Abrupt closure of Boston Language Institute spurs review by state Attorney General’s office

The Massachusetts Attorney General’s Office is reviewing the abrupt closure earlier this month of the Boston Language Institute, a Kenmore Square school that for nearly 38 years helped students learn Spanish, Vietnamese, and dozens of other languages, along with teaching English-language learners.

The school lost its bankruptcy protection in mid-January, allowing creditors, including the bank, to seize its accounts. On Jan. 16, the school’s owner and president, Siri Karm Singh Khalsa, informed students and staff that the school would “terminate operations immediately.”

But students have complained about failing to get refunds, and former employees say they are owed weeks and in some cases months of back pay. Some former employees said their paychecks have bounced or the bank has warned them against cashing the checks, because the school’s account has no funds.

A few of the institute’s teachers are in the United States on work visas or are permanent residents, and the way Khalsa handled the closure and withheld their taxes has left them concerned about their status in the country, former employees said.

“Our office is aware of this closure and has received several complaints,” Attorney General Maura Healey’s office said in a statement on Monday. “We have reached out to get more information.”

The institute’s closure was first reported by the Boston Business Journal.

Khalsa said he has not yet heard from Healey’s office, but believes that the company has handled its payroll appropriately and that the closure was a surprise to him too. Other Boston language schools have agreed to take some of the institute’s students for free, Khalsa said.

But he could not say when employees would be paid.

“I am committed to making it work, I don’t have the answers at this point,” Khalsa said. “I have been doing this for 38 years. Businesses go through ups and downs, I’ve always been able to pull it out. . . . It never occurred to me that we would not prosper.”

Khalsa had previously assured the seven full-time administration employees, along with dozens of full- and part-time language instructors, of an orderly closure.

But employees said that is far from the reality.

“There was not a lot of transparency,” said Darlene Madera, an associate director who oversaw English language programs. Madera worked at the institute for almost eight years and said she assumed the school would downsize but wasn’t expecting a shutdown.

Just days before the closure she reviewed plans to house the institute in a smaller space in Chinatown, she said.

Madera and other employees said they have not been paid for their final weeks on the job. Several former workers also said they are concerned that their earnings reported for tax purposes don’t seem to match their actual pay.

One former part-time employee, who declined to be named, said she has informally consulted an attorney because she is worried that any tax discrepancies could jeopardize the renewal of her permanent residency card.

The institute, which opened in 1981, had experienced financial problems in the past.

Elizabeth Starr, who worked at the institute for three years until early December, remembered Khalsa asking her and other employees to take pay cuts. But as a single mother, Starr said she couldn’t afford to do that; Khalsa eventually backed off that proposal.

And checks to teachers would occasionally be delayed, Starr said.

In 1991, Khalsa sought bankruptcy protection after accumulating nearly $300,000 of debt, including back taxes owed to the Internal Revenue Service. At the time, employees rebelled and locked him out of the building.

But Khalsa prevailed. He outbid an employee-backed group to purchase the institute out of US Bankruptcy Court and regained control of the school.

Last summer, Khalsa returned to bankruptcy court, this time over a dispute with the institute’s landlord, Related Beal. Khalsa was fighting to remain in the Beacon Street property even as Related Beal, which had bought the building from Boston University, made plans for an extensive renovation with higher rents.

According to court documents, Khalsa had failed to pay his attorney about $45,000 between June and October. Then in late December, his attorney withdrew, citing “irretrievable breakdown.”

Khalsa had until Jan. 14 to find a new attorney, which he failed to do. As a result, the bankruptcy judge dismissed the case and the institute lost its bankruptcy protections, allowing creditors to seize its assets.

Former employees said Khalsa should have known that the school’s finances were dire, yet a new crop of students started their classes on Jan. 14. Tuition at the institute varied depending on the length of the coursework. Some students paid $187 for a one-week sessions, while others spent more than $4,400 for three months of classes.

Madera said many staff feel betrayed by the recent financial upheaval and are heartbroken that the school is shut.

“It was a labor of love for a lot of teachers there,” she said. “It was a really special environment that was really international.”