California's Attorney General has taken legal action that could shut down Olivet University, threatening a devastating blow to a global Christian sect at the center of a U.S. federal investigation into money laundering, visa fraud and other suspected crimes.
California is by far Olivet's most important state regulator: it is the only one in the United States to confer degree-granting authority on the college founded in 2000 by David Jang, a Korean-American cleric whose organizations have faced a series of legal cases over the past decade. The rest of Olivet's 10 campuses in seven states and the District of Columbia function as satellites of the university based in the high-desert town of Anza. Tennessee said it was looking into whether to take action against Olivet in light of California's move.
And as the threat looms from education regulators, one witness who is cooperating with separate Homeland Security investigations into Olivet said messages on computers seized from the Anza campus could be evidence of money laundering activity.
Olivet did not address the specific questions raised over the action in California or messages on the seized computers, but in an email repeated allegations against Newsweek of "weaponizing its newsroom" because of an ownership dispute.
California Attorney General Rob Bonta filed a complaint with the state's Department of Consumer Affairs on March 17, accusing Olivet of 14 violations of education regulations. It was filed on behalf of Bureau for Private Postsecondary Education Chief Deborah Cochrane.
"Complainant requests that a hearing be held on the matters herein alleged, and that following the hearing, the Director of the Department of Consumer Affairs issue a decision revoking or suspending" Olivet's approval to operate, according to a copy of the complaint.
Olivet is accused of teaching substandard courses with unqualified teachers to a student body that matched neither academic records reported to regulators nor the university's own financial data. Similar allegations have already led regulators in eight states and territories to shutter Olivet campuses or begin reviews of the college.
For years, California had done little to confront Olivet even as other regulators cracked down on the college
The Department of Homeland Security has an unrelated investigation into whether Olivet laundered money. It is also looking at whether it trafficked labor and broke visa laws with regard to the students on its campus, many of whom come from China. Olivet University has previously pleaded guilty to charges of falsifying business records relating to a money-laundering scheme in New York.
For years, California had done little to confront Olivet even as other regulators cracked down on the university, accusing it of operating unlicensed campuses, making incomplete disclosures, mismanaging finances and failing to cut ties to "criminal activity," among other issues. Both New York and California found Olivet had broken various rules soon after the college pleaded guilty in 2020 to a money laundering charge brought by the Manhattan District Attorney. New York shut down campuses in the state last year. California imposed a $5,000 fine and requested a written policy to show how it would comply in future.
But when California education investigators made an unannounced visit to the Anza campus on November 15, 2022, Olivet administrators attempted to evade them, according to the complaint brought by California's attorney general.
"Upon arrival, Bureau staff could not enter the campus location as the campus was secured by a security gate," according to the complaint, which chronicles the many phone calls investigators made to try to get inside the campus. Finally, "bureau staff were able to gain access to the campus by following a car who (sic) accessed the gate. No staff was present in the Administration office," the complaint said.
Eventually, Matthias Gebhardt, Olivet's president, who is identified in the complaint by his initials MG, met the investigators. The complaint contains a series of concerns uncovered by inspectors who also visited the Olivet properties in San Francisco and Los Angeles.
'Upon arrival, Bureau staff could not enter the campus location as the campus was secured by a security gate' ... Finally, 'bureau staff were able to gain access to the campus by following a car.'
Olivet's president needed time to organize his student records because they were in a "file dump," the complaint said. When the records were produced, they did not tally with graduate data and employment data reported by Olivet to regulators. The syllabus for a Bible course wasn't available. The school did not offer enough courses to support the number of enrolled students on campus. Courses for students in the Bachelor of Arts program were combined with the same courses for the Master of Arts program. Beginner textbooks were the same as ones for the intermediate level. There was no documentation to back up student enrollments and none to support the number of student withdrawals. No paper trails on refunds to students who withdrew. No criteria for scholarships and financial aid. Student data emailed to the education bureau staff didn't match the data in the annual report for the same period. In fact, the annual report contained two sets of contradictory student data, the complaint alleges.
The complaint also raised concerns over Olivet's faculty. The names of the faculty did not match the list of names in the college catalog. In any event, there weren't enough faculty to teach the courses offered. Those that were on hand didn't have the right qualifications — 12 of them had Olivet degrees, most holding a "Doctor of Ministry" which had little to do with the courses they were teaching. Many of the faculty were also not properly employed; their contracts had expired. Several professors didn't attend classes on campus but delivered lectures by Zoom. The professor of microeconomics, for example, delivered a virtual lecture to students who were present on campus in a "hybrid class" which itself broke the rules. Gebhardt did not respond to Newsweek's request for comment on the situation.
The allegations laid out in the 31-page complaint resemble those uncovered by Newsweek's previous reporting.
Newsweek has been in a legal dispute with Olivet since the magazine's co-owner and CEO Dev Pragad announced he had left Jang's sect in April 2022. Newsweek has rejected Olivet accusations that it is reporting on its difficulties because of the dispute.
