Dallas HVAC trade school owner gets almost 20 years for fraud

The former owner of a Dallas area school that trained military veterans in the heating and air conditioning industry has been sentenced to more than 19 years in federal prison for defrauding Veterans Affairs out of about $70 million, authorities said.

Jonathan Davis, 43, also misled student veterans attending his commercial school, Retail Ready Career Center, in Garland.

The now-defunct school received approximately $70 million in GI Bill money, making it one of the largest recipients of a trade school. He has been in federal custody since April, when a federal jury convicted him of seven counts of wire transfer fraud and four counts of money laundering.

Davis’s own words describing his lies and fraud – recorded in his personal diary seized by officers – helped seal his fate, authorities said.

“There are several decisions ahead that will ultimately make the difference whether I succeed or fail. More heartbreaking conversations, more humiliating experiences, more lying is in order,” Davis wrote in an electronic diary he kept on his computer.

The magazine, in which he mulled over money and dreamed of wealth, became a key piece of evidence against Davis during a nearly two-week trial in Dallas federal court, officials said. When the money started pouring in, Davis went on to buy a $2.2 million house in Dallas, a $428,000 Lamborghini, a $280,000 Ferrari and a $260,000 Bentley, prosecutors said.

During Wednesday’s sentencing, U.S. District Judge Brantley Starr Davis also ordered $65 million in restitution and $72 million forfeiture to the federal government.

“A jury found that Mr. Davis lied to multiple government agencies, while stuffing his pockets with veterans’ GI Bill benefits even as they struggled to get by,” acting US Attorney Prerak Shah said in a statement. “Mr. Davis’s crimes were a slap in the face for the sacrifices our military made, and we are proud to have put him behind bars for such a long time.”

Derek Staub, a lawyer for Davis, had argued that the charges amounted to charges of civil violations, not crimes.

Retail Ready Career Center closed suddenly on September 27, 2017, as federal authorities investigate the school for profit.
Retail Ready Career Center closed suddenly on September 27, 2017, as federal authorities investigate the school for profit.(Eva-Marie Ayala / The Dallas Morning News)

Staub said many of his client’s graduates were satisfied with their education. The school’s graduation rate was 89% and the placement rate was 81% in senior year, the company said in court files.

Davis previously told The Dallas Morning News that many of its students were stranded out of state in 2017 when officers raided the school.

He filed multiple legal objections to the government’s civil suit for confiscation, which were unsuccessful. And Davis sued the government on behalf of Retail Ready in September 2019, alleging, among other things, a violation of the Fourth Amendment, which protects against unreasonable searches and seizures.

The school provided students with housing assistance in local hotels, including meals and transportation. Retail Ready has trained more than 2,500 people, some of whom progressed to jobs that paid more than $75,000 a year, the company said. More than 90% of the students were veterans, school officials said, most of whom needed financial assistance.

Davis was indicted in November, about three years after the federal civil forfeiture was filed, resulting in the seizure of his bank accounts and other assets.

Davis was broke when he came up with the idea of ​​marketing his school’s six-week HVAC training to veterans, prosecutors said.

He realized he could charge up to $21,000 per student for the course — payable by the Veteran’s Educational Assistance Act of 2008, also known as the post-9/11 GI Bill, the courts say.

But Davis first needed official approvals from the VA, the Texas Workforce Commission and the Texas Veterans Commission, officials said. To get those approvals, Davis lied by claiming that he was not facing any criminal or civil actions at the time and that his school was an established institution in good financial shape, prosecutors said.

However, Davis was “facing numerous civil judgments over unpaid debts,” authorities said, and he had a pending service theft charge.

Davis also told the Texas Veterans Commission that he had run his school for two years when it had only been in existence for a few months and had not yet trained a single student, prosecutors said. Retail Ready didn’t even have a building or basic supplies when Davis indicated he was ready to begin instruction, the government said.

He also filed false financial statements with state agencies, the FBI said.

“I lied to the accountant I use for my auditing service, I told him I have nothing in the name of the company other than a lease… and that I had a bank account with expenses because it’s a disaster and wouldn’t paint a good picture Davis wrote in his journal.

He started recruiting veterans for his school in 2014 and promised them success. But many of its graduates found that Retail Ready didn’t “teach them many of the basic skills needed for entry-level jobs,” prosecutors said. Some of those former students testified at the trial, telling jurors that they felt used and cheated, the US law firm said.

Retail Ready Career Center CEO and Founder Jon Davis stands outside the building that still houses his company in Garland, Texas, on Thursday, September 26, 2019.  with GI Bill funding he received for his school.  But he says the government has wrongly turned a potential civil regulatory case into a criminal case.

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