Brazil firm alleges Mizzou staged a ‘heist’ in failed attempt to boost enrollment
Several years ago the University of Missouri embarked on a plan that offered foreign students a path to college through a U.S.-based online learning program.
Recruiters in other countries lined up the students, who would go on to earn an American high school diploma through MU’s program and then, the university hoped, wind up on the campus in Columbia, Missouri — boosting enrollment as the rate of new U.S. college students flattens.
But fewer than 10 of the thousands of students who enrolled have gone on to attend MU. And the university now finds itself the target of a lawsuit filed by its former business partner in Brazil, which claims the university cheated the company after getting its help establishing the online program there.
What MU’s behavior amounted to, the suit says, was a “heist” perpetrated through deception, fraud and other “criminal acts.”
MU denies wrongdoing. Ultimately a judge or jury will decide culpability in this latest chapter in a now two-year-old dispute between the school and the South American company.
But regardless of how it turns out, the litigation highlights the importance American universities now place on enrolling international students to shore up their finances.
Students from foreign countries certainly add diversity to college campuses and expose their American classmates to other cultures. But perhaps more important are the dollars they bring in. Even as their numbers have diminished due to COVID-19 restrictions and the Trump administration’s harsh immigration and travel policies, foreign students help keep the lights on at tax-supported public universities by paying full, out-of-state tuition.
Mizzou, like some others, has gone beyond merely recruiting foreign students. They’ve built close relationships with high schools in those students’ home countries by offering online classes that can lead to an American high school diploma and guaranteed enrollment at a U.S. university.
Several years ago, some MU officials thought it might lead to hundreds of new students with freshly minted high school diplomas from Mizzou Academy attending college classes in Columbia. But that hasn’t happened, a university spokesman acknowledged Friday.
“While we definitely encourage Mizzou Academy students to consider MU as a college choice,” Christian Basi wrote in an email, “there have been less than 10 international students who have matriculated from Mizzou Academy to MU since 2012.”
Meanwhile, the number of international students overall at MU has fallen 47 percent since the peak in 2015 — 1,319 in the fall semester compared to 2,507 six years ago — with much of that decline felt before the pandemic depressed enrollment.
The victim of the alleged “heist,” as it is characterized in court documents, is the company that Mizzou’s College of Education hoped would turn Brazil into a recruiting ground.
The middleman was a firm in Santa Lucia called High School Servicos Educacionais, or HSE for short. The university signed an agreement with HSE in 2015 to help market its online high school classes to the teachers and parents of students at dozens of high schools through a program called Mizzou K-12, which was later rebranded as Mizzou Academy.
Thousands of Portuguese-speaking students signed up for Mizzou K-12’s English immersion classes and began working their way toward dual degrees: one from their Brazilian high school and one from the University of Missouri High School. With the latter came the guarantee of becoming a Missouri Tiger, if they chose.
But four years into Mizzou’s five-year contract with HSE, there was a falling out over money. Mizzou K-12 decided to cut out the middleman and begin working directly with the high schools that HSE had connected with Mizzou.
That’s when the alleged “heist” occurred.
According to HSE, the university used deception and fraudulent means to achieve that transition in 2019. Before announcing that it was severing ties, officials at Mizzou K-12 began copying word for word the operations manual HSE had provided high schools to supplement the online learning program and removed all references to the company in it with the intent of passing the document off as the university’s own work.
And while a team of Mizzou K-12 officials was plagiarizing the manual, the suit says, one of its leaders connived to get a copy of HSE’s confidential client contact list that the company had built up over years and was given out only on a need-to-know basis.
The company says that emails between Mizzou K-12 officials that were entered into the court support its contentions.
Says one marked “confidential” and sent Jan. 4, 2019, from the college of education’s chief business development officer, Tanya Haeussler, to five members of the Mizzou K-12 team:
“One of the documents we will need to present to Brazil schools after the flip is a new 2019 MK12 Operations Manual that takes out HSE’s involvement. THIS IS HIGHLY CONFIDENTIAL ... go through the entire document and make sure any changes that are needed are included, including removing all HSE references.”
She further instructed the recipients to “be circumspect” in choosing someone outside the group for assistance in making the changes.
“They need to CLEARLY understand what we are intending to do, and understand that this is highly confidential.”
Three days after sending that email, the suit alleges, Haeussler sent another one to an HSE official asking for an updated contact list of all the coordinators at the high schools the company had been dealing with.
The suit alleges the list was obtained under false pretenses. Instead of using it to supposedly “carry out their contract obligations,” it helped Mizzou K-12 tell those high schools of its intention to remove HSE as intermediary.
Those emails went out on Feb. 14, 2019. HSE wasn’t informed until later that day that the university was exercising its option to end the relationship early by giving a one-year notice. The school year in Brazil runs from February to December.
HSE did not know about any of the maneuvering that went on behind the scenes when it filed its first lawsuit in April 2019, which alleged that MU acted in bad faith when it breached the agreement. The emails and other information turned up during the discovery process.
