In the Matter of the Complaint Against

BORINQUEN UNIVERSITY
Post Office Box S-4068 at
Old San Juan, Puerto Rico 00905 and

BORINQUEN UNIVERSITY
at Old San Juan, Puerto Rico 00904

This address added to Complaint by amendment prior to the hearing.

P.S. Docket No. 6/14

09/26/77

Duvall, William A. Chief Administrative Law Judge

Thomas A. Ziebarth, Esq.
Law Department
United States Postal Service
Washington, D.C. 20260

Frank Carbo, Esq.
DeDiego 309 (P.D.A.)
22, Santurce, Puerto Rico 00912

Before: William A. Duvall, Chief Administrative Law Judge

INITIAL DECISION ^1/

This proceeding was initiated on June 2, 1977, when the Office of Consumer Protection, Law Department, U. S. Postal Service, the Complainant, filed a complaint in which it charged that Borinquen University at various addresses in San Juan, Puerto Rico, is engaged in conducting a scheme for obtaining money or property through the mails by means of false representations in violation of 39 U. S. Code 3005.

The specific representations alleged by Complainant as being falsely made by the Respondent are as follows, from Paragraph 3 of the Complaint:

"(a) BORINQUEN UNIVERSITY has the physical facilities, faculty, finances, staff and curriculum necessary for the operation of a bona fide Medical School;

"(b) BORINQUEN UNIVERSITY has, or will have, a bona fide Medical School in operation offering a four-year American Medical Studies program with classes commencing in September 1977;

"(c) The BORINQUEN UNIVERSITY Medical School is currently approved by the Department of Public Instruction of the Commonwealth of Puerto Rico;

"(d) BORINQUEN UNIVERSITY Medical School will be operating with a provisional accreditation of the Council of Higher Education in Puerto Rico; and

"(e) BORINQUEN UNIVERSITY Medical School has applied for accreditation and expects to receive a 'letter of reasonable assurance' (viz., a kind of provisional accreditation) during its first academic year from the Liaison Committee on Medical Education of the Association of American Medical Colleges and the American Medical Association."

On July 11, 1977, and within extensions of time granted for that purpose, the Respondent filed its answer to the Complaint in which it (1) admits doing business in Puerto Rico for years as a teaching institution, but denies that it is engaged in conducting a scheme for obtaining money through the mail by means of false representations in violation of 39 U. S. Code 3005 or any other Federal, State, or local statute; (2) denies that any advertisement or direct mail promotional materials are used to attract, induce, or in any other unwarranted method have money or property remitted through the mail; (3) denies that exhibits submitted with the Complaint are used for the purposes alleged in the Complaint or that other such material as well as oral interviews with prospective students are so used; and (4) denies making the representations alleged in Paragraph 3 and its Subparagraphs of the Complaint, or those that are implied in all of the Complaint, including Paragraph 4 thereof.

As affirmative defenses, Respondent alleges: (1) The Liaison Committee, the Complainant, or both of them, are attempting to discredit the school, prevent its interviewing further applicants, and prevent its opening a medical school as planned; (2) the Order obtained to detain all mail addressed to Respondent and other mail addressed to other persons and entities at various addresses is a violation of the civil rights of persons and entities not a part of Respondent; and (3) failure of Respondent to prevail in this procedure could result in the inability of the school to start functioning as planned and could very well lead people to think that the allegations in the Complaint are true.

Some advertising material used by the Respondent was attached to the Complaint as Exhibit 1 thereto, consisting of an advertisement appearing in the New York Times of April 17, 1977. Exhibit 2 to the Complaint consists of a thirteen-page piece of direct mail promotional material, not all of which pages are mailed at the same time. Exhibit 3 to the Complaint is an excerpt from the Wall Street Journal of June 10, 1977, on which appears an advertisement of Borinquen University. These items are attached hereto as Appendices A, B and C to this decision.

The hearing in this proceeding was held on July 19 and 20, 1977, in San Juan, Puerto Rico, and on August 22, 1977, in New York City. On the first day of the hearing, the depositions of the following individuals, whose depositions will be summarized, were received into the record. (Tr. 8, 13, 14).

1. James Roy Schofield, M.D. Dr. Schofield's educational training, experience, military service, national professional assignments, bibliography, and the like are outlined in his curriculum vitae which is Exhibit 1 to his testimony. Presently, he is the Director of the Division of Accreditation of the Association of American Medical Colleges, and during the 1976-1977 academic year he served as the Secretary of the Liaison Committee on Medical Education, acting in behalf of the Association of the American Medical Colleges, and during the 1976-1977 academic year he served as the Secretary of the Liaison Committee on Medical Education, acting in behalf of the Association of the American Medical Colleges and the American Medical Association. ^2/

2/ Hereafter in this decision, the Liaison Committee on Medical Education will be referred to sometimes as the Liaison Committee, the Committee, LCME or LC.

Historically, for a period of about one hundred years, medical schools sought some kind of peer recognition and this was obtained from the Association of American Medical Colleges and from the Council of Medical Education of the American Medical Association. In 1942 the accreditation functions of these two organizations were merged into the Liaison Committee. Graduation from a medical school accredited by the Liaison Committee automatically renders the graduate eligible to take an examination for licensing in any State, Commonwealth, or Territory of the United States. Each State or Territory has its own medical licensure laws, but graduation with the M.D. degree from a medical school accredited by the Liaison Committee is a prerequisite for direct licensure to practice medicine in the United States. (Schofield deposition, page 25)

The United States Office of Education, under the Commissioner of Education, maintains a system of recognition of all institutions of higher learning in the United States. This system includes institutions for instruction in medicine, law, and other professions. The supervision of the activity and the accreditation of medical schools is under the Liaison Committee, and this Committee is the nationally recognized accrediting agency for medical schools. (Schofield deposition, page 57)

On or about May 2, 1977, Dr. Schofield accompanied by Dr. Perry Culver, M.D., of Harvard University, Dr. John Kemph, M.D., Dean of the Medical College of Ohio and a member of the Liaison Committee, Dr. Stanley W. Olsen, M.D., the Provost of the Northeastern Ohio School of Medicine, Dr. Carlos Valvon, M.D., Professor and Chairman, Department of Community Medicine, Baylor College of Medicine, Houston, and C. R. Morris, M.D., Director of Pediatric Nephrology at the University of North Carolina School of Medicine, made a consultative visit to Borinquen University. They met Borinquen President, George Haggerty, Dr. Jose Muriente, a graduate in Dentistry, who is the Dean of Borinquen, Mr. John Haggerty, Vice-President, and Mr. Frank Carbo, ^3/ Respondent's Counsel, and a young lady who was a secretary of Borinquen University.

