@radiks.net)
------------------------------------------------------------------
Midlands News, Monday, August 12, 1996
Omaha World Herald (Metropolitan Edition)
Schools Pledge To Aid Students From
Gateway
By Rick Ruggles and Fred Mogul (World-Herald Staff Writers)
Career schools in Omaha and Lincoln will try to accommodate students who have been stranded in
the middle of their programs by the closure of Gateway College, the directors of those schools say.
"We'll work with them to keep them in school and to get them out with a degree," said Gary
Carlson, director of the Lincoln School of Commerce. "We don't want them to have an experience
with proprietary schools that's a sour one."
Omaha businessman Rick Waddington has closed Gateway, a for-profit college with branches in
Omaha and Lincoln, because he had not received authorization from the state to operate it. He
bought the college from the Internal Revenue Service on June 25. Before Waddington acquired it,
the IRS had filed liens against the college and seized its assets on June 14 for nonpayment of taxes
dating back to 1992.
Gateway enrolled 300 students at the most.
Ikpe Udofia, a program director at the Nebraska Education Department, said he must obtain
student records from Gateway so that students can be matched with career schools that have
comparable programs. He had not reached Gateway officials Monday morning to obtain those
records, he said. But Udofia said state law requires the records to be turned over, so he anticipated
no difficulty obtaining them.
Mike Abdouch, chairman of the legislative committee of the Nebraska Council of Private Career
Schools, said career school directors weeks ago discussed the possibility that Gateway might go
under. They agreed at that time that they would try to help students relocate to other schools if
Gateway closed, he said.
Abdouch, director of Universal Technical Institute in Omaha, said Gateway offered programs in
electronics, computer-, health- and legal-related areas. He said four colleges that have been
identified as potentially serving students in one or more of those areas are the Nebraska College of
Business in Omaha, the Lincoln School of Commerce, the Omaha College of Health Careers and
the ITT Technical Institute in Omaha.
"To the extent possible, we are going to see that every single student at Gateway... has an alternative
rather than just walking away from it," Abdouch said.
Carlson said it was not a surprise when Gateway closed Friday, given the problems that college has
had.
"It was maybe long overdue, too," Carlson said. "I really felt sorry for the students because they
were going to school every day, I'm sure, wondering, 'Are we going to be here or are we not going
to be here?'"
He said three Gateway students were at the door of the Lincoln School of Commerce when it
opened Monday morning, seeking enrollment information.
Carlson said Gateway typically offered programs that ranged from six months to 18 months in
duration.
William Stuckey, president of the Omaha College of Health Careers, said that if the students had
paid their tuition at Gateway, he would anticipate placing them into his classes at no charge.
Waddington said Sunday that Gateway owes at least $112,000 in refunds to students and perhaps
as much as $500,000.
"Those students who have paid and have refunds coming will receive them," he said.
He said that his purchase of Gateway included $114,500 in outstanding debts and that in the last six
weeks the company has accrued "hundreds of thousands of dollars" in operating expenses.
Waddington, the president of Tiburon Golf Club, and his wife own Anric Corp., an Omaha dairy
trading firm. He said Anric is independent from the Raldor Corp., the company name for Gateway
College.
Gateway's two campuses have 45 employees, Waddington said.
Waddington accused the Education Department of dragging its feet in processing his application.
Marge Harouff, the department's administrator of adult program services, denied that there had been
a delay.
"It came as a complete shock to me," Ms. Harouff said. "We did not tell them that they needed to
close."
In a letter dated July 30, an Education Department official informed the school that operating without
authorization is illegal. Authorization under the previous owner, Gateway Electronics Institute Inc.,
had expired June 30, and the Raldor Corp. had submitted its application for authorization June 28.
Waddington said that when the school received the July 30 notice, its officials were already working
on a response.
Omaha World-Herald (Metropolitan Edition)
Midlands News, Wednesday, June 26, 1996, page 17
Omahan Buys Debt-Saddled College
Lincoln (AP) - The Internal Revenue Service has sold the beleaguered Gateway College to an
Omaha Businessman for $38,000.
As the electronics college's new owner, Rick Waddington assumes the school's liabilities, according
to the deal involving both Omaha and Lincoln campuses.
Waddington is president of Tiburon Golf Club. He and his wife, Anne, own Anric Corp., an Omaha
dairy trading firm. He declined Tuesday to reveal Gateway's liabilities saying, "They have been taken
care of."
The IRS seized the property on the campuses, in Lincoln at 1033 O St. and Omaha at 808 S. 74th
Plaza, June 14 for nonpayment of taxes. The IRS had filed liens on the property involving as much as
$147,998 in trust fund taxes - money withheld from employees' wages that represents income,
Social Security and unemployment taxes.
Ed Daemon, IRS public affairs officer in Omaha, confirmed the sale.
Waddington said he liked the potential he saw in the troubled school and planned an expansion
within the next few months. He said he also was meeting with faculty to provide assurances that their
jobs and paychecks were on solid ground.
Gateway students and staff have been on spring break since Monday. Classes will resume Thursday
as scheduled.
In addition to its IRS problems, Gateway, which has 175 students at its Lincoln campus and 350 at
the Omaha campus, learned that the Nebraska Student Loan Program will stop guaranteeing new
financial aid loans to Gateway students. It was uncertain how the sale would affect the loan program.
Omaha World Herald (Metropolitan Edition)
Midlands News, Monday, June 17, 1996
IRS Could Act to Sell Gateway
By Michael O'Connor (World Herald Staff Writer)
The federal government probably will sell the property of Gateway College if the career school does
not pay $147,998 in delinquent taxes.
Ed Daemon, an Internal Revenue Service spokesman in Omaha, said that he could not comment
specifically on Gateway but that sale of seized property is generally the next step in such cases if
payment is not made.