Surprise bills
MU’s falling out with HSE began a year earlier, according to court documents, when the company got what it claims was an unexpected invoice from Mizzou K-12 in May 2018. The bill said HSE owed $4.1 million retroactively for past-due tuition and fees from the previous three years on top of the nearly $5 million the firm had already paid.
HSE says it challenged what it contended was a “surprise” bill and said it amounted to a tuition increase that HSE, not the students, would have to cover. HSE figured things had been worked out when, on Jan. 1, 2019, the company received another invoice, only this time the supposed past-due amount was $5.2 million.
Three days later, Haeussler sent that email marked “confidential” in the subject line instructing her team to start revising the operations manual in secret.
That original suit was dismissed in November on a technicality before any of the evidence was heard. The university argued that, as a unit of government, it couldn’t be sued, and a judge agreed. HSE has appealed that decision.
The new lawsuit includes additional allegations based on information that turned up during the discovery process for the old one. HSE aims to get around the issue of sovereign immunity this time by suing top university officials individually, as well as International Education Associates LLC, a little-known company that the university created near the beginning of its big push to teach high school courses overseas.
IEA’s stated goal is “to assist the University of Missouri’s College of Education in expanding its Mizzou K-12 Online Program to international markets,” according to records on file at the Secretary of State’s office in Jefferson City.
Its exact role in all this is unclear. The suit alleges that IEA and university officials committed “criminal acts” beyond violating federal copyright and trade secrets laws, including fraud and violations of the Racketeer Influenced and Corrupt Organizations Act, more commonly known as RICO.
The suit outlines in vague terms a scheme involving alleged incidents of fraudulent billings and secret payments to “one or more” of the university’s curators and others associated with the online high school program.
According to the lawsuit filed Jan. 19 on behalf of HSE by Kansas City attorney Kenneth N. Caldwell:
“The objective of the Enterprise was the enrichment of IEA investors/partners, and others who are persons favored and approved by MK12 to receive a disguised income stream from tuition and fees paid by approximately four thousand (4,000) Brazilian students.”
The suit also alleges that International Education Associates paid artificially inflated invoices to a consulting company owned by Haeussler, a university employee, and then tried to bill the South American company for the costs IEA incurred paying those invoices.
Caldwell declined comment on the lawsuits.
The university declined to make any of the officials alleged to be part of the scheme available for interviews, nor would it provide information on the purpose of IEA or its activities.
“Due to the pending litigation, we’re unable to provide comments on this,” Basi’s email said.
MU gave the same reason for refusing to discuss whether it was appropriate for Haeussler and her private company, Taratuga LLC, to have a business relationship with HSE.
She is currently a university employee in an administrative support role for the College of Education, Basi said, and did not respond to The Star’s request for comment.
High hopes for program
The University of Missouri began offering high schoolers correspondence courses more than a century ago. But a full curriculum wasn’t added until 1999, when University of Missouri High School became an accredited, diploma granting online program through the extension service.
According to the Mizzou Academy website, a high school in the Chinese city of Qindao became University of Missouri High School’s first foreign partner in 2008. But the big focus on foreign high school students began shortly after University of Missouri High School was moved to the College of Extension and rebranded as Mizzou K-12 with the addition of a grade-school and middle-school curriculum.
The academy now serves 7,000 students in all 50 states and more than 40 countries. Domestic students pay $250 per course per semester, and foreign students pay twice that. Those charges and fees help cover costs of the program.
Previously, the university has said the program was self sufficient. Basi did not directly answer a question of whether taxpayers also support it, other than to say “Mizzou Academy is funded through a variety of sources.”
The partnership with HSE was a big boost to the program’s budget at the time it began. A university news release in June 2016 said the addition of Brazilian high school students nearly doubled the size of the whole program at the time to more than 6,000 students.
That news release noted that through a program called MizzouDirect, graduates were pre-admitted to MU, which “could enhance Mizzou’s enrollment and diversity efforts.”
The dean of the College of Education at the time, Kathryn Chval, was hopeful.
“Within a few years, we could potentially have hundreds of new international students bolstering Mizzou’s enrollment numbers and diversifying our campus in amazing ways,” Chval said.
Mizzou K-12 founding executive director Zac March was also enthused about the future.
“The sky is the limit in terms of how far we can expand this program,” he said.
But as for becoming a way to boost MU’s enrollment, it’s been a bust.
“It is not a significant recruiting tool for international students,” Basi wrote, and characterized its role in teaching high school here and abroad “part of the university’s overall mission of service.”
March, who like Haeussler was a defendant in the lawsuit that was dismissed, retired unexpectedly from the university without public explanation in the fall of 2019.
UM System President and MU Chancellor Chancellor Mun Choi removed Chval as dean last summer, citing “management issues” and a “cultural divide.” It is unclear whether the dispute with HSE had any bearing on those changes.
Chval declined comment and March did not respond to requests for comment.
This story was originally published February 1, 2021 at 5:00 AM.