3/ Although Mr. Carbo is noted herein as being present at many meetings, interviews, conferences and the like, he insists that he has no proprietary interest in Respondent, but that his function is solely that of legal counsel to Respondent, its officers and staff.

On asking about quarters for the Medical School, the Committee was told that a building to be used for that purpose was being acquired. That such a building could be acquired and furnished in time to permit students to be enrolled by September, 1977, was doubted by the consultative committee. The representatives of Borinquen University then told the committee that a library was not necessary for first-year medical students. The witness, Dr. Schofield, observed that this was a remarkable departure from the usual planning of a medical school. (Schofield deposition, page 13)

In short, the information about such matters as faculty, clinical and hospital affiliation and availability, and finances was to the effect that little or nothing had been accomplished in any of those fields, but that there are plans for their accomplishment and completion in time for the Fall semester, 1977, enrollment. In respect to Borinquen University's plans to operate entirely on a tuition cost basis, Dr. Schofield stated that of the 146 medical schools in the United States and Canada none is able to operate accredited programs solely on the basis of tuition income. (Schofield deposition, page 16)

With respect to the admission program, the thirty-five dollar fee for filing an application for admission appears to be reasonable. Applicants are given the Miller Analogies Test, a standard test widely used, for which Borinquen University charges a fee of $350 to cover the test and interview. This test can be taken almost any place in the United States for from ten to fifteen dollars. (Schofield deposition, pages 18-19) The student who is accepted as a student is requested to send a certified check for $6,500 to reserve a place in the class. The general practice in this regard in the usual medical school is to call for a deposit ranging from $50 to $100, after which time arrangements are made for the payment of the remainder of the costs over a longer period of time.

In the establishment of a new medical school, the Liaison Committee regards the date of the appointment of a competent Dean as the date to be considered as the beginning of the process. In the thirty new medical schools established since 1960, the length of time between the appointment of the Dean to the enrollment of the first class has ranged from eighteen months to fifty-two months, with the mean of the experience of those thirty schools being about twenty-six to twenty-eight months. Based on this experience, it was the conclusion of Dr. Schofield and his colleagues that, as of the time of their May 2, 1977, visit it would not be possible for Borinquen University to make all the appropriate arrangements before the scheduled enrollment of the first class in September of 1977. (Schofield deposition, pages 22-25)

Dr. Schofield's office receives many inquiries, most of them from Northeastern United States, about Borinquen University and whether it is accredited. Borinquen University has not applied to the Liaison Committee for accreditation. (Schofield deposition, page 26)

There is a status for medical schools known as "provisional" accreditation, which is the first step leading to professional accreditation. For example, early in its experience an institution asks the accrediting agency (1) to come to judge whether it has a satisfactory plan for the development of a medical school, (2) to make a judgment as to whether the resources to implement such a plan can be obtained, and (3) to make a judgment whether the plan has a good chance of being implemented if these conditions are met. If the answers to these questions are in the affirmative, the Liaison Committee can issue what is known as a "letter of reasonable assurance," which is a legal determination sufficient to satisfy the requirements of statutes under which Federal funds may be transferred to the newly-formed medical school. (Schofield deposition, pages 26, 27)

Stage two in the procedure is usually at least a year before the enrollment of the first class, and this step is called "provisional" accreditation. Borinquen University has applied for neither a letter of reasonable assurance nor provisional accreditation. (Schofield deposition, page 28)

In Item 6, page 12 of Appendix 2, it is stated, "Borinquen University has as one of its objectives and goals the full accreditation of the Liaison Committee on Medical Education. This full accreditation cannot be obtained by any school until the first graduating class." This statement is incorrect, because "provisional accreditation" has usually been granted about twelve months before the enrollment of the first student. The schools are inspected each year and if a school maintains the required standards, by the time the M.D. degree is conferred upon the first class, the school is a candidate for full accreditation. (Schofield deposition, page 29) Since Borinquen University Medical School states that it plans to start in September, 1977, and since provisional accreditation precedes enrollment of the first student, this time schedule precludes the possibility of the first enrollee graduating from a fully accredited school.

A bona fide medical school is one which has a reasonable likelihood of being accredited by the Liaison Committee or one which already is accredited by the Liaison Committee. Based upon his observations of May 2, 1977, and upon what the Committee was told by the officers of Borinquen University in the conference of May 2, 1977, it is the witness's opinion that Borinquen University is not a bona fide medical school. (Schofield deposition, page 34)

In May, 1977, the faculty and the library of Borinquen University were inadequate, but Dr. Schofield was not aware of any development that might have taken place between May 2 and June 14, the date of his testimony.

On cross-examination, Dr. Schofield testified that there were in June, 1977, two medical schools operating in Puerto Rico without accreditation by the Liaison Committee. These schools are Universidad Internacional Eugenio Maria de Hostas and Universidad del Caribe, Escuela de Medicina. These schools and the Catholic University of Puerto Rico have "provisional" accreditation and they have applied for accreditation by the Committee. (Schofield deposition, page 69) But, as of the date of the Schofield deposition, no decision had been announced on those applications. (Schofield deposition, pages 42 and 44) If, as apparently happened, these schools (Hostas and Caribe) enrolled students before they became accredited, they would not necessarily have to wait with the usual 18 to 15 months between the appointment of the Dean and the enrollment of the first year class of medical students. (Schofield deposition, page 53)

The Catholic University does not enroll students yet, but all three of these schools have libraries, faculty, classroom facilities, laboratory facilities, and equipment. If Borinquen University requests accreditation and meets the stipulated procedures, the Committee would hold an inspection and make a decision in accordance with the regular procedure. (Schofield deposition, page 54)

It is suggested in the record (Schofield deposition, page 58) that the accrediting authority of the Liaison Committee which formerly extended for a period of four years recently was reduced to a two-year period, but this fact has no bearing on this proceeding.

