Fired by her school board, a Montrealer went on to run 3 colleges. International students are paying the price
Leah Hendry, Benjamin Shingler | CBC News | Posted: March 17, 2022 8:00 AM | Last Updated: March 17, 2022
Caroline Mastantuono and her daughter charged with fraud in connection with school board work
There was the photo op with Prime Minister Justin Trudeau in India, a trip to China with her children and a sprawling lakefront home in the Laurentians.
Business was going well.
By 2020, Caroline Mastantuono and members of her family owned a fast-expanding recruiting firm, Rising Phoenix International, and three private colleges that attracted hundreds of foreign students, mostly from India, who paid up to $30,000 to attend.
But in January 2022, Rising Phoenix and the three colleges — M College in Montreal, CCSQ College in Longueuil and CDE College in Sherbrooke — shut down and filed for creditor protection.
Today, the colleges owe students millions of dollars in tuition refunds; the recruiting firm is the target of multiple lawsuits, and Caroline Mastantuono and her daughter Christina await trial on fraud charges connected to their time at Quebec's Lester B. Pearson School Board.
The colleges now have a buyer in place, which could allow many students to return to classes, but for hundreds of others seeking refunds, the outcome remains uncertain.
How did it get to this point?
Trouble at the school board
Prior to starting Rising Phoenix, Caroline Mastantuono, 59, worked at the Lester B. Pearson School Board for 27 years, until being fired in 2016 under a cloud of controversy.
The English-language school board serves western Montreal and its off-island suburbs.
In 2004, Mastantuono became director of the board's small international student department, where two of her children, Christina and Joseph, eventually joined her.
In 2011, the Pearson board forged a partnership with a Toronto-based consulting firm called Edu Edge Inc., headed by Naveen Kolan, aimed at attracting more foreign students.
It was an immediate success. In 2010-11, the Pearson board's international student program had just seven students. By 2015-16, there were 777, paying what amounted to millions of dollars in tuition for the cash-strapped English-language school board.
Suanne Stein Day, who chaired the board during that period, described Mastantuono as someone who knew how to turn on the charm and had a knack for befriending people in influential positions. She said Mastantuono scheduled breakfast meetings, threw her birthday parties and invited her to her son Joseph's wedding.
"She had me completely and totally fooled," said Stein Day.
But Stein Day had questions about the international program. Although it was successful, she was concerned about the commission Edu Edge was charging and suspected the company was double-dipping.
The school board eventually commissioned an investigation. The resulting 2016 report, obtained by CBC, found that Mastantuono "lacked transparency," providing an accounting of her department's activities "at the last minute" and in "an incomplete fashion."
The report also found the specifics of the financial arrangement with Edu Edge hadn't been disclosed to the school board, and Mastantuono was assigning staff to work on outside projects for Edu Edge and other colleges.
Robert Mills, then the board's director general and the one who signed off on the deal with Edu Edge, was also found to lack transparency, according to the report.
Echoing Mastantuono, Mills told members of a committee set up to oversee the international department: "We bring in money, we are within budget, don't worry," the report quotes him as saying.
Mills, who retired in 2015, did not return requests for comment.
Stein Day was found to have violated the board's code of ethics following a complaint from Mastantuono, for not showing respectful behaviour to colleagues. A few months later, she went on a personal leave and ultimately resigned as chair of the board.
She expects to appear as a witness in the fraud trial against Caroline and Christina Mastantuono and Kolan.
False statements and deleted emails
Caroline Mastantuono was fired in 2016, following the preliminary investigation by the school board. Christina and Joseph were also dismissed around the same time.
In a three-page dismissal letter obtained by CBC, the school board's then-director general, Michael Chechile, who succeeded Mills, said it appeared Mastantuono had "demonstrated misconduct and insubordination" in her duties.
Chechile alleged Mastantuono had instructed employees under her supervision to "make false statements to government authorities" about tuition fees, and erased emails and hard drive data on a school board computer.
Mastantuono later rebutted these claims, saying she never told staff to "lie to government authorities." Mastantuono also said she had used the computer for personal matters and, as such, there were "some banking things on there I had erased."
The school board also sued Edu Edge in 2016 in an attempt to recoup lost earnings. In response, the firm countered that it was actually the one owed $5.5 million.
In 2019, the accounting firm Ernst & Young was appointed to help make sense of the financial dispute, but the case has still not been resolved.
Court documents related to that dispute hint at the extent of the alleged obfuscation, including the existence of a numbered company the school board alleged was created by Edu Edge for the "sole purpose" of tax evasion.
The province ordered its own audit of the international program shortly after Mastantuano was fired. The resulting report, parts of which have been redacted, found management was "deficient" and expenses were not properly tracked.
Mills and Marcus Tabachnick, who chaired the Pearson board for 24 years before leaving to run the Quebec English School Boards Association (QESBA) in 2011, would go on to work with Mastantuono in the private sector.
Mills worked at M College as the director general — appearing in a Facebook live hosted by the college alongside Joseph Mastantuono in August 2020.
Tabachnick, who worked as a consultant for Rising Phoenix after he left QESBA in 2017, said he helped recruit, sign clients and provide advice on issues such as property rentals, marketing and advertising.
The company gave him a title — executive director of innovation and strategy — and he traveled with Caroline Mastantuono to both India and China for business.
"I was never on staff. I was never an employee," said Tabachnick.
When asked why he got involved with Mastantuono's business despite the serious allegations that hung over her from her time at the Pearson board's international department, Tabachnick said no senior managers at the board had flagged anything "specific" to him.
