"I found it astounding, really. It's a huge call centre with pop music blaring through loudspeakers revving people up. Their managing director proudly told me they give away 700 free coffees a day or something to their staff," says Brody who is chief executive of the Consumer Action Law Centre.

"It didn't seem to me the type of culture that would align with education and job seeking. It was all about sales."

Brody had been invited to see first-hand how Acquire, which markets vocational education courses and owns some private colleges, worked after speaking critically of the company's high pressure sales techniques and allegedly unscrupulous behaviour.

With links to the Demetriou family, former AFL boss Andrew is on the advisory board and his nephew Tim a director, Acquire has become a big name in the vocational education sector.

Acquire was, up until early this year, hurtling towards listing on the Australian Securities Exchange. Some estimates had put the value of the company, at a whopping $700 million.

Then it all went quiet with many putting the delays to the company's float down to the troubles of other listed vocational education stocks like Vocation, Ashley Services and Australian Career Network. Problems that have helped fuel a call for wider reform of the sector.

It can now be revealed that Acquire's float has been delayed for another reason. Court documents show Acquire accuses three former staff members and consultants of ripping off the business in an elaborate scheme.

Acquire sensationally alleges the trio accessed company secrets and changed the password of the CEO to access the company's entire IT system. They then went 'moonlighting' to establish a competitor right under the company's nose.

The cohort of alleged "moonlighters" includes disgraced Macquarie stockbroker Newton Chan who spent time in jail for insider trading in a highly publicised case involving Bill Express and OnQ.

While Acquire has its detractors, the company has won some support in the investment community for its high growth business model and is a sponsor of Carlton Football Club and the Twenty20 Big Bash cricket team The Melbourne Stars.

Several fund managers and investors were shocked when told Acquire had recruited Chan as a senior consultant.

"That's in the 'oh my god you're kidding me' category," says one fund manager who declined to be named lest it ruin his reputation.

The Sydney based investor, already burned by Vocation, says he won't dip into any other ASX-listed education stocks.

"Investing in Vocation wasn't our finest hour. In hindsight, the sector is too immature for institutional shareholders let alone retail shareholders," he says.

In Vocation, he is referring to another celebrated listed company flame-out in the sector. The company is now a shell of its former self after serious problems in two of its colleges and the loss of investor trust.

For his part, Acquire chief executive John Wall says his company provides a valuable service.

"There's probably a little bit of egg on our faces over this. We've been building a really good business," Wall says.

Acquire Learning Group managing director John Wall (left) with executive chairman Andrew Demetriou. Photo: Patrick Scala

"We're focusing on building a good business for our team and for our students."

When asked whether his office resembled a call centre, Wall says: "We have a great business."

"From out point of view we're helping students get into training and to get a job and we do it very successfully."

Yet according to Brody, the experience of Vocation, Acquire and others shows the perils of a sector that is so hungry to list on the ASX to raise money.

This result, he says, is a focus more heavily on earnings and sales rather than compliance and governance.

Brody says there's a clear connection between the troubles in the sector and the roll-up model used by companies after quick growth which sees them hoovering up smaller operators to gain scale. The hot pursuit of customers, bankrolled by the government, has led to an outbreak of unscrupulous operators in the sector.

"The fact that these colleges have come together and listed on the stock exchange demonstrates that really the driver here is around profit. Once they are on the stock exchange there are shareholder demands to ensure returns stay high," he says.

"Most education institutions, secondary schools, universities have a higher purpose. Sure these days some aspects of the market are having competition applied to them but not the hurly burly of the stock exchange and the demands that are put on executives associated with those businesses to get returns."

Deregulation has brought boom

Vocational Education and Skills Minister Luke Hartsuyker. Photo: Alex Ellinghausen

Australia's vocational education sector has ballooned since the deregulation of the skills and training sector. The Commonwealth will spend $3 billion this year alone on VET (vocational education and training) Fee-Help loans that help students pay for courses once they gain employment. Around another $3 billion is being spent by state governments subsidising certificate or "non-diploma" courses for hundreds of thousands of students.

This multi-billion dollar honey pot has attracted the bees and several, well documented unscrupulous operators, targeting vulnerable people with telemarketing and door-to-door sales and offering courses that are not up to scratch or not appropriate for the student's capabilities or resembling anything like skills training for a particular industry.