In addition to Dr. Schofield's curriculum vitae which was Exhibit A to his deposition, the following exhibits were received in connection with his testimony: Complainant's Exhibit B, a pamphlet entitled "Accreditation of Schools of Medicine: Policy Documents and Guidelines"; Complainant's Exhibit C, a document entitled "Liaison Committee on Medical Education Procedures Leading to Provisional Accreditation of New Medical Schools"; Complainant's Exhibit D, a document entitled "Accreditation of Medical Colleges By the Liaison Committee on Medical Education"; Complainant's Exhibit E, a document entitled "Projected Budget for Borinquen University Medical Division, 1977-1978;" Respondent's Exhibit 1, a copy of an article entitled, "More Trouble for Doctors and Lawyers," from page 102 of April 25, 1977, issue of Business Week.

2. David Shanker was another witness whose deposition was received. Mr. Shanker saw Respondent's advertisement in the New York Times (Complainant's Exhibit 1 to the Shanker deposition) and he sent in a request for an application, together with $35 to pay the fee, on February 13, 1977. The application was received (Complainant's Exhibit 2 to the Shanker deposition) and an interview was arranged and held on March 6, 1977. Present were George Haggerty, John Haggerty, Frank Carbo, Esq. and two other representatives of Borinquen University, and David Shanker was accompanied by his father, Sidney Shanker, although Sidney Shanker was not present at the actual interview.

At the interview, the fee of $350 was paid, after which David Shanker was given an examination consisting of multiple choice questions and some mathematical questions. After the test, he was asked "three or four" questions, but the interview was cut short because the Borinquen University representatives said they had obtained the necessary information from Sidney Shanker. David was told that the University was going to seek a "letter of reasonable assurance," which should be forthcoming in May, 1977. (David Shanker's deposition, page 9)

At the conclusion of the interview, David was given a letter notifying him that he had been accepted as a student by Borinquen University (Complainant's Exhibit 3 to David Shanker deposition).

A letter of acceptance advises the recipient of the requirement to forward the first year's tuition in the amount of $6,500 to Borinquen University, and it also advised the recipient of the refund schedule in the event of the withdrawal of the student at certain time periods. Based upon information received from (a) two doctors whose names were mentioned at the interview by Borinquen University representatives; (b) two letters from the Council of Higher Education in Puerto Rico (Complainant's Exhibits 4 and 5 to the D. Shanker deposition); and (c) a friend of the Shankers living in Puerto Rico, or persons who were friends of a friend of the Shankers, the tuition was never sent to Borinquen University. Dr. Shanker and David Shanker sent a memorandum of the events of their experience with Borinquen University to, among other addressees, the Attorney General of the State of New York (Complainant's Exhibit 6 to the David Shanker deposition).

3. Sidney Shanker, Ph.D., David's father, was also deposed. Dr. Shanker is a professor of English at the City University of New York. He went with David when he was interviewed as mentioned above. Dr. Shanker was told that a Dr. Sherman, a professor of Anatomy from Downstate Medical College, would head the faculty on a rotating basis. He was also told that a Dr. Goldberg, of the Borough of Queens, would be in charge of curriculum and the elder Shanker was encouraged to contact both individuals. Mr. Haggerty also mentioned the name of a Mr. Landes, a New York State legislator representing the Great Neck area. As a result of communications from the three references given by Borinquen University's Mr. Haggerty, Dr. Shanker decided not to pay the $6,500 tuition, and he wrote a letter to Borinquen University requesting the refund of the $350 fee for the test and interview. The last request went unanswered.

During the course of David's interview, Dr. Shanker was told by Borinquen University representatives that there was a hospital that had dormitory facilities that would be available for students during their first year, and that the laboratory facilities also would be available for September, 1977, school opening. (Sidney Shanker's deposition, pages 10 and 11)

There was cross-examination of Dr. Shanker but it served principally to buttress the testimony he had given on direct. An exhibit to his testimony was a letter from a Mrs. Helen Margarida, a friend of one of Dr. Shanker's Washington, D.C. friends. Mrs. Margarida replied to some of Dr. Shanker's inquiries concerning Borinquen University.

4. The next deposition was that of Dr. Harry Elbaum, a dentist, 87-18 Avenue A, Brooklyn, New York. A friend of Dr. Elbaum's, Bruce Weiner, had given him an envelope (Elbaum deposition, Ex. 1) containing a number of papers including a letter addressed "Dear Applicant" (Elbaum deposition, Ex. 2A); a Borinquen University Medical School checklist (Ex. 2B), part of which (Ex. 2C) advises the applicant of the requirement to deposit the $6,500 within one week to assure his place in class; a curriculum covering a four-year period (Ex. 2D); and a listing of Borinquen University Medical Division admission requirements (Ex. 2E). Dr. Elbaum sent to Borinquen University, as directed, a money order for $35 with his application. A week later he received a telephone call from a woman in Puerto Rico who said that she was the secretary of Borinquen University. She told Dr. Elbaum to report to Howard Johnson's at Kennedy Airport on the following Saturday, but this date was inconvenient for Dr. Elbaum, so he later went to Puerto Rico for the interview on or about the 17th or 18th of April, 1977. (Copies of the airline tickets are Exhibits 4A and B to the Elbaum deposition) Dr. Elbaum took a test which lasted about twenty minutes and he was then interviewed by persons whom he identified as George Haggerty, someone else named Haggerty, and a third, unknown, person. After the interview, he saw, on the third floor, a computer and a classroom that would seat about ten people. The interview had been conducted on the sixth floor, and Dr. Elbaum was told that there were more facilities, including laboratories, on the upper floors but he was not shown those other facilities. Also, he was told that Borinquen University was in the process of acquiring another building. (Elbaum deposition, page 13) Dr. Elbaum was told that a Dean and a staff had been appointed and the Borinquen University representatives showed him resumes of the staff. Dr. Elbaum paid for the test and the interview with his check for $350. (Exhibit 5 to the Elbaum deposition)

On the same date, Dr. Elbaum was given copies of a letter from the Liaison Committee on Medical Education (Exhibits 6A and B of his deposition) and from the World Health Organization (Elbaum deposition Exhibit 7) addressed to George Haggerty, President of Borinquen University. The letter from the Liaison Committee is dated March 21, 1977, and related to a prospective visit to Borinquen University by a survey team in response to a formal request by Borinquen University for a letter of reasonable assurance. In this letter, Borinquen University was cautioned not to indicate that it was accredited. The letter is signed "J. R. Schofield/ms" over the typed name, "J. R. Schofield, M.D., LCME Secretary, 1976-77." On the left side of the page are the initials "JRS:ms." The World Health Organization's letter dated March 9, 1977, points out that the World Health Organization neither accredits nor recognizes medical schools. It publishes a list or directory of medical schools, but the mention in the directory does not indicate accreditation.