The IRS seized the school's property Friday for nonpayment of social security and income taxes
withheld from employee wages and unemployment taxes. The electronics and computer-training
school offers classes in Omaha at 808 S. 74th Plaza and in Lincoln at 1033 O St.
Daemon said he could not comment on when the for-profit college must pay the taxes to avoid sale
of the property. The unpaid taxes are for a period from 1992 through this year.
In a news release Saturday, the college's president, John Queen, said that the "IRS and the college
have worked out their differences" and that classes would be in session Monday.
Daemon said he could not comment on Queen's statement. Daemon said only that as of Monday
morning the IRS still had control of the school's property. Queen could not be reached for comment
Monday morning.
Queen's news release also said there were plans to sell the school to a group of career school
owners. The release did not identify the owners or say when the school would be sold.
The school faced other problems last week.
On Thursday, the Nebraska Student Loan Program announced that it would stop guaranteeing new
loans to students at the school's Omaha and Lincoln campuses.
Problems that led to the action included the college's not refunding loans to lenders when students
withdrew from classes, said Tricia Dunn, spokeswoman for the Nebraska Student Loan Program.
The college has until July 3 to appeal the loan action.
Omaha World Herald (Sunrise Edition)
Midlands News, Tuesday, March 12, 1996
Electronics School Faces Federal Fine,
Program Cuts
By Rick Ruggles (World Herald Staff Writer)
The U.S. Education Department plans to cut off....many federal financial aid programs because of
alleged improprieties at (Gateway College) and fine (it) $275,200. Among other accusations, the
government said ....that Gateway College....failed to refund financial aid money to the government
and lenders when students withdrew; made unauthorized distributions of federal financial aid; and
had far too many students withdrawing from its programs.
*Note: According to the above article, John E. Queen is the president of Gateway College. In
March of 1995, the employees were told that Keith R. Feilmeier (see below) was the president of
the school.
Omaha World-Herald (Metro Section)
Business, Page 12, March 4, 1996
Mail Sorting Firm Settles Civil Lawsuit
SUMMARY: Federal authorities....agreed to settle a civil fraud lawsuit for a fine of $620,462.
....postal inspectors investigated the company's pre-sorting activities in late 1994.
-------------------------------------------------------------------------
*Note: Keith R. Feilmeier was vice-president and chief operating officer of Postal Services, Inc.
during this period according to his resume.
Omaha World-Herald (Sunrise Edition, 9/9/90, Page 1B)
Omaha Bankruptcy Case Investigated
Link to Commonwealth Funds Sought
SUMMARY:
John Queen was the Special Deputy Receiver of Commonwealth Savings Co. receivership when
Kent C. Johnson, the former assistant special deputy receiver, allegedly embezzled nearly $1.3
million.
Queen resigned ....after Kent Johnson told investigators that he took $20,000 in May 1988 from a
Commonwealth account to go into business with Queen at Phoenix Sign Corp.
Queen declined to discuss the nature of Johnson's ownership in Phoenix Sign, saying the matter
(was) under FBI investigation. In an affidavit....Queen (told the FBI) .... Johnson deposited
$703,000 in Phoenix Sign accounts from September 1989 to August 1990.
Queen served as registered agent for Globe Neon (Sign), which was headed by Keith Feilmeier....,
a longtime business associate of Queen's. Queen (was) also president of Phoenix Management
Corp. which acquired Globe Neon's stock in Gateway Electronics Institute in September of 1987.
Globe Neon forgave a $336,000 loan to Gateway as part of the transaction.
Feilmeier served as Gateway's president ....for at least a year after the stock sale. (In fact, Feilmeier
is the current president of Gateway in 1996, though the March 12 article states that Queen is the
current president).
Phoenix Sign was incorporated May 11, 1988. Globe Neon creditors were notified about May 13,
1988 that a "transfer in bulk" of Globe Neon assets to Phoenix Sign would occur May 23, 1988 ....
On May 18, 1988, the International Brotherhood of Electrical Workers, Local No. 22, forced
Globe Neon into bankruptcy.... The union had been unable to collect on a 1987 U.S. District Court
judgement awarding it $45,936 from Globe Neon for spending employees' pension and health and
welfare funds.
....Rick Myers, attorney ....believes the creditors' objections were abandoned when it became
apparent that the bank's mortgage on the Globe Neon equipment and inventory was more than the
property was worth.
The bankruptcy action over Globe Neon Sign Corp. remains unresolved (as of 9/9/90).
Feilmeier, Queen and Ochs were commercial loan officers at Omaha National Bank in the 1970s.
Other Omaha World-Herald articles you may find interesting are:
"2 at Gateway Accused of Embezzling"
3/16/89 (Sunrise Edition, Page 25). The 2 accused were Keith R. Feilmeier and Robert Ochs.
"Two Face Trial Over Pell Aid"
4/18/89 (Metro, Page 8). In which the accusation is broken down into $20,904 for Feilmeier and
$30k something for Ochs.
"Man Convicted Of Embezzling"
6/13/89 (Sunrise Edition, Page 30). Keith Feilmeier was convicted of Embezzling $20,904 by a
jury.
"Diverted Funds Net Probation"
8/21/89 (Metro, Page 5). Feilmeier is sentenced to 1 year probation by Judge William Cambridge.
"Legal Mistake Spurs Dismissal"
9/9/89 (Sunrise Edition, Page 55). Judge William Cambridge vacated the convictions of Feilmeier
and Ochs because the indictment did not include the words "knowingly, willingly and unlawfully."
-----------------------------------------------------------------------
This article was posted to Usenet via the Posting Service at Deja News:
http://www.dejanews.com/ [Search, Post, and Read Usenet News!]