Victoria has had a particularly open slather approach. It was started by the state ALP, tackled under the Coalition government and now being cleaned up by Labor again after a four-year hiatus in opposition. That crackdown has led to 8000 training certificates being torn up, colleges closed, state funding pulled and a raft of audits and reviews that are still ongoing and could result in more qualifications being disallowed as the crackdown enters full swing.

Students in Sydney, while not immune to rogue operators, have had a better outcome due to the state taking a vastly different approach to funding certificate-level courses by capping 'entitlements' to funding for courses. Still the state has been conducting an inquiry over 2015 to finesse its vocational education model which still relies heavily on the TAFE sector.

One college located above a shop on George Street Sydney is linked to a 7-Eleven franchisee who is subject to civil action by the Fair Work Ombudsman for systematically underpaying staff. Another, Unique International in Granville, Sydney is being taken to court by the Australian Competition and Consumer Commission for breaches of Australian Consumer Law.

Many of the more high profile cases of sales-driven poor conduct within the sector is linked to colleges that are owned by companies listed on the stock exchange.

Vocation now infamous

The experience of Vocation, Acquire and others shows the perils of a sector that is so hungry to list on the ASX to raise money. Photo: Karl Hilzinger

Perhaps the biggest disaster in the sector so far is Vocation Ltd, founded by Sydney gym-lover Mark Hutchinson, dubbed 'Thor' in the investment community due to his blond locks and chiselled physique.

Over the 13 months on the stock exchange, Vocation's shares have gone from $3.30 to 12 cents. Attempts to restructure the company have not brought back investors and many who bought in at $1.89 when the company floated on the stock exchange in December 2013 have since sold out.

The company is now subject to three class actions over allegedly not disclosing in its prospectus that two of its largest businesses – Aspin and BAWM – had failed a federal audit of course quality and delivery and the allegedly tardy disclosure to investors that Aspin and BAWM's funding from the Victorian government had been cut.

Recently appointed Vocation chief executive officer Stewart Cummins did not return calls.

Another listed company expecting a rough ride is Australian Careers Network. ACN's rise from its $1.70 initial public offer price in November 2014 to its current share price of $3.43 has been spectacular. Yet in October it suspended its shares after the Victorian government placed its funding arrangements with all of the company's colleges on ice. Now the market, and ACN presumably, is waiting for the bottom to fall out of the stock.

This week Fairfax Media revealed ACN faces the termination of all of its financial agreements with the Victorian government over concerns about unscrupulous behaviour in at least three of its subsidiaries. The Department of Education had briefly suspended the funding to all of ACN's colleges following the revelations. A cessation of state funding would "destroy" ACN's business, according to court documents.

ACN's troubles started shortly after it purchased the fantastically named 'Phoenix Institute' in January. It was revealed in October, Phoenix had hired door to door salesmen to hawk 'free laptops' in exchange for enrolling in the college's courses. Many vulnerable people, some with intellectual disabilities, signed up to Phoenix courses unaware that while the laptop was 'free' the course had led to them to being $18000 in debt.

Two other ACN companies, Consider This Training (no question mark) and Australian Management Academy have had their funding cut following reviews by state and federal regulators after a raft of complaints.

ACN chief executive Ivan Brown says the company hopes to resume trading on the ASX "as soon as practicable"

"Since receiving notifications from federal and state regulators regarding various compliance matters on October 12, ACN has been diligently addressing the issues and responding in detail to the requests," Brown says.

"ACN has lodged a large volume of documents in response to the notices and understands it will take time to fully assess those responses and expects to be notified of the outcome in due course."

Royal commission interest

Victorian Skills and Training Minister Steve Herbert is hoping a crackdown on the sector will weed out rogue operators. Photo: Lucy Di Paolo

Ashley Services is another stock with significant exposure to the vocational education sector, listing in August 2014 at $1.66 a share. While the company has grabbed headlines at the Trade Union Royal Commission over troubles in its labour hire arm, Ashley's VET arm has also caused the company significant issues.