He said he'd known Mastantuono for more than 20 years, and when she was fired, she told him she was innocent and he believed her.
"I didn't know there was the ongoing investigation. It's not something she disclosed to me at the time," said Tabachnick.
His contract with Rising Phoenix ended in 2018. By that point, the company was focused on running its own private colleges. Tabachnick says he did wonder where all the money was coming from, but he was not privy to the company's financial operations.
Anti-corruption unit lays charges
In November 2020, Caroline and Christina Mastantuono were arrested by the province's anti-corruption unit, UPAC, and charged with fraud for acts allegedly committed when the pair worked at the school board between 2014 and 2016. Joseph Mastantuono was not charged.
Edu Edge's Kolan was arrested in January 2021 in connection with the same case.
In making the arrests, UPAC said it discovered a scheme that caused "financial prejudice" to the school board, involving the forging of government immigration documents.
The allegations have not been proven in court. Both Caroline and Christina Mastantuono have pleaded not guilty to the charges, and their lawyers said they had no further comment.
Kolan did not return requests for comment through his lawyer.
Joseph Mastantuono also did not return a request for comment.
Fast-growing sector
The Mastantuono family's acquisition of three private colleges, despite the controversy at the school board, underscores the lack of government oversight of a fast-growing and increasingly profitable sector.
In Quebec, the number of students from India skyrocketed, from 2,686 in 2017-2018 to 14,712 two years later. The majority of the students attend private, non-subsidized colleges.
Olivier Bégin-Caouette, who teaches comparative higher education at the Université de Montréal, said the Quebec government wasn't prepared for the rapid expansion of non-subsidized private colleges.
He said many of them exploited a "loophole," offering one- or two-year programs in areas such as business administration and project management, that don't require government certification.
"I think there used to be a lack of oversight in the past, mostly because the government had not foreseen this," said Bégin-Caouette. He said the province needs to tighten controls on the private college sector or risk damaging the reputation of Quebec's higher education system as a whole.
A recent government probe into 10 private colleges, including M College and CDE college, revealed shortcomings around recruitment, commercial practices, governance and teaching conditions.
Why were the colleges approved?
Quebec's Ministry of Higher Education granted M College a licence in the summer of 2019, even though the UPAC investigation was underway, and a 2016 provincial audit had found a litany of "irregularities" with the Lester B. Pearson board's international program.
A student told CBC the college was not well run and compared poorly to the college she attended later.
"No regular quizzes, no regular follow-ups, nothing," said Amanpreet Kaur, who took online business administration classes at M College for a few months before asking for a refund.
A teacher at M College described the administration as "extremely disorganized" and unlike anything she had seen in her 20 years of teaching.
"They literally started a school with no resources, no curriculum, no schedules: nothing," said the teacher, whom CBC agreed not to identify.
In an emailed response to questions about why M College had been accredited, ministry spokesperson Esther Chouinard told CBC News it met the licensing requirements, and no one had been criminally charged at the time the licence was awarded.
The Mastantuonos acquired CDE and CCSQ colleges in the spring of 2020, just months before Caroline and Christina were charged with fraud. Those colleges were already designated learning institutions so were already licensed.
After they were charged, Caroline and Christina withdrew from the administration of the colleges and Rising Phoenix. Joseph Mastantuono stayed on as president of all three colleges.
In November 2021, Caroline returned as president of Rising Phoenix.
'Shocking for everyone'
On Jan. 7, 2022, three days before M College was set to reopen after the winter break, Caroline Mastantuono held a Zoom meeting with teachers to let them know Rising Phoenix and the three colleges they owned had filed for creditor protection.
"Today, I'm reaching you not with good news," she told those assembled in the video, obtained by CBC News.
Joseph Mastantuono spoke only briefly, telling the teachers they had tried to keep "plowing ahead" throughout the pandemic.
"It's very unfortunate, and it was a privilege to work with all of you," he said.
The Mastantuonos took no questions.
In its application for creditor protection, Rising Phoenix blamed its financial troubles on the COVID-19 pandemic, ill-timed expansion and changes to the immigration process for international students, which led to long visa delays.
WATCH | International students hoping for a better future left 'stuck':
The closure may have come as a surprise to students and staff, but in the months leading up to filing for creditor protection on Jan. 6, financial problems were piling up, and the Mastantuonos took steps to mitigate their own losses.
After Caroline and Christina were arrested, two financial institutions cancelled $10.6 million in financing which Rising Phoenix had planned on using to cover off the purchase of CDE, CCSQ and other real estate.
By this point, they had amassed a trove of properties, including a building in Longueuil for CCSQ's operations and a property in Gatineau, where they hoped to open another campus of M College.
In March 2021, Caroline Mastantuono gifted the lakefront home she owned in St-Adophe-d'Howard, valued at $750,000, to a family trust that she and her husband oversaw.
The colleges also began pressuring students to pay their tuition shortly before filing for creditor protection, as documented in emails obtained by CBC.
Harleen Kaur, who is originally from India has been advocating on behalf of students, said the whole situation has been "shocking for everyone."
The insolvency process is still ongoing, and Kaur is hopeful the students still seeking a refund will eventually get one.
"They came here for a better future, right, so that they can get a good education," she said.
"But they are somewhat stuck now with this system."
The fraud trial of Caroline and Christina Mastantuono, as well as Naveen Kolan, is expected to start in January 2023.