Pragad's departure from the sect set off a flurry of lawsuits pitting Pragad and the company that publishes Newsweek against Jang's disciples and institutions they control. At least two of those lawsuits have since been dismissed. IBT Media, Newsweek's former corporate parent and a Jang-controlled company, failed in its bid to reverse the transaction that made Pragad a 50-percent shareholder. Newsweek's suit against IBT Media to recover millions of dollars it says it was owed has also been dismissed. The rest of Newsweek's shares are held by Johnathan Davis who also owns half of IBT Media.
Olivet responded to a request for comment on the California complaint with a statement accusing Newsweek of using the newsroom to help Pragad in the dispute.
"You continue to incite and intimidate state agencies against OU. We look forward to an opportunity to reveal the truth," it said.
Bonta's complaint against Olivet made no mention of any criminal conduct. Neither his office nor Cochrane's responded to Newsweek's emailed requests for comment.
The U.S. Attorney's Office, Los Angeles, overseeing the federal criminal investigation into Olivet, declined to comment on California's action. A spokesperson for California's Department of Consumer Affairs, which will hold the hearing, declined to answer whether it was coordinating with state and federal investigators, telling Newsweek only that "[a]ll required notifications have been made."
Olivet's status is also under review by its sole academic accreditor. The Association For Biblical Higher Education (ABHE) has given the university until next month to "provide evidence that the institution demonstrates integrity in all of its practices." The Director of the ABHE Commission on Accreditation, Lisa Beatty, did not respond to Newsweek's request for comment.
Tennessee said it had previously reviewed Olivet's case and had decided not to take action against the institution, but was now going to take another look. "Having learned of the action by the Bureau of Private Postsecondary Education for the State of California, Tennessee will reassess whether adverse action is appropriate," Jessie Greene, Coordinator of College Access Communications, said in an email to Newsweek.
Agents from Homeland Security Investigations had searched Olivet's Anza campus in April 2021. The raid was an escalation of an investigation triggered by a 911 call from a female student who said she was held at Anza against her will. Newsweek and The San Bernardino Sun reported that the woman later escaped Olivet.
Computers seized during the Anza raid, Newsweek reported, prompted Homeland Security investigators to ask cooperating witnesses for information on Mark Spisak, head of the World Olivet Assembly, the church founded by Jang which says it has followers in 160 countries. The Assembly says it has nothing to do with the university, although Newsweek has documented several connections and corporate transactions that link the two institutions. In an email, the World Olivet Assembly echoed the view of Olivet University that Newsweek's reporting on Olivet is linked to the ownership dispute.
The computers seized from Anza contained chat logs that pointed to the involvement of two people at Olivet in money laundering, one cooperating witness told Newsweek, citing information from a conversation with an HSI agent investigating the case. The witness, who declined to be identified for fear of retribution, shared a separate email sent by the investigator that gave the names of the two people of interest.
"They found some chatting record indicating that they are doing money laundry. And that's a crime. From the computers they seized during the OU raid," the witness said in a message to Newsweek.
Among the complaints to California's education regulators was that Olivet had too much debt in relation to its assets. It is required to have a ratio of assets to debt of 1.25 to 1 under California's code of regulations, but has been found to have a ratio of 1.16 to 1.
Olivet federal 990 tax filings show major swings in its sources of revenue over 14 years from 2006 to 2019.
From 2006 to 2010, income from tuition hovered around $1 million until jumping to over $4 million from 2011 to 2017. Then, in 2018 it dropped to around $3 million then $2 million in 2019.
Grants and gifts to the university fluctuated between $500,000 to $1 million from 2006 to 2010 before jumping to over $7 million from 2011, staying around that level until 2017 and then jumping to around $15 million.
"Research" was not listed as a revenue source until 2014, when it totaled $8 million. In 2016, it ballooned to $33 million before fluctuating between $12 million to $17 million.
"There are large and unexplained jumps and other divergences from year to year," said H. David Rosenbloom, a tax attorney with Caplin & Drysdale who served as International Tax Counsel and Director of the Office of International Tax Affairs in the U.S. Treasury Department from 1977 to 1981. He reviewed the accounts at Newsweek's request.
"The pattern of funding of this organization raises some serious questions," he said.
Olivet remains under scrutiny in Washington, DC, where the DC Higher Education Licensure Commission (HELC) has made its operations the subject of a special meeting. According to the Commission, Olivet's permission to operate expires on March 31 of 2023. HELC did not respond to Newsweek's request for comment. However, the school appears to still be operational. An individual at the front desk of the building where Olivet houses its DC operation said people affiliated with the school had been coming and going from the building as recently as last week.
Olivet remains operational in Missouri and Indiana. Educational authorities with both states told Newsweek any California action would not affect its standing due to "religious exemptions." Newsweek did not receive responses from authorities in Texas or Florida where the school also maintains campuses. When Olivet was shut down in New York state, these states said the school's ability to operate would not be affected due to religious exemptions.
A spokesperson for the Indiana Commission for Higher Education explained that the future operations of Olivet's extension campuses would fall under the purview of ABHE, through which it receives religious exemptions. In the state of Indiana, Olivet remains at work seeking independent accreditation for its campus which operates under the name, Great Commission University.
Correction 4/20/23, 4:24 p.m. ET. This story originally stated that Olivet pleaded guilty to money laundering; it pleaded guilty to falsifying business records in connection with a money-laundering scheme. Newsweek regrets the error.