In its first year on the board, the company issued two profit warnings linked to a lower than expected performance in its VET arm. After an exodus of board members including former Federal Minister for Education Simon Crean, its shares are now trading at 24 cents.

A class action now hangs over the company while it can be revealed that an audit by the federal skill regulator shows in January this year there was "significant non-compliance" at two courses being offered by subsidiary Ashley Institute

Ashley managing director Ross Shrimpton, declining to answer questions on the company's share price problems, says the report "is not a picture of our current state of compliance".

He says Ashley supports the federal government reforms to VET Fee-Help funding, adding: "We have only recently entered this market".

Australian Skills Quality Authority chief commissioner Chris Robertson tells Fairfax Media the federal skills regulator has received complaints about one of Acquire's vocational colleges, which he is investigating. Acquire is also subject to a complaint to the Privacy Commissioner after it allegedly used the details of job applicants to market education courses.

Acquire's boss Walls says ASQA had not bought any complaints to his attention and while he defends his company's track record, he does back the need for reform.

"There's been a lot of negative stories in the press about VET but there's a lot of good stories too especially from students who Acquire has helped," he says.

"I think the reforms to the sector are good and hopefully it will have a huge impact on the industry which needs cleaning up."

Federal Minister for Vocational Education and Skills Luke Hartsuyker is the new broom cleaning up the sector, following the footsteps of his predecessor Simon Birmingham.

Hartsuyker says the government has introduced a range of measures to tighten up regulation of the VET sector, including banning inducements such as free laptops and iPads and a two-day cooling off period for students who sign up to courses with VET Fee-Help loans attached.

"The government is absolutely determined to ensure that unscrupulous providers are shown the door. The government has no tolerance for providers who are not genuine about delivering quality training that helps students develop the skills they need to get a job."

Some of the worst instances of unscrupulous behaviour are by fly-by-night colleges operated out of migration agents.

Separately, Victorian Skills and Training Minister Steve Herbert tells Fairfax Media the crackdown on the sector was looking into course marketers that post fake job ads to "lure people into training", describing it as a "deceptive practice".

Robertson also confirms ACN's training sites had also been subject to several complaints which ASQA was working through.

"It doesn't need to be by definition a problem because a company buys up another company, it depends on what they do after that as to how they run their business and whether they run it properly. We don't regulate their business models," he says.

Robertson points out many operators in the vocational education space are good or have good intentions.

"There's a number that worry us and I don't think training is what they're interested in, they're interested in making a dollar," he says.

ALP Senator Sue Lines, who has chaired a Senate inquiry into the sector, says larger listed groups focussing on rolling up smaller businesses rather than student outcomes is "definitely" a problem as it attracts people who are not VET specialists.

"At one level, if you're going to run a profitable business you have to have business acumen, but having said that you can't be industry agnostic and I think some of these folks running the private entities are industry agnostic. They say there's a buck to be made here and we're here," she says.

Senator Lines says the funding system has been seen by the market as "money for jam".

"Look at Victoria. That tells you there is something wrong when they have to cancel 8,000 certificates. Hello! Crisis!"

Minister Herbert knows the state has a significant problem.

He concedes the way his party, the ALP, initially deregulated started what he describes as "a fiasco" but adds Liberal Party's cuts to the TAFE sector, which many say had been starved of funding for over a decade, and lax regulation made the problem worse.

Herbert's office has set aside $9 million into a crackdown on the sector, with reviews of colleges underway, and has budgeted $30 million for reviews over the next three years.

Along with additional funding to regulate the market, Herbert is working through reforming the sector including deeming companies ineligible for government contracts if an owner or senior manager has ever worked at another VET provider that has lost their state funding.

"We're stopping those sharks that move from one company to another ... We know that's what happens."

He says the crackdown at state level over certificate level courses has led to many of these 'sharks' leaving the state system and targeting the diploma market and the super lucrative VET Fee-Help system.

He adds it was a positive the federal minister was cracking down on the VET Fee-Help sector.

"If the way the open market was introduced in Victoria was a fiasco, which we're now trying to fix, VET Fee-Help is an absolute disaster."

"If [you] go anywhere around country Victoria, you can't watch a television show without being bombarded with VET Fee-Help ads, promising the world and delivering little," Herbert says.