By Kate Conger
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But Chiantelli also ruled that only Zenzi's Beauty College Inc., the corporation, was responsible for paying the award, not owners Zenzi and Curtis Cook personally. That distinction effectively gave the Cooks a way out. By the time the judge's ruling came down, the Cooks had already transferred the school to a new company, headed by their son, called CZM Enterprises Inc. Shortly thereafter, they disbanded Zenzi's Beauty College Inc.
To students who had waited years for a refund, some staving off collection agencies all the while, the outcome was a disappointment. But an attorney for the school's owners is not sympathetic. As he sees it, the Waters Act was an onerous law to begin with. "I call it overlegislation," says John Boone, Zenzi's attorney. "They put in penalties that just made no sense."
Most of the students took the loss and went on with their lives. Dodds, who was owed almost $5,000, returned to work as an electrical contractor, and dutifully continued to pay off his loan. There's still a possibility he might get some of the money back from the state, he says, but he's not holding his breath.
The fact that Zenzi's has remained in business, without even receiving a warning from the state, is a glaring example of how badly California's Bureau for Private and Postsecondary Vocational Education has stumbled on the job. Four other schools across the state have also lost class-action lawsuits, and in at least one instance, the owner has continued going about his business as if nothing had happened.
Michael Abbott arrives in a rush, late to the meeting he has arranged. Abbott, chief of the Bureau of Private and Postsecondary Vocational Education since last November, has come to discuss his department's state of affairs. The first thing he does is take off his coat. "It's officially Friday afternoon," he says, grinning around the room.
Members of Abbott's staff have begun answering questions without him, specifically the status of Zenzi's. Deborah Godfrey, the bureau's lead analyst, has just explained that Zenzi's applied for a license renewal in December. The bureau is doing a routine investigation because the school has changed ownership, she says. Abbott nods his head in agreement.
But when Abbott and his staff learn that Zenzi's changed hands three years ago, ducking its obligation to pay the $650,000 awarded from the lawsuit, the room suddenly grows very quiet. All eyes turn to Abbott, who lets out an audible gasp. "Well, we may be doing something more than a routine investigation, but we're not allowed to say," he says.
Apparently, the top state official in charge of policing vocational schools -- and his staff -- had no idea that Zenzi's was ever sanctioned in a court of law. In the three years since, Abbott's department has taken no disciplinary action against the school.
Abbott won't say anything more about the Zenzi's case but, speaking hypothetically, says schools are required to inform the bureau 30 days before they close or change ownership. "At that point we must evaluate the old and new owners," he says. "To the extent that that doesn't happen, well, it's a problem. It's illegal. If it looks like the entities are concealing the change to avoid liability, that's a problem."
Boone, Zenzi's attorney, says he is not sure when his client notified the bureau about the change in ownership.
Abbott finds himself stepping in these messes all the time. By most accounts, he's just the man to lead the bureau out of the mire. But he has taken over a department that is still investigating complaints dating back to the Wilson administration, and when problems sit around that long, they tend to explode.
The Student Tuition Recovery Fund is a perfect example. The fund was meant to serve as a payer of last resort, "a safety net for students who don't receive the educational outcome they expected," says Abbott. But, Abbott says, the fund's architects never anticipated the vast number of students who would be asking the bureau for money.
Trade schools across the state are tanking in the face of class-action lawsuits. Now the agency is facing millions of dollars in claims, and has admitted the fund is simply broke. First in line for payment are approximately 250 students from a now-bankrupt medical trade school in Chico. They have submitted claims for $2 million. Once those students collect, another 400 to 500 students from four other schools, including Zenzi's, are waiting for their fair share, estimated at a couple million dollars more at least. A bit of resentment seems to creep into Abbott's voice as he describes the fund's bleak financial straits. "As a policy matter, the fund was a good idea. But was its construction sound? Not when you consider the burden these class actions place on the department and other schools," he says.
But it's not as if the fund lost all its money overnight. In fact, the fund remained solvent until the industry shook things up in 1997, and the agency went to pieces. It took another lawsuit, this one against the state itself, to focus attention on the fund's problems.