IN THE MATTER OF THE BALIN INSTITUTE OF TECHNOLOGY,
Docket No. 90-67-ST
Student Financial Assistance Proceeding
Appearances: Russell B. Wolff, Esq., Office of the General Counsel, and Nan Shepard, Esq., for the Office of Student Financial Assistance, United States Department of Education.
None at present for the Balin Institute of Technology. See footnote 1
Before: Judge John F. Cook
On August 30, 1990, the Office of Student Financial
Assistance (OSFA) commenced a proceeding to terminate
Respondent's (Balin's) eligibility to participate in Federal
student financial assistance programs authorized by Title IV of
the Higher Education Act (HEA) of 1965, as amended, 20 U.S.C. §
1070 et seq. (Title IV programs) and to fine Balin $500,000.00
based on certain alleged violations of law. Thereafter, Balin
filed a request for hearing dated September 19, 1990.
A hearing was held in Atlanta, Georgia from February 26 through March 1, 1991. At the conclusion of the hearing a posthearing order was orally issued by the judge setting a briefing schedule. In accordance with that order OSFA filed its brief and proposed findings of fact.
On May 7, 1991, Balin filed a Motion for an Extension of
Time to file Balin's posthearing brief. Additional time was
requested because Balin is in Chapter 11 reorganization, and
approval of attorney's fees by the Bankruptcy Court was required.
Balin's attorney's stated that they would have no recourse but to
withdraw from the case if a motion for extension was not granted.
OSFA opposed Balin's motion. In view of the fact that an
emergency action to withhold funds from the respondent
institution or its students was previously rescinded after
hearing by the Director of Student Financial Assistance Programs,
and in order to preserve due process, on May 16, 1991, an order
amending the briefing schedule was issued granting Balin an
extension until June 28, 1991, to file its brief and proposed
findings of fact and conclusions of law. However, the order
provided further that--
if respondent's attorney for any reason withdraws from
the case before the brief is filed, then the respondent
itself will be responsible for filing its brief by that
same deadline. For this reason counsel for the
respondent will be required to inform respondent's
president, of this requirement by Friday, May 31,
On May 21, 1991, Balin's attorneys filed a notice stating
that they had informed Balin's president--
that the tribunal had amended the briefing schedule to
provide that Balin's Brief, Proposed Findings of Fact,
and Conclusions of Law are due by June 28, 1991, and
that respondent itself will be responsible for filing
these documents by that date in the event that the
undersigned counsel withdraws from the case.
On June 17, 1991, Balin's attorneys filed a notice of
withdrawal as counsel. The attorneys stated that the Bankruptcy
Court had granted the interim fee application with modifications
on May 30, 1991, but that, notwithstanding, Balin had not paid
the fees and costs approved by the Court. The attorneys stated
that it was necessary to advise the tribunal that they were
withdrawing as counsel to Balin, effective immediately. They
stated that the president of Balin had been advised that this
would occur if the approved amounts were not paid by June 14,
1991. They stated further that:
A copy of this Notice is being sent to him and to his
local bankruptcy counsel by facsimile and by first
class mail, postage prepaid. Dr. Hecht has been
previously advised, as the tribunal ordered, that Balin
Institute's post-hearing brief, proposed findings of
fact and conclusions of law with respect to the
proposed termination and fine proceeding are due no
later that June 28, 1991, and that no further
extensions of time will be granted.
Balin has not filed a post-hearing brief or any proposed
findings of fact or conclusions of law in this proceeding.
On July 5, 1991, OSFA filed a Motion for Termination of
Proceedings and Entry of Judgement Against Respondent. In that
motion OSFA stated, in part, as follows:
9. In accordance with 34 C.F.R. § 668.89(c)(2), the
court has the authority to terminate a hearing and
issue a decision adverse to a party if that party does
not comply with established time limits for submission
of written documents. (See also, Fed. R. Civ. P. 55.)
10. Such a decision is most appropriate in this case
given Respondent's willful noncompliance with the Order
Amending Briefing Schedule of May 16, 1991.
Respondent's counsel has advised the court on more than
one occasion that Respondent was aware of the June 28,
1991, deadline for posthearing submissions.
Respondent's counsel has further represented that
assuming he was compensated, he would comply with the
Order on behalf of his client. Nonetheless, when the
Bankruptcy Court authorized Respondent to provide
counsel with costs and fees, Respondent refused to do
so. This action by Respondent followed counsel's
specific advisement to Respondent that counsel would
withdraw from the case if the approved amounts were not
paid by June 14, 1991. (See, Notice of Withdrawal of
Counsel, June 17, 1991.)
11. The court was more than accommodating of
Respondent's situation when it granted the initial
extension, especially since this extension allowed
Respondent continued access to Federal funds.
Respondent's current actions place it in intentional
defiance of the court's Order and should not be
12. This Motion to terminate proceedings is also consistent with the decisions in In The Matter of Transwestern Institute, Docket No. 90-86-ST (February 26, 1991) and in In the Matter of Arnold International University of Cosmetology, Docket No. 90-19-ST (March 1, 1991), and the Orders of Dismissal issued in In Re: Metropolitan Business College, Docket No. 90-93-ST (February 26, 1991) and in In The Matter of Mar-Pel's Beauty Academy, Docket No. 91-19-SP (June 6, 1991). In all these cases, decisions were issued adverse to a party for failure to timely file prehearing matters.