After the interview, Dr. Elbaum was given a letter of acceptance as a student at Borinquen University (Exhibit 8 to his deposition) in which he was told he was required to send the usual $6,500 for the first year's tuition. The withdrawal refund schedule also is set forth in this letter. Later, Dr. Elbaum requested that he be allowed until May 21, 1977, to make the required payment. (Exhibit 9 to the Elbaum deposition)

Dr. Elbaum was told by Borinquen University's representatives that they were not accredited by the American Medical Association, but that such accreditation was easy to get. (Elbaum deposition, page 26)

Dr. Elbaum was told, also, that in the following weeks Borinquen University representatives would meet with representatives of the Commonwealth of Puerto Rico, and that the school was almost guaranteed to get accredited by Puerto Rico.

Dr. Elbaum never sent the $6,500 tuition fee because his suspicions and doubts were aroused about the school by (1) Mr. Haggerty's quick acceptance of the qualifications of another applicant whose papers Dr. Elbaum had taken with him, (2) by the remarks of Postal Inspector Pack, and (3) by the remarks of the man who had picked him up and given him a lift to the school that morning. (Elbaum deposition, transcript pages 30-31, and Exhibit 9)

5. The next deposition was that of Norman Phillips of 200 Winston Drive, Cliffside Park, New Jersey. Mr. Phillips said he received from a friend exhibits identical to Exhibit 2A through 2E to the Complaint. He sent in the application and the check for $35. He later received word that he had been preliminarily accepted at Borinquen University and he was asked to go to New York for an interview. He went for the interview, which was attended by Mr. George Haggerty and two unknown persons. He was given the Miller Analogy Test and a minor I.Q. type of examination. (Norman Phillips deposition, page 7) The interviewers showed Mr. Phillips letters from the Liaison Committee and from the World Health Organization, and they asked him to interpret these letters. He said that he read the letters to mean that there was a possibility that accreditation might not be forthcoming. The Borinquen University representatives specified that they might not get accreditation and they stressed this. The only question asked by Mr. Phillips related to living conditions. In reply to this question, he was told that Borinquen University was going to take over a hotel or other facility so that the students could live together in a dormitory setting. About five minutes after the interview, he was told that he had been accepted by Borinquen University. Within the following week, as specified in the letter of acceptance, he paid the first year's tuition. (Norman Phillips deposition, page 10)

On cross-examination Mr. Phillips said that his letters of inquiry to the school had gone unanswered because, he understood, the mail was being detained. He added that it is very hard to run a school with this type of investigation in progress. He stated that he felt that accreditation would be almost impossible. On June 27, 1977, he wrote to Borinquen University requesting the refund of his tuition payment. This letter was prompted by information obtained by Mr. Phillips' father, who is a medical doctor, from Dr. Schofield, and from Dr. Muriente, the Dean of Borinquen University.

6. The next deposition is that of Saul H. Phillips, M.D., a radiologist and the father of the previous witness, Norman Phillips. After the interview of Norman, nothing was received by the family for several weeks. Then Norman sent to his father all the literature he had received from Borinquen University.

Dr. Phillips called Dr. Schofield who said Borinquen University's application for accreditation had been withdrawn by the school late in May. Dr. Phillips then called George Haggerty, who told him to call Dr. Muriente. Dr. Muriente said there was no application for accreditation and that Borinquen University had written a letter asking for information that would help Borinquen follow the steps for accreditation.

After the rulings were made with respect to the foregoing depositions, Complainant called as its first witness at the hearing, Dr. Enrique Perez-Santiago, M.D., Dean of the University of Puerto Rico's Medical School, which is accredited by the Liaison Committee on Medical Education and by the Superior Education Council of the Commonwealth of Puerto Rico. Graduates of this medical school are entitled to take State Board examinations in any State, Commonwealth or Territory of the United States.

The initial studies relating to the establishment of a medical school in Puerto Rico began in 1944. (Tr. 19) The actual process of establishing the legal basis, the location of funds, the recruiting of a faculty, and so forth, began in 1948 and it required two years, or until 1950, for their completion. The current cost per student at the University of Puerto Rico Medical School is approximately $12,000 per year per student. Before it admitted its first student, the University of Puerto Rico Medical School had a letter of reasonable assurance from the LCME. It received full accreditation after the graduation of the first class, in 1954.

The University of Puerto Rico Medical School could not teach 250 medical students on a budget of $1,625,000, which is the budget of Borinquen University. Puerto Rico Medical School has a total of 510 students in all classes and it now admits about 150 students each year. (Tr. 23, 24) The current annual budget is over $8,000,000.

The proposed curriculum for Borinquen University covers more or less the same subjects that are taught in medical schools having a departmental type of curriculum, but, based on his experience, Dr. Perez-Santiago said it would not be possible to teach 250 students these subjects with the proposed budget for Borinquen University. (Tr. 26) Four or five laboratories would be needed, as would a classroom that would accommodate 250 students and other facilities so that these students could be divided into groups and taught individually. Affiliation with a hospital is vital to a medical school, and arrangements with a hospital will have to be concluded prior to admitting the first class. (Tr. 27) The University of Puerto Rico Medical School has affiliations with hospitals having a total of 2,500 beds. Freshman medical students do some of their work in hospitals, (Tr. 28) although this depends to some extent on the curriculum. (Tr. 38)

On cross-examination it was pointed out that some medical schools are operating in Puerto Rico without accreditation. Because of a law passed by the Commonwealth Legislature in 1976, these schools that were in operation when the law became effective have a right to a temporary license. The University of Puerto Rico Medical School is the only fully accredited medical school in Puerto Rico. (Tr. 35) There is one school that has a temporary license for one year in Puerto Rico from the Superior Educational Council. Dr. Perez-Santiago repeated that in the experience of the Medical School of the University of Puerto Rico, 125 students could not be taught for the money in Borinquen University's budget.

