Concord School of Law Update:
False Affidavits filed with Federal Court
(Says Concord not a part of Kaplan Higher Education Corp.)
I need your help.... Please Help! Kaplan has defame a student's good name to
obstruction any resonable review a complaint filed against the first online
law school. However, if there's nothing to the student's complaint and
lawsuit, why did Kaplan officials file false affidavits in a Pennsylvania
1. On November 29, 2003, false statements, either knowingly or with
reckless disregard for the truth were submitted to a Pennsylvania federal
court as a further attempt to frustrate and/or obstruct the administration of
2. That is, Cassandra Colchagoff, Assistant Dean,
Kaplan, Inc's Concord School of Law, (she is also an attorney at law),
knowingly caused a false affidavit to be submitted to federal court,
in her name, attempting to avoid liability that provides specifically at
paragraph 6 the following:
"Concord operates as a division of Kaplan, Inc. and is in no
way connected to Kaplan Higher Education Corporation ("KHEC"),
which is an incorporated subsidiary of Kaplan, Inc."
3. In addition, Gerald Kosentos, Executive Vice President of
Operations, Kaplan Higher Education Corporation ("KHEC"), knowingly
caused a false affidavit to be submitted to the court, in his name,
attempting to avoid liability that provides specifically at paragraph
6 the following:
"KHEC operates approximately fifty-five vocational schools across the
United States, none of which has any relation to Concord Law School
("Concord"), which is an unincorporated division of Kaplan, Inc. and
a wholly separate entity."
4. However, as provided below, on November 15, 2002, Jonathan Grayer,
Chairman and Chief Executive Officer, Kaplan, Inc. told shareholders that Gary
Kerber the founder of Quest, runs Kaplan Higher Education and Concord School
"That brings us to our largest division, and our newest,
Kaplan Higher Ed. We provide programs to students in health care -
Allied Health is another name for that segment - in criminal justice, helping
individuals become police officers and other types of law-enforcement
professionals; legal professionals, paralegals mostly. We have both a graduate
program and an associates' degree program; design and fashion, not
something most of us know a lot about, but Gary does; and business,
undergraduate business degrees for people who want to get into some area of
commerce; and, finally, information technology, which had been our
fastest-growing program until the recent slowdown.
Gary Kerber is with us today. Gary was the founder of Quest
Education, which we bought out of the public market in 2000, and ran
a public company, a founder, who had the same long-term view of this business
as we did, and has been an excellent addition to the top of management of
Kaplan and The Washington Post Company. He's been mentioned a couple of times,
but I don't think anyone has seen him. So, Gary, if you'll stand up so people
can get a good look. This is a very important man to all of you right
This business has boomed since we bought it, and Gary and his
management team are the reason why.
We have 45 campuses around the country. I showed a similar slide with 31,
I believe, at the last shareholder meeting right after we bought it, and
you'll see there's still a lot of opportunity for red circles in those blue
states, and more importantly there's still a lot of blue states, and we're
going to be opening up more campuses as we go. It takes a lot of management
bandwidth to get one open, not easy, but we're excited about the prospect of
Year-to-date through nine months, those are our numbers. Very profitable
business. You should know that on the total, the fourth quarter is, far and
away, the largest quarter of the year for us. So we will finish substantially
higher than $22 million in operating income. It has been an enormous year for
your Higher Ed Division.
The public markets have recognized this segment, and the reason is you
have high margins, and very, very large moats around the business because
there's a lot of regulation and a lot of expertise needed to run these
schools. We're lucky to have Gary and his management team who can do
it. Your management team at Kaplan could not have gotten into this business on
our own. We would not have had the expertise to do so.
What are the highlights? Well, look at that. This is a problem for next
Total revenue up 43 percent and operating income up 93 percent on a base
of in the low 20s, not bought, but organically grown. This is the kind of
year, when you look back on companies' histories, when great businesses are
built, and I'm sure The Washington Post had a similar kind of time. This
is our time, and Gary is doing it.
We have 20,000 enrolled students getting their associate or bachelor's
degree, fully accredited from the same accreditors that accredit any great
school in this country. We're going to open up new schools, and we are always
looking for acquisitions. We have bought six or seven campuses this year. It's
hard to buy schools, for a number of reasons; one, there's pricing pressure as
private equity has come into the market, but, two, there's an enormous amount
of regulation and small operators have not always followed the letter of the
law. That poses risks for us when we acquire, so it's hard to get a deal done.
