The owner of a for-profit trade school convicted of bilking the U.S. Department of Veterans Affairs will forfeit $72 million to the federal government, Acting U.S. Attorney Prerak Shah announced today.
In an order handed down Wednesday, U.S. District Judge Brantley Starr ruled that Jonathan Dean Davis, the 43-year-old owner of Retail Ready Career Center, will forfeit $72,480,225.03 – the total amount the VA paid him for military veterans’ student tuitions – to the government. The order included the specific forfeiture of more than $4.7 million in cash; numerous luxury vehicles, including a Lamborghini, a Ferrari, a Bentley, two Mercedes-Benzes, and a BMW; and real estate in Dallas and Utah worth more than $2.5 million.
Mr. Davis was found guilty of seven counts of wire fraud and four counts of money laundering following a six-day trial in April.
“This defendant attempted to argue that because the proceeds of his fraud were in his business account, rather than in a personal bank account, he should not have to give it all back. But neither the American taxpayer nor the Court recognize such a distinction. We are proud to say that $72 million in fraudulently-obtained money is headed back into U.S. coffers,” said Acting U.S. Attorney Prerak Shah.
According to evidence presented at trial, Mr. Davis marketed Retail Ready’s six-week HVAC training course to veterans whose tuition and fees would be covered by the Veteran’s Educational Assistance Act of 2008, also known as the post-9/11 GI Bill. The defendant, who was essentially broke at the time of the crime, realized that he could charge $18,000 to $21,000 per student for the six-week course, if only he could get approval from the VA to accept GI Bill payments for tuition – which required prior approvals from the Texas Workforce Commission (TWC) and the Texas Veterans Commission (TVC).
These agencies required applicants to certify that they were not personally facing any criminal or civil actions, and to prove that their schools were established educational institutions in stable financial condition. Knowing he could not meet these requirements, Mr. Davis repeatedly lied and concealed information from these agencies.
“Several decisions lie ahead that will ultimately make the difference if I succeed or if I fail. More gut-wrenching conversations, more humiliating experiences, more lying is in order,” Mr. Davis wrote in an electronic journal he kept on his computer, which was recovered by federal agents during a search of Retail Ready. The journal became a key piece of evidence at trial.
Mr. Davis assured the TWC that he was not subject to any civil actions, when, in fact, he was facing numerous civil judgments over unpaid debts. He also told the TWC that he was not facing any criminal charges, when, in fact, he had a pending felony charge for theft of services.
Mr. Davis told the TVC that Retail Ready had been operating as a school for two years, when, in fact, the company had only existed for a few months and had never trained any students. He claimed that Retail Ready was fully prepared to train veterans, when, in fact, the company lacked a building and basic supplies. He even lied to an independent accountant about the school’s financial condition, and then submitted false financial statements to both the TWC and the TVC.
Eventually, based upon Mr. Davis’ lies to the TWC and TVC, the VA accepted Retail Ready’s application, allowing Mr. Davis to charge veterans’ tuition and fees to the VA under the GI Bill.
In 2014, he began recruiting student veterans, promising to prepare them for lucrative careers in the heating and air conditioning industry. Upon entering the workforce, however, many of these veterans discovered that Retail Ready had failed to teach them many of the basic skills necessary for entry-level technician jobs.
Several veterans testified at trial that they had relied on the Retail Ready’s fraudulently obtained VA endorsement and were sorely disappointed about their post- Retail Ready career prospects and pay. They were also shocked to learn of the rate at which Retail Ready’s six-week course had drained their GI Bill benefits, testifying that they felt “used,” “taken advantage of,” “deceived,” and “bamboozled.”
Mr. Davis is set to be sentenced on Wednesday, Sept. 22. He faces up to 180 years in federal prison.
The VA’s Office of Inspector General conducted the investigation with the assistance of the Federal Bureau of Investigation’s Dallas Field Office and the United States Postal Inspection Service’s Fort Worth Field Office. Assistant U.S. Attorney Dimitri Rocha is handling forfeiture. Assistant U.S. Attorneys Douglas Brasher and Fabio Leonardi are prosecuting the case.
Department of Justice
Office of the U.S. Attorney
Northern District of Texas