Stone Academy students get early court win; judge orders owners to post $5M against possible verdict

A judge concluded Monday that 1,000 or more students who claim they were cheated of an education by now defunct Stone Academy are likely to win a class action lawsuit and ordered the family that ran the school to produce $5 million to guarantee payment of a verdict.

Superior Court Judge Barbara Bellis issued what’s known as a prejudgement remedy in the unfair trade practice and breach of contract suit. She said evidence presented so far suggests the suit will be certified as a class action and the students will succeed in persuading a jury that willful and reckless conduct by the school owners left them with a substandard education when the school closed without notice in February.

“With respect to the class action aspect of this litigation, there is no prohibition against the issuance of a prejudgement remedy at this stage, and the courts can issue preliminary relief prior to class certification,” Bellis wrote. “Even at this early stage the court finds probable cause that a class will be certified and that the class is likely to prevail on the (unfair trade practices) and breach of contract claims.”

The suit claims that the private, closely held school sold students a “ticket to a sinking ship.” It marketed itself as providing a medical services education when the owners knew it was in dire financial shape and couldn’t adequately provide accredited courses and clinical experience, the suit says.

About 800 students at the school’s three campuses, many of whom had borrowed heavily, were left without degrees when the school closed. Many others who graduated found that they were unable to pass a licensing examination and, with the school closed, were unable to return for remedial courses.

“This is a really good first step to getting some relief for this class of more than 1,000 practical nursing students whose lives have been turned upside down by Stone Academy’s closure and the really bad conduct of the principals,” said David Slossberg, one of the lawyers representing the students. “Given this conduct they need a remedy and this is a really good first step to making it happen.”

Lawyers for the school and its owners could not be reached or chose not to discuss the ruling.

The students had asked for a prejudgement remedy of $10.35 million.

In addition to the school, Bellis said three principals are responsible for the lesser sum of $5 million. They are Joseph Bierbaum, who owned 25 percent of the school, Richard Steinberg, who controlled a trust that held the remaining 75 percent and Mark Scheinberg, who was an owner and actively involved in running the school until he was forced to divest himself in a 2022 settlement with the Department of Justice.

Mark Scheinberg and the school paid $1.02 million then to resolve allegations that they violated the federal false claims act by concealing money order payments he made to prevent loans from being counted in Stone Academy’s student loan default. He also was accused of failing to disclose the school’s actual, higher default rate to federal regulators.

The three men have the option of posting a $5 million bond to satisfy a potential verdict. If they don’t post a bond, lawyers for the students will be allowed to force the three to disclose assets in court during a discovery process. If there were no settlement, a trial by jury would be scheduled in September.

The students and former students are pressing their suit under the Connecticut Unfair Trade Practices Act, which charges the school with willful and reckless business misconduct. If a jury were to find the school liable under the state law, the students would be eligible for unlimited punitive damages in addition to compensation for their losses.

Bellis said in her decision that evidence produced in court so far suggests that, “prior to its sudden closing, Stone Academy’s shortcomings included their failure to provide in person, suitable clinics at approved off-site locations that were required for certification, and their failure to provide qualified faculty for all courses.”

Those shortcomings combined with others, the judge wrote, resulted in a substandard pass rate for students taking nursing licensing examinations. She said the school closed abruptly when the state began an audit to determine the extent of the problems – even though the school agreed to the audit and the state Office of Higher Education authorized its continued operation.

“On the issue of the closure, the court rejected the testimony of the defendant Joseph Bierbaum as false, and the court found his testimony in large part as not credible,” Bellis wrote. “The evidence established that Stone Academy students were given no warning of the closure, as on February 15, Stone Academy students were informed that classes were discontinued as of February 16.”

“Not surprisingly, as a result of these actions by Stone Academy, their students have encountered problems in obtaining their certifications,” Bellis wrote.