Financial Troubles Jeopardize School

The well-known acupuncture school in St. Petersburg also faces several lawsuits.
By GRAHAM BRINK, Times Staff Writer
© St. Petersburg Times - Published January 28, 2002

ST. PETERSBURG -- Su Liang Ku is well-known as one of the pioneers of acupuncture in the United States, arriving in the early 1970s after President Richard Nixon re-established ties with China.

In 1986, Ku opened the Florida Institute of Traditional Chinese Medicine in St. Petersburg, where students could learn the ancient medical art from a true master.

Fifteen years later, the dream appears to be crumbling.

Students of the school at 5335 66th St. N are complaining about canceled classes, faculty attrition and shoddy record keeping. A recent graduate said she had to clean bathrooms herself because no one was hired to do the job. Students, who pay about $23,000 for a three-year degree, are frustrated. Morale is low.

Several lawsuits have been filed claiming the school breached contracts and committed fraud. The state licensing commission also is looking into complaints.

Worse yet, the school's financial disarray is jeopardizing its accreditation. Without accreditation, federal grants and guaranteed loans could dry up.

"We have informed them in writing that they are on notice to show cause as to why they shouldn't have their accreditation withdrawn," said Roger J. Williams, executive director of ACCET, the Accrediting Council for Continuing Education and Training.

Among the recent financial troubles:

The Internal Revenue Service hit the school with a $45,735 lien in October for failure to pay payroll taxes. The school paid the lien three weeks ago.

A routine government audit revealed that the school kept thousands of dollars in unused student aid that should have been paid back to the U.S. Department of Education. The school negotiated a deal to pay back $73,581 in $1,500 monthly increments. Recently, the school renegotiated a deal to lower the monthly payments to $1,000.

The school closed its Tampa satellite campus and clinic at 1802 E Busch Blvd. in November. The Bank of America had begun foreclosure proceedings in September after the school stopped making payments on the $288,750 mortgage. The school recently sold the property, and the bank dropped the case. Tampa code enforcement also placed a lien on the property in September for failure to remove trash, which was eventually cleaned up.

The school settled a lawsuit for $11,900 with two former employees, Billy Potter and Jill Bevan, who said they were fired after they spoke out about what they believed were "numerous violations of state and federal law" regarding student financial aid and disbursements. The school is fighting two other lawsuits by students who claim officials misled them about the program and mistreated them when they complained. In one suit, the school's lawyer withdrew from the case, telling the judge that the school had stopped paying its legal bills.

The school's founder and president, Su Liang Ku, received about $200,000 in personal loans from family members two years in a row, which he pumped into the school. The loans represented 24 percent and 47 percent of the school's annual revenues in 1999 and 2000, according to independent audits conducted pursuant to licensing applications.

In 2000, Ku faced a $74,558 foreclosure suit on his personal rental property on 63rd Way N in St. Petersburg that was eventually resolved.

School officials say they have always been able to get the money they needed when they needed it, said lawyer Jeffrey Blau. The school has a solid history, he said, and the quality of education is well regarded.

"The graduates are well trained and go on to good careers," Blau said. "That's the bottom line."

About 65 students currently attend the school. They learn acupuncture -- the practice of inserting tiny needles into the body to stimulate healing -- among other things. They are supposed to perform 800 hours of service at the student clinic, where they treat patients under the guidance of seasoned faculty members for a range of ailments from back pain to hay fever.

Few of the school's detractors dispute the legitimacy of acupuncture. Some even praise the school's academic rigor and the quality of the professors. It's the way the school is run that raises questions.

When Diana Thomas quit as clinic manager 18 months ago, she sensed she was fleeing a sinking ship. The school was filthy, she said, and the air conditioning barely worked. Thomas said she had trouble ordering paper towels because the school owed money to so many distributors.

"The administration seemed to have no priorities except to just stay afloat," she said.

Last summer, several students complained to the state about other problems. They said the school promised to offer a master's degree but then tried to tie it to an unexpected tuition increase. It turned out the school was not licensed to grant a master's degree.

Former student Pamela Allen got so fed up she filed a lawsuit. Allen, a Lutz resident who transferred to the school in January 2000, listed many problems: class schedules were changed or were inaccurate, staff quit and were fired on a regular basis, and the Tampa campus was understaffed.

In fall 2000, the school asked some students to sign a month's worth of missing attendance sheets just before an audit by an accrediting agency, Allen said, though some students had not attended all the classes. For months, Allen said, administrators strung her along about how much credit she would get for her 16 months at the Maryland Institute of Traditional Chinese Medicine.

Allen said she tried to get copies of her student records to substantiate that the school was keeping accurate records. She was told the records weren't available or the staff was unable to locate them. Another time, Allen said she was told she would have to find her own attendance records in the unstaffed registrar's office.

Disgusted, Allen contacted Tampa lawyer William L. Yanger in April. Yanger said he set up meetings to resolve the problem but said the school did not accept the olive branch. After the lawsuit was filed July 25, the sides agreed to mediation. The school canceled the meeting the day before it was to take place, court records show.

Allen wrote to consumer and accrediting agencies to outline her complaints. In response to one of the letters, Blau wrote that Allen was "out of control" and that school officials would write to all the regional and national agencies that license acupuncture practitioners and tell them that they could not certify that Allen had the "requisite mental stability to be permitted to practice traditional Chinese medicine."

Allen, 47, holds three degrees from Florida State University, including a doctorate in mass communication. She has worked in Washington, D.C., with the Center for Population, Health and Nutrition and as a public health manager for Johns Hopkins University.

"The mentally unstable tag was pure retaliation," Yanger said. "She's smart, educated and she's right. That scares them."

Allen passed the National Board exams but doesn't have her diploma. The school claims she has course work left to complete. Allen says she has met all the requirements for graduation. Without the diploma, she cannot open a practice.

Ku, 61, declined to answer questions.

Blau said the school was willing to negotiate, but Allen made that impossible by continuing to criticize the school in letters to accrediting agencies. Allen declined the school's offer to let her take the remaining classes on a one-on-one basis in Tampa and for her to make up the final exams that she missed, he said.

In December, the Florida State Board of Independent Colleges and Universities sent a committee to the school to check out complaints and see whether the school should be granted a higher level of accreditation.

Cindy Bellia, assistant director for the commission, said preliminary reports suggested the school was okay academically, but signs of money woes raised "red flags."

"We'll be taking a closer look at those over the next few months," she said.

-- Times news researcher John Martin contributed to this report.