HARTFORD, Conn. — The state's case against Stone Academy has been expanded by Attorney General William Tong, his office announced Monday.
Tong filed an amended complaint this week, detailing millions of dollars reportedly siphoned from the nursing school by its owners.
Stone Academy was a for-profit business owned by Joseph Bierbaum and Creative Career Trust, which Mark Scheinberg established for his benefit, Tong alleges. The amended complaint states that Bierbaum and Scheinberg earned "vast sums from unfair and deceptive conduct."
The state sued Stone Academy in July after abruptly closing its doors in February, leaving thousands of students in the dark regarding their education.
Tong had said that the school's owners had not cooperated with state investigators by withholding texts and emails while mounting aggressive public relations campaigns designed to obfuscate and mislead the public, its students, state officials, and lawmakers.
Tong's office said at the time that evidence compiled through numerous depositions, interviews, and review of thousands of documents was irrefutable. Tong alleged that Stone Academy had engaged in unfair conduct and willfully deceived its students in clearly violating Connecticut law.
With the amended complaint, Tong stresses that the school was "financially incapable of living up to its promises due to the siphoning of millions of dollars."
Stone Academy promised an education that would position students to become Licensed Practical Nurses in less than two years, with hands-on training from industry leaders," Tong said. "The evidence shows otherwise. While Stone students struggled in unheated classrooms without textbooks, experienced teachers, or promised clinical experiences, Stone’s own financial records show how Stone’s owners hoarded millions of dollars for luxury cars, mansions, and their other businesses. The more we investigate, the more greed and lies we uncover. This is a textbook case of consumer deception. The evidence is growing stronger by the day. We will hold Stone and its owners accountable, and we will get justice for Stone’s students.”
The amended complaint continues how Stone Academy's enrollment and revenues surged at the height of the COVID-19 pandemic, enriching its owners at the expense of students.
Tong states that the school's profits swelled from around $660,000 per year in 2019 to more than $3 million in 2020 and 2021, bolstered by increased student loan revenue, student fees, and federal pandemic aid.
However, students never benefited from the increase, the complaint states. While the school's nursing exam pass rates faltered, the owners paid themselves nearly $5 million in distributions in 2020 and 2021, Tong alleged.
The school's income from student fees increased from $1.8 million in 2018 to over #$3 million in 2021, according to the complaint, yet many students did not receive the books they paid for and struggled to learn from photocopied handouts instead.
Stone Academy's financial statements were obtained by Tong's office and the outsized distributions began during the pandemic after they received over $18 million in tuition payments (including $16.3 million in federal loan or grant revenue), according to the complaint. The school also received nearly $1.8 million in federal Payroll Protection Plan funds that were supposed to support the salaries of staff and instructors, Tong said.
According to the complaint, Bierbaum had bought a $1.4 million mansion in Rocky Hill. It also alleges that the school paid over $100,000 a year for three luxury vehicles – two Teslas and an Audi – driven by Stone Academy insiders.
In addition to the distributions, Stone Academy's owners also allegedly used the school as a bank for other businesses.
Since Dec. 31, 2021, the school reportedly loaned over $2.5 million to a network of affiliated family businesses which included Paier College of Art, which Bierbaum ran. The school's assets were used to secure at least $3.3 million in mortgages by two affiliated businesses, including Paier and its landlords Oyster River, Olmstead Realty, and Sound Education LLC, according to the complaint.
Tong said financial records show that the school loaned nearly $440,000 to Sound Education for part of its downpayment it used to buy property by the University of Bridgeport, where Scheinberg was a trustee. The property was then leased to Paier.
Tong stated that while the school's owners got rich, the school itself failed to provide the education and training it promised to its students which rendered many of its graduates indelible to sit for the NCLEX licensing exam.
Many of Stone Academy's faculty were also not qualified to teach practical nursing students, Tong stated. The school reportedly only provided a fraction of the 750 hours of clinical experience that was required. The complaint stated that students could not graduate on time due to a backlog of over 1,000 students waiting for clinical hours.
The clinical experiences the school promised were allegedly invalid and in some cases, self-serving. That included directing students to perform COVID-19 temperature screenings for Stone and Paier. At Bierbaum's direction, Stone Academy even stopped taking attendance to track students' progress, the complaint states.
Jennifer Glatz is a digital content producer at FOX61 News. She can be reached at jglatz@fox61.com.
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