We're actively looking, but more importantly, we know we will open up more
campuses ourselves to grow our distribution. We're sharing programs among
schools, and we're getting the benefits as we grow of a larger distribution
system. We can afford better talent, and we're keeping the best people that we
This business is all about the top management. Revenue is not the largest
challenge here. The largest challenge is making sure that your students who
are borrowing money from the federal government are able to repay their loans.
If they can't repay their loans, you get that funding opportunity from the
federal government taken away, you have no business, and the risks here are
The sister company to our Campus Division that Gary runs is Kaplan
Higher Education Online. This is actually a student going to Concord Law
School. The student lives in Alaska. There is no law school in Alaska. We've
joked about petitioning to become the official law school of the State of
Alaska because we're the only law school that can offer a program there.
Alaska, we did talk to them, and they said, "What will you
pay us?" and that was the end of that discussion.
But you'll see, he looks like he's going to law school, doesn't he? Well,
he is, and next week we're graduating our first class-about eight students,
which is a remarkable achievement for them. They bet on the Internet in ways
that go beyond even how we're betting on the Internet. They have spent an
enormous amount of time, much of which occurred between the hours of 10 p.m.
and 4 a.m. They worked, they're all working adults, these graduates, and
they're graduating with a full law degree, and we're having a big party for
them in L.A. next week."
5. The Washington Post, Kaplan, Inc.'s Parent Corporation reported the
following during its June 2003 Media Mid-Year Report:
"Kaplan, meanwhile, under the extraordinary leadership of CEO
Jonathan Grayer and his team, continues to grow quite rapidly in revenue and
To refresh your memory, Kaplan reports its operating results in two
groups. Supplemental Education includes Kaplan Test Prep and Admissions, the
business in which we help students prepare for college and graduate admissions
exams; Kaplan Professional, which offers licensing and continuing education
training for professionals in financial services and real estate; and Score,
our after-school learning center business for younger kids. Kaplan
Higher Education includes online as well as traditional colleges and offers
degree and certificate programs.
Test Prep now accounts for 29 percent of Kaplan's revenue; 21 percent
comes from Kaplan Professional; and Score is at 8 percent. Revenues from
Kaplan Higher Education account for 42 percent of Kaplan's total revenue.
Test Prep remains a fierce battle in every market with competitors large
and small. But John Polstein and his team continue to win most of the battles.
Kaplan Professional has had another strong five months under Eric Cantor's
The biggest news here, of course, is Kaplan's expansion into the United
Kingdom with its $87 million acquisition of FTC in March. This company is one
of three offering training for accountancy tests in the U.K., Singapore, and
Hong Kong. We negotiated carefully before taking Kaplan's first major step
into international waters and can report, three months later, that FTC's
business looks even better than we thought.
We've added a strong management team led by William Macpherson, who had
built the business. The market is a large one, and FTC has plenty of room to
And just last week, Kaplan announced the acquisition of Inspection
Training Associates, the leader in home inspection training and education,
which will become part of the Kaplan Professional schools.
Although it's the smallest of Kaplan's four major businesses, Score
continues to show gratifying economic progress, while making us all feel great
about the service it provides. This business is nudging into profitability
while continuing to expand.
Kaplan's Higher Education division is booming ahead. We
now have more than 10,000 students online through Kaplan College and Concord
Law School. While Concord is small compared to the total size of
Kaplan, I have to take time to brag. Of the ten students in Concord's first
graduating class, six passed the California bar on the first try. This 60
percent pass rate, while it comes from a very small sample and may not be
repeated, is higher than the 57 percent first-time pass rate from
California-based ABA-accredited bricks-and-mortar law schools. It's also
higher than the 22 percent first-time pass rate of California state
Again, I mention these numbers not because they foretell a trend that
online students will outperform everyone else. Rather these results offer
proof, on a small scale, that online higher education works. This bodes well
as Kaplan rolls out additional online programs.
Meanwhile, Higher Ed's traditional bricks and mortar campuses now have
roughly 40,000 students each year in 47 schools in 15 states. Under
Gary Kerber's leadership, they have had huge increases in student
counts, revenues, and operating income. People are flocking to these schools
because they produce practical results in terms of jobs and promotions in a
very tough labor market."
6. This information has been forwarded to the FBI.... Please Help!