Students left empty-handed as scholarship goes bust

By Joe Tash

Five college freshmen from San Diego County — including 2013 graduates of Canyon Crest Academy and Torrey Pines High School — have learned a difficult, real-life lesson of financial bottom lines and broken promises along with their studies this year.

All five participated in a rigorous scholarship competition put on last year by a San Diego-based nonprofit group, won the competition and were awarded four-year scholarships of varying amounts. But midway through their first year of college, they were informed the group had no more money with which to continue the scholarship payments.

The bad news came in a Jan. 13 email from Jim Hester, organizer of the STOP 2011 scholarship program, which was put on in conjunction with the Heartland Coalition, a San Diego-based nonprofit.

“Because of donors who withdrew their pledges, there are no funds to pay out the scholarships. I am sorry,” said Hester’s two-sentence email.

Organizers expressed regret, but said the money just isn’t available to make good on the promised scholarships.

“We wish with all our hearts we had the money to do this,” said Mark Hanson, president of the Heartland Coalition, a retired teacher who said he contributed his own money to make partial payments on the scholarships.

“This is the biggest disappointment, failure and embarrassment of my life and words cannot convey my feelings,” wrote Hester in another email to the scholarship winners.

The abrupt end of the program came as a shock and disappointment to the students, who competed for months through four different stages of the contest: an essay, a letter to the editor, a speech and a debate. According to the STOP 2011 web site, which has since been taken down, some 150 high school seniors competed from throughout San Diego County, and the five students with the highest cumulative point totals from all four rounds were declared the winners.

Although scholarship organizers could be liable to make good on their promises based on emails they sent to winners, the question is whether a legal effort would be worth the cost, time and effort if the organizers don’t have the money to pay a judgment, said A. Thomas Golden, professor of contract law at Thomas Jefferson Law School in San Diego.

Legally, scholarship organizers could be “on the hook” because they promised the payments in exchange for actions by the students, such as participation in the competitive events, and the students fulfilled their end of the bargain, Golden said. The students also relied on the promised scholarship money to help pay for college, which could also create legal liability, he said.

Miranda Ceja, a student from Mission Hills High School in San Marcos, who placed second in the competition, said she was devastated when she got Hester’s email.

“I broke down in tears when I read there was no money to award my scholarship,” said Miranda, who is majoring in journalism at Long Beach State University. “I was just extremely stressed out and I felt manipulated, taken advantage of.”

Miranda and her family were so caught up in the competition, and determined to win, that they hired a tutor to work with her on her speech and debate skills.

Her four-year scholarship award was $12,000, of which she received an initial payment of $1,200 before the program ended.

Kara Jacobson said her son, Rory, a graduate of La Costa Canyon High School and the third-place finisher in the scholarship competition, found out about the program while searching online for scholarships.

“This isn’t something where he wrote a quick essay and he was done. He did hours and hours of work on this,” said Jacobson of her son, who was awarded $10,000, and is now studying at UC Berkeley. “He worked his tail off for it.”

Like Miranda, Rory received an initial payment of $1,250 last fall, before the students were notified the program wouldn’t continue.

“My question is, where did the money go? They used these kids to raise money that they didn’t get,” she said, referring to the Heartland Coalition web site, which featured the scholarship competition on its pages. Families were asked to generate support for the program in their communities, and also to help promote a planned 5K walk as a fundraiser, which was later cancelled, she said.

The other three winners of the scholarships were Jack Conway of Canyon Crest Academy, first place; David Greif of Torrey Pines High School, fourth place; and Madison Phillips of The Rock Academy, fifth place. According to his family, Jack, who attends Vassar, received an initial payment of $2,000.

The scholarships were announced last May, at the end of the students’ senior year of high school. According to the now-defunct STOP 2011 web site, $128,000 was awarded in the program’s first year, the 2011-2012 school year, while at least $48,000 total was to be awarded to the winners of the 2012-2013 competition. It is not clear how much money, if any, was paid to the first-year winners.

STOP 2011, according to its web site, was formed to educate Americans about the harm caused by the nation’s debt, and to advocate for elected officials to take steps to reduce the debt. All of the activities, including the essay, letter to the editor, speeches and the debate, were centered around the theme of the national debt and federal budget deficit. STOP is an acronym that stands for Stop Taxing Our Pupils.

In an interview, Hanson said Hester, organizer of the STOP 2011 program, is an attorney who served on the Heartland Coalition’s board of directors as vice president and general counsel. STOP 2011 was a separate program from the Heartland Coalition, which describes itself as serving “low-income residents of California, Nevada, Arizona and Alaska with projects in the areas of career and community development, healthcare, environmental protection and clean energy, disaster relief, education, objective and timely news, and public art.”

“Stop 2011 is a separate organization, but we supported the effort just like we support a lot of things,” Hanson said.

The donors were attorneys who worked with Hester who lost their jobs when the firm carried out layoffs. Hester has since moved to Florida, and is no longer affiliated with the Heartland Coalition, Hanson said.

Although Hanson said the Heartland Coalition was only supporting STOP 2011 by providing space for meetings and assisting with the competition judging, the scholarship is mentioned prominently on Heartland’s web site, including in its annual report and in a list of goals for 2013 in a letter from Hanson. In addition, the $2,000 check sent to Vassar on behalf of Jack Conway during his first semester was drawn on Heartland’s bank and signed by Hanson.

Also, on its web site, STOP 2011 identifies itself as affiliated with the Heartland Coalition, and lists the group’s nonprofit tax identification number.

Hanson said he and Heartland contributed to the scholarship program so the winners wouldn’t walk away empty-handed. “We have nothing to be ashamed of,” he said, although he feels bad the students won’t get their full scholarships.

Hester did not respond to emailed requests for comment. In one email to scholarship winners, he said Heartland is “insolvent,” which Hanson denied. According to Heartland’s 2011 IRS filing, the most recent available, Heartland had total revenue of $392,396, and total expenses of $526,398.