Owner of Dallas-area trade school who wrote of lies in journal is convicted of $70 million fraud

The owner of a Dallas-area trade school that trained military veterans in the heating and air-conditioning industry was convicted Thursday by a federal jury of defrauding Veterans Affairs out of about $70 million, which he used to support a lavish lifestyle, the U.S. attorney’s office said.

Jonathan Davis’ own words describing his lies and fraud — jotted down in his personal journal seized by agents — helped convict him, authorities said.

“Several decisions lie ahead that will ultimately make the difference if I succeed or if I fail. More gut-wrenching conversations, more humiliating experiences, more lying is in order,” Davis wrote in his electronic journal that he kept on his computer.

The journal, in which he fretted about money and dreamed of riches, became a key piece of evidence against Davis during the nearly two-week trial in Dallas federal court, officials said. When the money started flowing in, Davis went on a spending spree, buying a $2.2 million home in Dallas, a $428,000 Lamborghini, a $280,000 Ferrari and a $260,000 Bentley, prosecutors said.

Davis, 43, was also convicted of misleading student veterans who attended his for-profit school, Retail Ready Career Center, in Garland. The now-defunct school received about $70 million in GI Bill money, making it one of the biggest recipients for a trade school.

The jury found Davis guilty of seven counts of wire fraud and four counts of money laundering after deliberating for about seven hours, the U.S. attorney said. He faces up to 180 years in federal prison when he is sentenced.

“Mr. Davis lied to multiple government agencies in order to swindle veterans out of their hard-won GI Bill benefits. While graduates of Retail Ready were just scraping by, Mr. Davis was living the high life,” said Acting U.S. Attorney Prerak Shah. “To undermine the VA is to insult the incredible sacrifices made by U.S. military veterans.”

Jack Ternan, one of Davis’ attorneys, said in an email Thursday, “There’s no justice in the criminal justice system.”

Derek Staub, another lawyer for Davis, told The Dallas Morning News late last year that the indictment amounted to allegations of civil regulatory violations, not crimes.

Staub argued that many of his client’s graduates were satisfied with their education. The school’s graduation rate was 89%, and it had a placement rate of 81% in its final year, the company has said in court records.

Davis previously told The News that many of his out-of-state students were left stranded in 2017 when agents raided the school. He filed multiple legal challenges to the government’s civil forfeiture action against him that were unsuccessful. And Davis sued the government in September 2019 on behalf of Retail Ready, claiming, among other things, a violation of the Fourth Amendment, which protects against unreasonable searches and seizures.

The school provided students with housing assistance at local hotels that included meals and transportation. Retail Ready trained more than 2,500 people, some of whom went on to jobs that paid more than $75,000 annually, the company has said. More than 90% of its students were veterans, school officials said, most of whom needed financial aid.

Davis was indicted in November, about three years after the federal civil forfeiture case was filed, resulting in the seizure of his bank accounts and other assets.

‘I lied’

Davis was broke when he came up with the idea to market his school’s six-week HVAC training course to veterans, prosecutors said.

He realized he could charge up to $21,000 per student for the course — to be paid for by the Veteran’s Educational Assistance Act of 2008, also known as the post-9/11 GI Bill, court records say.

But Davis first needed official approvals from the VA as well as the Texas Workforce Commission and the Texas Veterans Commission, officials said. In order to win those approvals, Davis lied by claiming he wasn’t facing any criminal or civil actions at the time and that his school was an established institution in good financial condition, prosecutors said.

However, Davis was “facing numerous civil judgments over unpaid debts,” authorities said, and he had a pending felony charge for theft of services.

Davis kept a detailed account of that criminal charge in his journal, writing that it stemmed from a bad check he had written to a hotel in 2012 for $25,000, prosecutors said.

“The more complicated and damaging aspect is that having a felony arrest doesn’t do well with trying to apply for a school certificate,” Davis wrote in his journal.

Davis also told the Texas Veterans Commission that he had been operating his school for two years when it had only been in existence for a few months and hadn’t trained a single student, prosecutors said. Retail Ready didn’t even have a building or basic supplies when Davis indicated he was ready to begin instruction, according to the government.

He also submitted false financial statements to the state agencies, the feds said.

“I lied to the accountant that I am using for my audit service, I told him that I don’t have anything in the company name other than a lease … and that I’ve had a bank account with expenses out of it because it is a disaster and wouldn’t project a very good picture,” Davis wrote in his journal.

He began recruiting veterans for his school in 2014, promising them success. But many of his graduates discovered that Retail Ready did not teach them “many of the basic skills necessary for entry-level technician jobs,” according to prosecutors. Some of those former students testified during the trial, telling jurors they felt used and deceived, the U.S. attorney’s office said.

“They were also shocked to learn of the rate at which Retail Ready’s six-week course had drained their GI Bill benefits,” the office said.

Journal entries in May 2013, when the scheme began, indicated that Davis saw VA money as the source of his anticipated riches and some expensive purchases like a private jet, said Assistant U.S. Attorney Douglas Brasher in a filing. Or as Davis put it in his journal, “not a hundred million dollar plane or anything but a solid private jet,” court records said.

“Before anything else can really come to fruition I need to get my program approved by the VA and be able to accept GI Bill funding,” Davis wrote in his journal