SAN FRANCISCO -- Attorney General Kamala D. Harris today filed a lawsuit against Corinthian Colleges, Inc. (CCI) and its subsidiaries that operate Everest, Heald and WyoTech colleges for false and predatory advertising, intentional misrepresentations to students, securities fraud and unlawful use of military seals in advertisements.
The complaint alleges that CCI intentionally targeted low-income, vulnerable Californians through deceptive and false advertisements and aggressive marketing campaigns that misrepresented job placement rates and school programs. CCI deployed these advertisements through persistent internet, telemarketing and television ad campaigns. The complaint further alleges that Corinthian executives knowingly misrepresented job placement rates to investors and accrediting agencies, which harmed students, investors and taxpayers.
“The predatory scheme devised by executives at Corinthian Colleges, Inc. is unconscionable. Designed to rake in profits and mislead investors, they targeted some of our state’s most particularly vulnerable people—including low income, single mothers and veterans returning from combat,” Attorney General Harris said.
“My office will continue our investigation into the for-profit college industry and will hold accountable those responsible for these illegal, exploitative practices.”
According to Harris’ complaint, CCI’s predatory marketing efforts specifically target vulnerable, low-income job seekers and single parents who have annual incomes near the federal poverty line. In internal company documents obtained by the Department of Justice, CCI describes its target demographic as “isolated,” “impatient,” individuals with “low self-esteem,” who have “few people in their lives who care about them” and who are “stuck” and “unable to see and plan well for future.”
According to the complaint, CCI advertised job placement rates as high as 100% for specific programs when, in some cases, there is no evidence that a single student obtained a job during the specified time frame.
The complaint further alleges that CCI runs millions of online and mobile ads offering ultrasound, x-ray, radiology, and dialysis technician programs at their California campuses—when, in fact, CCI does not offer those programs. CCI’s call center agents are disciplined if they tell callers that CCI does not offer these programs. Additionally, according to the complaint, CCI includes official Army, Navy, Air Force, Marine Corps, and Coast Guard seals in mailings and on web sites without authorization and in violation of California law.
The complaint alleges that CCI committed securities fraud by reporting a nationwide job placement rate of 68.1% in presentations to investors, when senior executives knew this percentage was false. The complaint describes internal audits emailed to CCI executives that show job placement data error rates between 53% and 70%. The complaint references an email from a CCI executive which explains that in 2011, two Everest College campuses (Hayward and San Francisco) paid a temporary employment agency “to place students to meet the accreditation deadline and minimum placement %.” The complaint also states that CCI double-counted job placements and failed to maintain required records of reported job placements.
According to a recent CCI securities filing, the average tuition for a CCI associate’s degree is $40,000 and the average tuition for an online CCI associate’s degree is $34,000. The average tuition for CCI’s non-degree healthcare programs is $17,000.
CCI is based in Santa Ana and currently operates 24 Everest, Heald and WyoTech campuses in California, 111 total campuses in North America and three online programs. Out of the 81,000 students who attend CCI colleges, approximately 27,000 (33%) are in California.
Corinthian opened a controversial Everest campus in Milwaukee, Wisconsin in 2011. The city provided the campuses' developer with $11 million in interest free bonds. Milwaukee's Everest campus closed a year and one half later with a drop out rate of more than 50% and a job placement rate of less than 6%. CCI promised to pay off the federal financial aid loans of the students who had not completed their degrees.
CCI is a publicly traded corporation with assets of over $1 billion. Federal funds account for almost all of CCI’s annual revenue.
In July 2013, Attorney General Harris filed a separate lawsuit in Sacramento Superior Court to enforce an investigative subpoena against Bridgepoint Education Inc., operator of Ashford University, as part of an investigation of that company’s practices.
A copy of the complaint is attached to the electronic version of this release at: http://oag.ca.gov/news
Showing posts with label Bridgeport Education. Show all posts
Showing posts with label Bridgeport Education. Show all posts
Monday, October 14, 2013
Thursday, July 21, 2011
For-Profit College CEOs Reap Rewards of Weak Regulation
In the six weeks since the Obama administration issued weaker-than-expected rules governing student debt at for-profit colleges, the University of Phoenix's founder and executive board chairman has cashed out more than $59 million of the school's parent company’s stock, according to filings with the Securities and Exchange Commission. The company's share prices on Wall Street have climbed to the highest levels in more than six months.
John G. Sperling's sale of 1.8 million shares comes as the stocks at many for-profit college companies have surged in the wake of the Department of Education's issuance of "gainful employment" rules, which the for-profit college industry had been aggressively fighting for more than a year.
And Sperling isn't alone. Donald Graham, the main stakeholder in Kaplan University, reaped a gain of $12.5 million over the last month. Andrew Clark, the CEO of Bridgepoint Education, made a $2.5 million profit on his stock holdings. Dennis Keller of Devry University made $27.6 million.
As enrollments at for-profit colleges have swelled over the past decade, along with the federal financial aid dollars that deliver as much as 90 percent of their revenues, scrutiny has intensified on students' outcomes. Hundreds of thousands of students at for-profit colleges have emerged with enormous debts and meager job prospects, resulting in a disproportionate share of student loan defaults at for-profit colleges.
