November 20, 2002
Arts and Entertainment
The abrupt collapse of the Center for Electronic Art leaves school officials pointing fingers and students in the cold
By A.C. Thompson
It's a chilly night in early November, and I'm taking a postmortem tour of the Center for Electronic Art. Located in a catacomblike basement complex at 250 Fourth St. in San Francisco, the computer training school abruptly shut its doors Oct. 22, stranding students who spent up to $20,000 each in tuition and leaving teachers unpaid.
Nearly all of the school's 80 to 90 computers have left the building. "There was an Apple G4 here, an iMac there, and an expensive Epson printer over there," explains my tour guide, Ann Smith, a former intern at the school, as we step into a small room that was once a teacher's office. "They're all gone now." A creditor apparently took off with the hardware.
In another office we discover a stack of student transcripts abandoned atop a file cabinet. The sour odor of decaying food wafts out of the student lounge; evidently nobody's taken out the trash.
Since the tech sector downturn of 2000, scores of computer schools have gone under. Perhaps the most notable bankruptcy was that of Computer Learning Center, a national chain with campuses in San Francisco and San Jose, which folded in early 2001. According to news reports, across the country 1,200 CLC staffers were jettisoned, and 3,800 students, many of them living on loans, were cut off midsemester.
Though it's doubtful any of these school closures were particularly pleasant for the people involved, the demise of the Center for Electronic Art has been a disaster, with the professionals who ran the school making little effort to mop up their mess. Which is why Smith is here rescuing student records from the trash. "I'm disgusted by the way the school shut down," she tells me. "It really destroyed a bunch of peoples' lives."
• • •
A digital guru named Harold Hedelman founded the CEA in 1987. At its peak, the academy served about 200 students and boasted a roster of 40 instructors, including syndicated cartoonist Lloyd Dangle (a Bay Guardian contributor) and Rhoda Grossman, a caricaturist and Photoshop whiz. The nonprofit school offered six-month certificate programs in Web site construction, animation, and graphic design, and the chairs of those programs were paid $60,000 a year, while part-time instructors made as much as $50 an hour. Revenues topped $1.1 million in 2000, according to federal tax forms.
Then the Internet industry tanked, and enrollment plummeted, dropping further still after the terrorist attacks last year. "By September 11, enrollment was probably down 40 to 50 percent," Hedelman, the executive director, tells me. "The week of September 11 was just unbelievable. Students just didn't show up."
Paychecks started arriving late or bouncing. Some teachers quit. Others kept working for reduced pay.
Still, the end came abruptly and impersonally. It was announced via e-mail by acting CEA director Murray Powers at about 10 p.m. Oct. 21. Powers wrote, "I no longer feel that I can be reasonably sure that CEA can continue to make it's [sic] payments, that students will receive the courses that they pay for and that teachers who teach their classes will be paid for their work. As a result, with more despair and sadness than I can possibly express, I feel I have no option other than to stop taking on students and close the doors of the school."
Instructors and students who didn't check their in-boxes before showing up for class the next morning were shocked to find the school doors chained, the building empty. For employees, there was no mention of ever getting the paychecks owed to them. For students, there were no refunds and no immediate offer to provide them with transcripts or other records.
Ex-student Angel Raudales can tell you all about it.
Enrolled since August 2001, Raudales spent $17,000 in tuition and so far has zilch to show for it. Just four days before closing, the school accepted his final tuition check: $8,500 for courses in animation and Web design. "This whole thing is very weird," Raudales says. "It smells like fraud to me."
There are plenty of similar anecdotes. In the month before the CEA closed, it took in lots of tuition money: one student put down $7,500, another $3,500, a third $918.
Trying to salvage something from the wreckage, Raudales is demanding $5,000 in small claims court and has implored school officials to issue him a certificate for the graphic design program he completed. "I sent an e-mail to Harold asking for my money, my transcripts, and my certificate. Harold didn't even answer, so I knew I was screwed," he says.
Hedelman says Raudales should be receiving his certificate in the mail any day now.
An Indonesian citizen, Kurniawanty Sri attended the CEA on a student visa. Now she's worried about getting deported. "I'm calling all the lawyers I can," Sri tells me. Another student, a Japanese national, e-mailed me to say she'd already been booted from the country.
As far as the state is concerned, the CEA had a legal obligation to give the California Department of Consumer Affairs 30 days' notice before shutting down the school something the state says school officials failed to do. "The school didn't properly notify us about the closure," the department's Mike Luery tells me. "Actually, we found out about it from the students who were locked out." The department, Luery says, is investigating and could refer the matter to the Attorney General's Office for prosecution.
• • •
"You'd have to be blind to not realize that there was a drop in enrollment after the dot-bomb," former teacher Eric Poelzl says, "but I really had no idea the school was in such bad shape." Poelzl, who taught classes in basic Mac skills and Illustrator, has filed a small claims court demand for $700 in unpaid wages.
Grossman is preparing to sue for $2,400, though she's not optimistic. "I'm hearing from a lot of people that we're never going to get the money," she says.
Others staffers have taken their grievances to the state's Department of Industrial Relations. State records indicate one ex-faculty member is asking for $8,988 in pay dating back to March 2002; another, a former part-time instructor, is seeking $600 for work done in July and August.
This isn't the first time the CEA has had legal troubles. In fact, an examination of the public record and assorted confidential CEA documents suggests school officials could've benefited from a tutorial in elementary fiscal management. And while the school's demise may have been unavoidable given today's bleak economic situation, it seems thick-skulled financial decisions and a simmering power struggle between top CEA officials hastened the collapse.
In April 2002 the center's landlord sued in Superior Court demanding more than $70,000 in overdue rent. The case concluded with a judge ordering school officials to hand over $81,114.34 in rent and attorneys' fees.
Next came the liens for failing to pay taxes. Records on file with the California secretary of state indicate the school was sued by the state in May for $6,809 in back taxes, and again in June for $5,734 for more delinquent taxes. Judging from internal financial documents I obtained, the school owed an additional $21,419 in unpaid federal payroll taxes and another $5,728 in unpaid state taxes.
(Fund Recovery Services, a collection agency, sued the CEA in June on behalf of this newspaper alleging the school failed to pay the Bay Guardian for more than $4,400 in advertising. The case is pending.)
"The school's been a financial shambles for a long time because of gross mismanagement," rails former graphic design program chair Li Gardiner, who's now teaching at Cooper Union art school in New York City. Gardiner says she's owed $5,500.
Nobody is willing to take responsibility for the CEA's problems. Murray Powers, the acting director, blames Hedelman, the founder and executive director. "He grossly breached his fiduciary duty," Powers charges.
In April 2002, with debts piling up, Hedelman simply disappeared, failing to show up to the office but refusing to resign, according to Powers. "He kind of did like an armadillo: he just rolled up in a ball. With Harold unwilling to resign or do any work, there was just no way to continue."
Powers pulled the plug and started excoriating Hedelman in e-mail messages posted to www.closingcea.org, a funerary Web site set up by CEA students and interns.
Hedelman, though, has a different tale.
For starters, he says he hadn't been in charge of finances since 1998. And he claims Powers effectively ousted him from the CEA in mid 2002. "[Powers] told the staff not to talk to me. He intercepted my mail and cut off my e-mail," Hedelman tells me.
"Murray was trying to steal the school."
Two men. Two stories. One dead school. How do you sort it out? In the final
tally, perhaps the truth doesn't really matter. Because the truth
isn't going to put $17,000 in Angel Raudales's bank account.