13. The fact that Respondent has failed to timely file
a posthearing brief and proposed findings of fact
warrants the same result. The posthearing submissions
are an integral aspect of the hearing, and may be of
greater significance than prehearing matters in cases
such as this, where considerable evidence was presented
at the hearing through witness testimony. Moreover, a
party that seeks a hearing on the record cannot be
allowed to decide which parts of the process it wants
to participate in and which aspects of the hearing it
desires to avoid. The court was careful to note at the
conclusion of the taking of witness testimony that this
only concluded a 'particular phase of the case.' (Tr.
at 919, 920.) To potentially benefit from the process,
Respondent has to participate in all 'phases' of the
case, not only those it chooses. To excuse
Respondent's violation of the court's Order would
establish a dangerous precedent for other Respondents
to ignore specific filing deadlines or attempt to
manipulate the process to their advantage.
. . . .
Wherefore, OSFA respectfully requests that an
initial decision be issued by the court terminating
these proceedings and terminating Respondent's
eligibility to further participate in the Federal
student financial assistance programs and imposing a
fine of $500,000.
On July 11 and 15, 1991, OSFA filed statements concerning
the fact that OSFA was not able to deliver a copy of the motion
of July 5, 1991, to the Respondent at the address of 18062 Irvine
Boulevard, Tustin, CA 92680 because Respondent had moved and left
no forwarding address, and a forwarding telephone number had been
disconnected. OSFA's counsel stated in a letter of July 11,
1991, that he used the above address because it was used by
Balin's then attorney to serve copies on his client of the
matters he filed on May 7, 9, 13, and June 17, 1991.
Since OSFA had not achieved actual delivery of a copy of its
motion to Balin an Order to Show Cause was issued by the
undersigned on August 8, 1991, which stated, in part:
ACCORDINGLY, IT IS ORDERED, That the Respondent
show cause within 14 days, i.e. by August 22, 1991, why
a decision should not be issued terminating this
proceeding and entering a decision against the
respondent, based upon the reasons set forth in
Appendix A [a copy of OSFA's motion of July 5, 1991].
Service by certified mail was then attempted upon Balin at
four different addresses which are the same as those set forth on
the service list attached to this decision. These included (1)
the address used on the original notice of intent to terminate
eligibility to participate in Title IV, HEA programs and to fine
Balin dated August 30, 1990, (2) the address given by Balin's
president during the hearing in this case as his home address,
(3) the address used by OSFA in Tustin, CA, as stated above, and
(4) a post office box address supplied by one of Balin's
attorneys. A certified mail return receipt was returned from the
18062 Irvine Blvd., Tustin, CA address which contained a
signature of a person who signed as an agent of Balin and
indicated that the Order to Show Cause had been received on
August 12, 1991. The envelope containing the Order to Show Cause
which had been sent to 20945 Cayuga Lane, Lake Forest, CA was
returned with a notation on the outside: "Refused 8-10-91." The
envelope containing the Order to Show Cause which had been sent
to 1285 Peachtree Street, Atlanta, GA was returned with a
notation: "Moved Left No Address."
Under 34 C.F.R. § 668.89(c) (1990), the administrative law judge
is authorized to--
take whatever measures are appropriate to expedite the
proceeding. These measures may include, but are not limited
to, the following--
. . . .
(2) Setting time limits for hearings and submission of written documents; and
(3) Terminating the hearing and issuing a decision against a party if that party does not meet those time limits.
34 C.F.R. § 668.91 provides as follows:
Verification of mailing and receipt dates.
(a) Verification of the Department of Education's
mailing dates and receipt dates referred to in this
subpart is evidenced by the original receipt from the
U.S. Postal Service.
(b) If an institution refuses to accept a notice mailed under this subpart, the Secretary considers the notice as being received on the date that the institution refuses to accept the notice.
Balin has not to this date ever filed a post-hearing brief,
proposed findings of fact, or conclusions of law, or a response
to the order to show cause.
In view of Balin's failure to comply with the order of
May 16, 1991, providing that Balin's post-hearing brief, proposed
findings of fact and conclusions of law were due by June 28,
1991, and in view of Balin's failure to respond to the Order to
Show Cause by August 22, 1991, which constitute a failure to
comply with 34 C.F.R. § 668.89(c), IT IS ORDERED:
1. That a decision be entered against Balin terminating its eligibility to participate in student financial assistance programs under Title IV of the Higher Education Act of 1965, as amended, and
2. That Balin immediately and in the manner provided by
law pay to the United States Department of Education a
fine in the amount of $500,000.00, and
3. That these proceedings be terminated.
John F. Cook
Administrative Law Judge
Issued: September 6, 1991
Designated Department Official/Representative
A copy of the attached document was sent by certified mail return
receipt requested to the following:
Dr. Donald Hecht
Balin Institute of Technology
18062 Irvine Blvd.
Tustin, CA 92680
Dr. Donald Hecht
Balin Institute of Technology
20945 Cayuga Lane
Lake Forest, CA 92630
Dr. Donald Hecht
Balin Institute of Technology
P.O. Box 1307
Tustin, CA 92681
Dr. Donald Hecht
Balin Institute of
1285 Peachtree Street, N.E.
Atlanta, GA 30309
Russell B. Wolff, Esq.
Office of the General Counsel
U.S. Department of Education
400 Maryland Avenue, S.W.
Room 4083, FOB-6
Washington, D.C. 20202-2110
Director, Audit and Program Review
Office of Student Financial Assistance
Room 3923, ROB-3
7th and D Streets, S.W.
Washington, D.C. 20202-5254