The next witness was Miss Myrna Fuentes, a legal adviser in the Department of Education of Puerto Rico. The Department of Education does accreditation of educational institutions at the non-graduate level, but not at the graduate level such as medical and law schools. Hence, a statement to the effect that a medical school is currently approved by the Department of Public Instruction of the Commonwealth of Puerto Rico would be a statement of a legal impossibility. (Tr. 52) The Technical School in computer sciences which is run by Mr. Haggerty is approved by the Department of Public Instruction of Puerto Rico. (Tr. 57)

Postal Inspector Carlyle Pack was the next witness. He is domiciled in Newark, New Jersey, and in the course of his duties he was given the papers received by Dr. Harry Elbaum. Among these papers was the letter (Elbaum deposition 6A and B) to Mr. George Haggerty of Borinquen University from Dr. Schofield of the Liaison Committee. Inspector Pack checked with Dr. Schofield, who verified the authenticity of that letter.

Inspector Pack visited Borinquen University premises at 403 del Parque, Santurce, San Juan, Puerto Rico. This is the location of a fourteen-story condominium or apartment building of which four floors are occupied by Borinquen University. These floors are divided into classrooms with chairs and long tables in them. At the time of Inspector Pack's visit, there were some rooms with blackboards on the walls and there were some office spaces. There was a room designated as a library, but it contained nothing that appeared to be related to a medical school. Inspector Pack had not seen a list of faculty members, and, so far as he knew, at the time of his testimony, Dr. Muriente, the Dean, was the only faculty member. (Tr. 75)

During his investigation, the Inspector learned that representations were made by Borinquen University's representatives that the University was affiliated with Whitestone Hospital in New York. Through an Inspector located in New York, it was developed that Whitestone Hospital is not affiliated with Borinquen University; there have been no discussions by Whitestone regarding affiliation with Borinquen University; and there is no relationship between Borinquen University and Whitestone Hospital. (Complainant's Exhibit 1. See also, the testimony of Mr. Seymour Post, who testified on August 22, 1977, Tr. 3-49).

Inspector Pack received a letter (Complainant's Exhibit 3) from the Assistant to the Executive Secretary for the Council on Higher Education of the Commonwealth of Puerto Rico, in which it is stated that this Council had a representative to meet with Borinquen University's President on April 20, 1977, to discuss the procedures to be followed to apply for a license for the proposed School of Medicine. The President of Borinquen was also interested in licensing three other existing institutional units that offer technical courses. Mr. Haggerty said that the application would be submitted in the near future in respect to the medical school proposal to be inaugurated by Borinquen University. But as of May 9, 1977, the application had not been received by the Council on Higher Education.

Inspector Pack sent two test letters of inquiry to Borinquen University, in return for which he received materials attached to the Complaint as Exhibit 2, with the exception of pages 11, 12 and 13 of Exhibit 2, which is Appendix B to this decision. (Tr. 98) The first test letter of inquiry was under the name of James Henderson; and the second was under the name of Linda Colgate. The reply to the second letter is Complainant's Exhibit 6 and consists of documents which are the same, or the same in substance as pages 1 through 10 of Appendix B to this decision. Later, there was received by the Inspector a correction to the sheet headed "A note on accreditation." (Complainant's Exhibit 7) Complainant's Exhibit No. 8 is a copy of the completed application in the name of Linda Colgate and the money order receipt in the amount of $35.

Names of other applicants were obtained by means of a mail cover, which means that incoming mail addressed to Borinquen University was checked to get the return address of the persons who were writing to Borinquen University. No mail was opened.

Postal Inspector Linda Colgate was the next witness. Borinquen University sent to "Linda Colgate," a name identified above as having been used in one of Inspector Pack's test letters, a receipt for the thirty-five-dollar application fee. (The receipt is in the record as Complainant's Exhibit No. 9) By letter dated May 19, 1977, (Complainant's Exhibit No. 10) Linda Colgate was advised that Borinquen University was to act further on her application for admission, and she was asked to appear at 10 a.m. on May 28, 1977, at the Hilton Inn at J.F.K. Airport for an interview and for testing. She was also asked to come with a certified check for $350 to pay for the test and interview.

On May 28, 1977, Inspector Colgate took the test and she was interviewed, but in Puerto Rico, by Mr. George Haggerty and a man who identified himself as VanVorgamin. Inspector Colgate paid for the test and the interview with two money orders -- one for $300 and the other for $50 (Complainant's Exhibit 11) which she endorsed to Borinquen University and for which she was given a receipt. (Complainant's Exhibit 12)

Inspector Colgate was presenting herself as a prospective student and was trying to get information about the school. All that she saw was a couple of classrooms and a computer room with a computer in it. (Tr. 153) She was taken to the tenth floor and shown a building a few blocks away where the medical school was to be located. She did not meet any of the faculty, but she did meet the Dean, Dr. Muriente. The Dean told her that he was hiring faculty members, that he had advertised in a magazine addressed to doctors, and that he had a friend at the University of Puerto Rico Medical School who would be able to help out on a part-time basis.

In respect to accreditation, she was told, first, that they would take into account all possibilities of accreditation, including a local license to operate the school. Next, they mentioned the Liaison Committee and they indicated that there was some problem there, but they were quite sure that after four years they would be accredited. If trouble was encountered and accreditation by the third year did not seem possible, they would begin negotiations with some "banana republic" where the students would go for a few months. The students would attend the university of that country and graduate as foreign medical students, and then go to the United States, take the appropriate examinations and, then, practice medicine.

The tour conductors, Messrs. Haggerty and VonVorgamin, said they couldn't get information out of the LCME and that if you called the office of the Committee, you would be told that the application had been withdrawn. They indicated that there was some kind of problem, but they would carry the battle for accreditation to court, if necessary.

The Borinquen University representatives told Inspector Colgate that there were new laws in Puerto Rico and that the law required a license. They were getting a license for the technical schools and they were pretty sure they would get a license for the medical school. They indicated that since they were recognized by the Puerto Rican government, Inspector Colgate would have no trouble practicing medicine in Puerto Rico when she graduated.

