Back in 2011, Florida’s Keiser University, a for-profit college under investigation by the Florida Attorney General, managed to save face, and avoid punishment, by becoming a nonprofit institution.
Arthur Keiser, the school’s “chancellor” (and founder and owner) sold the college to Everglades College Inc., a nonprofit entity that also operated Everglades University. Keiser, understandably, didn’t reveal how much he was paid for offloading the school, but it turns out he’s still making a hell of a lot of money, despite the fact that his school is now a nonprofit entity.
According to an article in the New York Times:
As president of Everglades, Arthur Keiser earned a salary of nearly $856,000, more than his counterpart at Harvard, according to the college’s 2012 tax return, the most recent publicly available. He is receiving payments and interest on more than $321 million he lent the tax-exempt nonprofit so that it could buy his university.
And he has an ownership interest in properties that the college pays $14.6 million in rent for, as well as a stake in the charter airplane that the college’s managers fly in and the Holiday Inn where its employees stay, the returns show. A family member also has an ownership interest in the computer company the college uses.
All of this is perfectly legal, of course, and lots of other people make money from funds normal colleges pay to rent property or use services, but this little game the Keiser family has going here is really something else.
Keiser, who founded his college in 1991 with money from his mother’s divorce settlement, managed to run the college, which trains people in various vocational fields, for decades using extensive federal grants and loans students received. And then when authorities stated to regulate the school the family switched tactics, became a nonprofit, and started to collect vast personal payments for property he owns that the school has to use. Never mind that $850,000 salary.
Keiser maintains, somewhat vaguely, that this was all according to plan. As he told the New York Times.
“My goal has been to build a family legacy,” he said. Becoming a nonprofit “was a natural transition for us,” and “for our students, too,” he said, allowing the institution to expand into a residential college.
Yes, a family legacy, which is to say, there’s an awful lot of money that his institution has provided for his family.
(It’s worth pointing out that a lot of this situation appears to be due to the fact that Keiser University was a privately held for-profit college. If the publicly-traded University of Phoenix became a nonprofit institution it would work out very differently.)