The Obama administration's new rules were expected to rein in schools that aggressively recruited students but did little for their academic and employment outcomes once they were in the door. Many industry executives and Wall Street investors anticipated stricter rules that could have barred certain underperforming programs from accessing lucrative federal student aid dollars.
Beginning last summer, when the Department of Education released a draft version of the regulations, stocks at the Apollo Group, the University of Phoenix's parent company, and many other higher education corporations began to tumble. But the resulting rules essentially gave the industry carte blanche to continue as usual, taking a more lenient approach that gives schools an additional three years to come into federal student aid compliance. One former Department of Education official said the administration "caved in" to the industry’s pressure.
The market certainly signaled that the rules changed little, as stocks at many of those schools' parent companies soared and have remained strong ever since.
The weakening of the rules came after an extensive yearlong battle in Washington waged by the for-profit college industry that included substantial lobbying and campaign finance money from the Apollo Group and Sperling himself.
John G. Sperling's sale of 1.8 million shares comes as the stocks at many for-profit college companies have surged in the wake of the Department of Education's issuance of "gainful employment" rules, which the for-profit college industry had been aggressively fighting for more than a year.
And Sperling isn't alone. Donald Graham, the main stakeholder in Kaplan University, reaped a gain of $12.5 million over the last month. Andrew Clark, the CEO of Bridgepoint Education, made a $2.5 million profit on his stock holdings. Dennis Keller of Devry University made $27.6 million.
In total, the CEOs of the 15 publicly traded American for-profit colleges have collected $2 billion from selling company stock over the last seven years.
Many for-profit schools have been shown to aggressively recruit low-income and minority students—in some cases providing false information about accreditation and the prospects for salary and job opportunities after graduation—raising the question of whether the recent gains of for-profit CEOs like Sperling are being made on the backs of the most vulnerable students.
As enrollments at for-profit colleges have swelled over the past decade, along with the federal financial aid dollars that deliver as much as 90 percent of their revenues, scrutiny has intensified on students' outcomes. Hundreds of thousands of students at for-profit colleges have emerged with enormous debts and meager job prospects, resulting in a disproportionate share of student loan defaults at for-profit colleges.
The Obama administration's new rules were expected to rein in schools that aggressively recruited students but did little for their academic and employment outcomes once they were in the door. Many industry executives and Wall Street investors anticipated stricter rules that could have barred certain underperforming programs from accessing lucrative federal student aid dollars.
Beginning last summer, when the Department of Education released a draft version of the regulations, stocks at the Apollo Group, the University of Phoenix's parent company, and many other higher education corporations began to tumble. But the resulting rules essentially gave the industry carte blanche to continue as usual, taking a more lenient approach that gives schools an additional three years to come into federal student aid compliance. One former Department of Education official said the administration "caved in" to the industry’s pressure.
The market certainly signaled that the rules changed little, as stocks at many of those schools' parent companies soared and have remained strong ever since.
The weakening of the rules came after an extensive yearlong battle in Washington waged by the for-profit college industry that included substantial lobbying and campaign finance money from the Apollo Group and Sperling himself.
Wednesday, March 16, 2011
Senate hearing focuses on for profit college with 84% drop out rate
Last week the Senate Health, Education, Labor and Pensions Committee, heard testimony about Ashford University, a for-profit college owned by Bridgeport Education, with an associate degree program drop-out rate of 84%.
Using data from federal filings and documents provided by Bridgepoint, Senator Tom Harkin, the Iowa Democrat who is chairman of the committee, described an institution that gets 86 percent of its revenues directly from the federal government, but sees the vast majority of its students drop out, burdened with student-loan debt. Bridgepoint employs 1,703 recruiters, the senator said, but only one employee is charged with job placement.
The amount spent on instruction per student has plummeted from above $5,000 before Bridgepoint bought Asford, to about $700 a student — about a tenth as much as at Iowa State. According to Mr. Harkin, for each Bridgepoint student, $2,700 went to recruiting and $1,500 to profits. Its chief executive, Andrew Clark, earned $20.5 million in 2009.
“From a strictly money-making perspective, this is a highly successful model,” Mr. Harkin said. “But from an educational perspective, from the perspective of public money and an ethical perspective, I think it’s a highly disturbing model.”
Read the New Tork Times article on the hearing.
Using data from federal filings and documents provided by Bridgepoint, Senator Tom Harkin, the Iowa Democrat who is chairman of the committee, described an institution that gets 86 percent of its revenues directly from the federal government, but sees the vast majority of its students drop out, burdened with student-loan debt. Bridgepoint employs 1,703 recruiters, the senator said, but only one employee is charged with job placement.
The amount spent on instruction per student has plummeted from above $5,000 before Bridgepoint bought Asford, to about $700 a student — about a tenth as much as at Iowa State. According to Mr. Harkin, for each Bridgepoint student, $2,700 went to recruiting and $1,500 to profits. Its chief executive, Andrew Clark, earned $20.5 million in 2009.
“From a strictly money-making perspective, this is a highly successful model,” Mr. Harkin said. “But from an educational perspective, from the perspective of public money and an ethical perspective, I think it’s a highly disturbing model.”
Read the New Tork Times article on the hearing.
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