They told her that after graduation (Tr. 2-155, 156) she could take a "flex" exam and some other type of examination and that she wouldn't have to worry about State Board examination unless she wanted to practice in a particular State. If so, she would have to take the State examination. They also told her that when she graduated from Borinquen University, eligibility to practice in Puerto Rico would be automatic. They added, however, that it would not be a good idea to practice in Puerto Rico because she would then be competing with local Puerto Rican doctors. (Tr. 2-156)

Messrs. Haggerty and VonVorgamin told their guest that they needed affiliation with a hospital having about 1500 beds and that negotiations had been opened with Whitestone Hospital in Queens. When "student" Colgate was ready to do clinical practice, she would have to go to New York and work at that hospital, which posed some problems for the University because the University then could not keep an eye on the students. The Borinquen University representatives stated that they preferred affiliation with a local hospital in Puerto Rico, if it is possible to work out such an arrangement. (Tr. 2-157)

On cross-examination it was developed that Inspector Colgate carried a transmitter on her person when she went to the school for the test and interview. The conversation was transmitted to a car outside the building where it was recorded. (Tr. 2-14, 15) She was at the school on Saturday, May 28, 1977, the first time, and the second time she was at the school was the following Tuesday. On both occasions she was carrying a transmitter. (Tr. 2-16) No tapes of the conversations that took place on those occasions were played during the course of the hearing, nor has this Administrative Law Judge ever heard, or seen a transcript of, such tapes.

Complainant's next witness was Mr. Luis E. Gonzales-Vales, Executive Secretary on the Council of Higher Education, Commonwealth of Puerto Rico, hereafter referred to as the Council. The Council, by law, is the accrediting body for private institutions of higher education in Puerto Rico. Under Public Law No. 31, of May 10, 1976, the Council is the Government Agency empowered to license private institutions of higher education in Puerto Rico. Any person or entity who establishes a private institution of higher learning in Puerto Rico must obtain a license from the Council. (Tr. 2-35)

There was a meeting on April 20, 1977, at the Council's offices, attended by the witness's assistant, Mr. Jose Carmelo-Cristobal and by representatives of Borinquen University concerning the latter's request for a license from the Council. Originally, Borinquen University was established to offer programs in computer sciences, with centers located in San Juan, Ponce and Mayaguez. The Council was advised at the April 20, 1977 meeting of the University's plans to establish a medical school, and Borinquen University's representatives were advised of the need to present to the Council the necessary documentation to justify the granting of a license. A letter under Mr. Gonzales' signature went to Borinquen University on April 20, 1977, enumerating the number of documents which had to be submitted in order for the license request to be considered. (Tr. 2-36, 37)

Borinquen University was requested to provide information concerning the background of the medical school, its purposes, objectives, the faculty, the curriculum vitae of each faculty member, administrative personnel and their curriculum vitae, the organization and administrative structure, description of facilities, and much other information. (Tr. 2-37, 38) None of these items was supplied by Borinquen University. Had such date been supplied, the Council would have applied the criteria used by the LCME in evaluating such data. (Tr. 2-38)

Under Public Law 31 of May 10, 1976, the Council must promulgate regulations which, at the time of the hearing, had been approved by the Council and were in the hands of the Governor awaiting his signature. When those regulations are approved, the institutions that must abide by them will have a one-year period in which to comply with them. If the institutions do not comply with the regulations within one year, then they are subject to legal action requiring them to cease and desist from their operation. (Tr. 2-39) Any institution that was in operation at the time the law was enacted will be granted a temporary license to operate, and each such institution will have one year subsequent to the approval of the regulations to meet the standards set forth in the regulations. Borinquen University Medical School, so far as the witness was aware, was not in existence at the time of the enactment of the law and, hence, it would not be entitled to a one-year period in which to meet the requirements of the regulations. If an institution had been established and operated between 1 July and 31 December, 1976, it would have been eligible for recognition under the "grandfather" clause. (Tr. 2-40) A copy of "Regulations for the Granting of License to Private Institutions on Post-Secondary Education," promulgated by the Council and approved by the Council on June 9, 1977, was admitted in evidence as Complainant's Exhibit No. 13. (Tr. 2-41) That is the set of regulations which, at the time of the hearing in San Juan, was in the hands of the Governor awaiting his signature, or his refusal to sign it. No information was furnished for the record to show what action the Governor of Puerto Rico took with respect to those regulations.

On Page 12 of Appendix B to this decision, it is stated that Borinquen University would be operating with a provisional accreditation by the Council. The Executive Secretary of the Council testified that the Council does not grant provisional accreditation.

It is the Council's position that Public Law 31, approved 10 May, 1976, contained a grandfather provision which stated that any institution that was effectively operating within six months after the approval of the law would automatically be issued a license. The license so issued would be effective for a period of one year following the approval by the Governor of the Commonwealth of Puerto Rico of regulations issued by the Council, within which year the institution must meet the requirements of the regulations. (Tr. 2-70) This matter presently is being litigated in the Courts of the Commonwealth of Puerto Rico and as of the July 19 and 20, 1977, hearings in this proceeding had not been decided.

Based on information received at the hearing, Borinquen University applied for licensure under the new law, but because it was seeking to broaden the scope of its operations to include the medical school in addition to the computer sciences program, the documents were rejected and they were returned to Borinquen University with the Council's letter of April 20, 1977, requesting additional information and documentation. (Tr. 2-71) The requested information for the technical courses has been supplied but, inexplicably, no license had been issued as of the date of the July, 1977, hearings in the instant matter. (Tr. 2-73). It was the opinion of the witness that any school organized after 31 December, 1976, is not covered by either of the two provisional conditions of the statute. (Tr. 2-94)

We next move to the session of the hearing which was held on August 22, 1977. At this hearing, the Complainant presented two witnesses. The first was Inspector Peggy Agard, whose signature appears on Complainant's Exhibit 1, which is the statement of that Inspector's findings with respect to any arrangement between Borinquen University and Whitestone Hospital, in the Borough of Queens, with respect to affiliation of the two institutions. After Inspector Agard verified the authenticity of this document, it was received in evidence. (Tr. 3-27, et seq.)

