The man who ran one of Australia's fastest-growing vocational colleges, Phoenix Institute, is being investigated for allegedly forging documents to reap more than $100 million in taxpayer funds.
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Federal Police search warrants say they have "reasonable grounds for suspecting" that Ivan Brown, the former chief executive of Phoenix Institute, made false documents or caused them to be made "with the intention to influence the Commonwealth to accept on-line students as genuinely enrolled and participating in training".
Police raided the offices of Phoenix's parent company, Australian Careers Network, earlier this month in search of evidence of criminal behaviour. It seized documents relating to students.
Mr Brown denies any wrongdoing.
"They can get a search warrant for murder weapons if they like; it doesn't mean a murder has been committed," he told Fairfax Media.
"They can put anything they want in a search warrant, it doesn't mean any crime has been committed. It's not proof of anything."
Fairfax Media revealed earlier this week that Mr Brown quit his job as a Victoria Police officer in 2010 after a series of harassment claims were made against him by a senior officer.
The details of the warrant came in an administrator's report from Ferrier Hodgson, which was appointed to the company last month after the Commonwealth government froze funding to ACN.
The downfall of ACN is part of the continuing unravelling of the private vocational education sector, whose explosive growth in 2015 was driven by brokers hard-selling expensive courses, which were paid for up front by the government.
Many of the "students" recruited to do online courses, not just for Phoenix but for a dozen or more private colleges, were unlikely to ever complete them or to pay back the deferred loan they had incurred to the government under the HECS-style VET FEE Help scheme.
The report shows the administrators believe that the education department owes ACN $253 million for people signed up to courses of study.
But the administration is complicated by five different legal cases, in addition to the criminal case. In one, the government is fighting Phoenix's claim for a portion of the money its claimed to be owed. The Australian Competition and Consumer Commission is also in court alleging the company was guilty of false, misleading and unconscionable conduct in recruiting students. The ACCC is seeking repayment of $106 million.
The administrators' report shows that ACN paid its brokers between 15 and 30 per cent of the value of its courses to the salesmen who recruited students. More than 90 per cent of students were signed to double diplomas – which gave them a $36,000 debt, suggesting brokers could earn almost $12,000 per sign-up.
ACN paid its brokers about $25 million in advance of receipts from the Commonwealth, but brokers claim another $24 million is owed them. The company also owes the tax office about $847,000.
The administrators are recommending that creditors vote next week to run the company under a deed of company arrangement. Creditors will get between 3 per cent and 100 per cent of the value of their debt, depending mainly on whether the government puts up the money the company claims it's owed.