The second witness presented by the Complainant was Seymour Post, Attorney at Law, 233 Broadway, New York, New York 10007. Mr. Post is the General Counsel of the Whitestone General Hospital and he is the legal adviser to the Board of Governors. That hospital is a 103-bed hospital and it is designated by its general counsel as an acute care hospital. It has no affiliation with any teaching medical institution.

Mr. Post concluded his testimony by stating that Whitestone Hospital is not affiliated with Borinquen University Medical School; there have been no discussions regarding affiliation with Borinquen University; and there is no relationship between Borinquen University and the Whitestone Hospital. (Tr. 3-40 et seq.)

There is a contract, in which Dr. Cole ^4/ is interested, relating to the sale of Whitestone Hospital, but the contract provides that if the sale is not consummated by January 1, 1978, the contract will be cancelled. Other contracts for the sale of this hospital have failed to mature. (Tr. 3-49, 50) After the testimony of Mr. Post, the Complainant rested.

4/ More fully identified at page 35, post.

Respondent called as its first witness Dr. Viola Wiegand, who is a practitioner of medicine in San Juan, Puerto Rico. Dr. Wiegand obtained a Bachelor of Arts Degree at St. Joseph's College, her Master's Degree and her Ph.D. at Columbia University, and she continued her studies in the field of medicine in which she was granted the M.D. degree in Hamburg, Germany. She is licensed to practice medicine, and does practice medicine, in Puerto Rico. She is certified in New York State as a psychologist, but she is not at the present time licensed to practice medicine in any of the States of the Continental United States. Dr. Wiegand is about to enter her third year in residency in the Puerto Rico Institute of Psychiatry, which is not an agency of the Commonwealth of Puerto Rico.

She stated that she has been engaged to teach at Borinquen University and that she is going to teach in such matters as inter-personal relationships and other related subjects at Borinquen University. She testified that classes are presently meeting at Borinquen University and that it will be her duty, in addition to teaching, to organize workshops.

The school is functioning now from the building at 403 del Parque in San Juan but on October 1, 1977, the Medical School is moving to the Metro Building in Hato Rey, which is a subdivision of San Juan. She was told this, about this move, by Dr. Muriente and by a Mr. Nugent, about whom more will be said later.

Dr. Wiegand testified that other staff members included Dr. Stiehl, head of the Department of Anatomy, a Dr. Godschalk, a Dr. Rendon, who is a cytogeneticist, a Dr. Van Loon, who is in the field of Neurophysiology, a Dr. Otero, a Professor Echevarria, who is to teach Spanish, and others. Dr. Wiegand testified that the school will begin to operate in the new building on October 1, 1977, but that as of August 15, classes started to meet in the present site of the school.

Dr. Wiegand is hired on a part-time basis. She is employed on the basis of eight hours a week, during which she will teach four hours a week and have four hours in workshops, group therapy, and counseling.

Dr. Wiegand testified that she visited the library at Borinquen University and that she was interested primarily in the library portion that related to her specialty, namely Psychiatry, and that insofar as that Department is concerned, the library is complete. However, Dr. Wiegand said that she is in New York for the purpose of taking back to Puerto Rico some classic works in the field of Psychiatry, some of which are at the present time out of print.

To summarize Dr. Wiegand's testimony, it would be unfair to say that her testimony is looking more to the future that it describes activities that are presently taking place or will take place in September. (Tr. 3-3 et seq.)

The next witness called by the Respondent was Mr. Fred DiPaola, who is a funeral director with branches of his businesses located in New York, with other branches in Florida. In the course of his care for his mother, Mr. DiPaola heard of a Dr. Cole who is on the staff of Whitestone Hospital. Mr. DiPaola has great admiration for Mr. John Haggerty, who is connected with Borinquen University, and he also has great admiration and respect for Dr. Cole. Mr. Haggerty and Mr. DiPaola were friends in Brooklyn for a number of years and they have helped each other in various ways on various occasions through the years. In the case of Dr. Cole, Mr. DiPaola thought that he had a particularly fine approach and technical ability in treating persons who are cancer patients. Mr. DiPaola thought that, in view of the fact that Mr. Haggerty is in the throes of starting a medical school, and since Dr. Cole is the possessor of such fine talent, it would be ideal if these two gentlemen could get together. Acting on this idea, he brought up, in discussion with Dr. Cole, the possibility of purchasing Whitestone Hospital and letting it be used as an affiliate of Borinquen University. Based upon the testimony of Mr. DiPaola, the affiliation was to specialize in the field of Oncology. (Tr. 3-56, 57)

The plan contemplated that students from Borinquen would come to New York and spend a three- or four-week period of training in Whitestone, and then go back to Borinquen and conclude their studies. Dr. Cole apparently was impressed with the discussion of Mr. DiPaola, and in some manner he gathered a group of individuals who were interested in purchasing Whitestone Hospital and they have made an offer to do just that. And the offer must be accepted by the end of 1977 or the purchase arrangement will be terminated. (Tr. 3-50)

Finally, the Respondent had as a witness Mr. Harold Nugent, who is a partner in Bec Associates, a real estate firm in Puerto Rico. They are associated from time to time with either a man or a company, or both, that bear the name of Jose Muratti. There is an organization known as Burnac Mortgage Investment Ltd. of Canada, and it appears that Mr. Muratti is a representative of that concern. Under an arrangement with the owner of the Metro Building in Hato Rey, Bec Associates has been designated as the agent for the leasing of that building. The agreement which is Respondent's Exhibit 2, specifically discusses the possibility of the purchase, or the leasing, of that building by the Haggerty brothers, Dr. Muriente and Mr. Frank Carbo.

Mr. Nugent stated that the lease pursuant to this agreement was, at the time of the hearing, being prepared and he anticipated that it would be signed by authorized representatives of the parties some day in the following week, that being the week commencing August 29, 1977.

It is stated in the tentative or proposed agreement that a certain number of floors will be leased by Borinquen University with options to increase the square footage leased in succeeding years. Mr. Nugent stated, further, that on August 15 of this year there was turned over to the architects for Borinquen University a set of the blueprints of Metro Building. The architects are to make certain specific additions to that building, included among which are the lengthening of windows, the increasing of the wiring circuitry to accommodate air-conditioning equipment, and the raising of floors in certain areas of the building.

Although the lease is not to be signed until some day next week, it is the opinion of Mr. Nugent that all of the repairs or the additions and all alterations can be made in time for Borinquen University to open by October 15, which was the date indicated by Dr. Wiegand as the date for opening. If that is not the date, and if the date is October 1, 1977, for opening of Borinquen, that increases the speed required with which to do the work. (Tr. 3-64 et seq.)

This has been a long recitation but it has been necessary in order to consider the evidence in this proceeding. Let us now turn to look at the specific representations that are charged in the Complaint as being made by the Respondent.

Charge A has been read into this decision and it is found that this representation is made by the Respondent based upon the contents of Exhibits 1 and 3 to the Complaint, which are the advertisements from the New York Times in the case of Exhibit 1, and from the Wall Street Journal, in the case of Exhibit 3.

In citing certain language on which certain of these charges are based, I do not mean to suggest that is the only place at which language can be located which would serve as the basis of the charges. There are other places in Respondent's literature that could give rise to those charges and they were pointed out by Complainant's counsel in his proposed findings of fact and conclusions of law. For example, in connection with Charge A he referred to Complainant's Exhibit 6 and Complainant's Exhibits 4 and 5.

Charge B is made by the Respondent, and again there is language in Exhibits 1 and 3 to the Complaint which forms ample basis for the finding that the Respondent makes representation in Paragraph 3B of the Complaint.

With respect to Paragraph 3C of the Complaint, that representation is made in Exhibit 2 on page 1, among other places.

With respect to the charge expressed in Paragraph 3D of the Complaint, that representation is made, among other places, in Exhibit 2 to the Complaint on page 12, Item No. 5.

The charge in Paragraph 3E of the Complaint is found in Exhibit 2 of the Complaint on page 12, considering together Items numbered 1, 2, 3 and 4 of that exhibit.

The next question is whether these representations which have been found to be made by the Respondent are true or false. From the Respondent's own testimony it is clear that the representations are false. For an example, it is clear from Dr. Wiegand's testimony that Borinquen University does not, and for some time in the future will not have, the physical facilities, staff and curriculum necessary for the opening of a bona fide medical school, nor will it have the finances based upon the expert testimony of persons who know, and I refer particularly to Dr. Perez-Santiago.

With respect to the other testimony of Dr. Wiegand it is clear that the staff is not completely filled out, that the facilities are not now in existence but it is hoped that they will be at some indefinite time in the future. This testimony is borne out also by the testimony of Mr. Nugent when he testified that, as of August 22, 1977, the lease for this new facility is not signed and will not be signed until next week some time, if it ever is signed. After the signing of the lease, there is much work to be done before Borinquen University is going to be able to move into the Metro Building. How much work is required is now known specifically, and how much time is required is not known, but it is going to be a significant amount of both time and labor.

Reference is made now to the charge in Paragraph 3B, that Borinquen University has or will have a bona fide medical school in operation offering a four-year American studies program with classes commencing in September, 1977. By testimony of the Respondent's own witnesses it has been shown that this representation is not true.

By the testimony of Dr. Schofield and the representatives of the Council on Higher Education, Borinquen University is not now a bona fide medical school. It is not accredited; it has not even applied for accreditation. It does not have a letter of reasonable assurance, nor has it provisional accreditation.

With respect to the charge in Paragraph 3C, that Borinquen University's Medical School is currently approved by the Department of Public Instruction of the Commonwealth of Puerto Rico, that not only is not true - it is incapable of being the truth for the reason that the Department of Public Instruction of the Commonwealth of Puerto Rico does not approve institutions of higher learning, according to the legal adviser to the Department of Education in the Commonwealth.

With respect to the charge in Paragraph 3D, the Council of Higher Education in Puerto Rico, according to its Executive Secretary, asked Borinquen University to supply, with respect to its medical school, sufficient information and documentation to warrant the Council in considering the application for accreditation. That information and documentation has not been furnished, on the basis of the evidence of record in this proceeding. Hence, that representation is certainly false.

The testimony of Dr. Schofield and the testimony of certain of the witnesses whose depositions were taken indicate that representatives of Borinquen University stated that the medical school has not applied for accreditation. Therefore, it could not expect to receive a letter of reasonable assurance. That representation also is false.

In addition to being false, each one of these representations is a material representation. It is the type of representation upon which a prospective applicant would be apt to rely, and upon which a prospect would act in deciding whether to file an application for admission to Borinquen University Medical School. Donaldson v. Read Magazine, 333 U.S. 178, 188-9.

Counsel for the Respondent, in his answer and in his concluding remarks, suggested rather broadly that there is some sort of a conspiracy between the Liaison Committee on Medical Education and the Postal Service. It is one thing to make such a suggestion but it is entirely another thing to come forward with proof of such an allegation. That proof was not forthcoming. Respondent's counsel did point out that some prospective applicants relied in part upon cautious statements by Inspector Pack in making their determination either not to send their tuition fee to the school or in requesting refunds of the tuition previously paid.

On the basis of the Postal Service's suspicions that a misrepresentation scheme is being operated, the question is, what else would the Postal Service Inspection Service be expected to do? It is required by law to inquire into such matters. That is part of the purpose for which it exists. It has to interview people, and in the course of the interview, it extracts information which makes them decide whether to refer a case to the General Counsel's office for prosecution or not. With all of the information that has been circulated with respect to Borinquen University, and I would point out that this information is so widespread that even in Puerto Rico the stranger who picked up one of the witnesses, whose deposition was taken, suggested to him that he be very cautious in dealing with Borinquen University, it is no wonder that persons' suspicions are aroused. These students who either refused to send their tuition or requested refunds of their tuition did not act solely on the basis of any remarks by any Postal Inspector. It was only one of the factors that led them to make up their minds.

Be that as it may, there is nothing in this record which in any way diminishes or gainsays the fact that Borinquen University was simply holding itself out to the public as being able to do something it was not prepared to do and which it could not do. When that situation exists, there is, and I find that there is in this case, a scheme or device to obtain money or property through the mail by means of false representation, within the meaning of Section 3005, Title 39, United States Code. Borg-Johnson Electronics v. Christenberry, 169 F. Supp. 746.

On the basis of that conclusion, an order of the type provided for in 39 U. S. Code 3005 should be issued against this Respondent.

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1/ This decision was rendered orally at the close of the hearing. It has been edited and transcribed for formal issuance.