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California Atty. Gen. Kamala D. Harris won a more than $1.1-billion judgment Wednesday against the now-defunct Corinthian Colleges, after a San Francisco judge ruled that the company’s advertising practices misled students and violated the law.
Granting a default judgment, San Francisco Superior Court Judge Curtis Karnow found that Corinthian Colleges provided untrue or misleading statements about graduates’ job placement rates, duping both students and investors, and that the Santa Ana-based company unlawfully used U.S. military seals in advertisements, among other claims.
The for-profit college operator, which filed for bankruptcy protection in May, was also faulted for advertising programs or degrees that it didn’t offer, such as training programs for X-ray and dialysis technicians, according to court papers.
The judgment found that Corinthian and its subsidiaries had unfair and unlawful debt collection practices, including barring students from attending classes if they were behind on loan payments, and that they failed to disclose their role in the "Genesis loan" program.
Corinthian Colleges, along with its Heald College business, were also faulted for misrepresenting the likelihood of whether academic credits earned at their programs could be transferred to the Cal State system, according to court papers.
In his 21-page judgment, Karnow ordered restitution of $820 million for students and civil penalties of just more than $350 million.
Corinthian Colleges must pay nearly $1.2 billion for false advertising and lending practices
But that's not all. Corinthian was sold and is now Zenith. Yep, a student debt collection firm. Same crap different day:
When one of the country's largest for-profit college companies failed in 2014, the Education Department faced a choice. It could shut down Corinthian Colleges Inc., incurring a $1 billion loss to taxpayers and sending students scrambling, or it could find someone to take the school off its hands.
With a history of fraud discovered by auditors and investigators, and poor outcomes for students, the company drew only one interested buyer: a student loan debt collection firm that had formed a nonprofit educational company called Zenith Education Group.
A little over one year after Zenith took the helm, a review of the school's operations by The Associated Press shows that despite ostensibly new oversight by the Obama administration, the business model for what had been a failing chain of career training schools hasn't fundamentally changed.
The Education Department has permitted Zenith, the new owners, to recruit students using large-scale telemarketing and paid media campaigns that sometimes advertise programs that no longer exist. Executives who formerly oversaw Corinthian's business practices, which state and federal officials said were fraudulent, remain employed at Zenith.
As with Corinthian, Zenith still requires students to waive their right to sue the school in a class action — a legal power play unheard of among traditional colleges. Zenith continues to recruit students using the very same ads that Corinthian ran during the very same daytime TV talk shows.
Ominously for students and the government, recent graduates told the AP they are struggling to find work that would allow them to pay back their student loans. That raises the prospect the U.S. is seeding a new crop of loan defaults.
"I graduated in April at the top of my class, with honors," said Shane Satterfield, a roofer in Georgia who now owes more than $30,000 in debt for the associate's degree in computer science he completed last year. "And I can't get a job paying over $8.50 an hour."
Trouble remains following failed for-profit schools' revival
Granting a default judgment, San Francisco Superior Court Judge Curtis Karnow found that Corinthian Colleges provided untrue or misleading statements about graduates’ job placement rates, duping both students and investors, and that the Santa Ana-based company unlawfully used U.S. military seals in advertisements, among other claims.
The for-profit college operator, which filed for bankruptcy protection in May, was also faulted for advertising programs or degrees that it didn’t offer, such as training programs for X-ray and dialysis technicians, according to court papers.
The judgment found that Corinthian and its subsidiaries had unfair and unlawful debt collection practices, including barring students from attending classes if they were behind on loan payments, and that they failed to disclose their role in the "Genesis loan" program.
Corinthian Colleges, along with its Heald College business, were also faulted for misrepresenting the likelihood of whether academic credits earned at their programs could be transferred to the Cal State system, according to court papers.
In his 21-page judgment, Karnow ordered restitution of $820 million for students and civil penalties of just more than $350 million.
Corinthian Colleges must pay nearly $1.2 billion for false advertising and lending practices
But that's not all. Corinthian was sold and is now Zenith. Yep, a student debt collection firm. Same crap different day:
When one of the country's largest for-profit college companies failed in 2014, the Education Department faced a choice. It could shut down Corinthian Colleges Inc., incurring a $1 billion loss to taxpayers and sending students scrambling, or it could find someone to take the school off its hands.
With a history of fraud discovered by auditors and investigators, and poor outcomes for students, the company drew only one interested buyer: a student loan debt collection firm that had formed a nonprofit educational company called Zenith Education Group.
A little over one year after Zenith took the helm, a review of the school's operations by The Associated Press shows that despite ostensibly new oversight by the Obama administration, the business model for what had been a failing chain of career training schools hasn't fundamentally changed.
The Education Department has permitted Zenith, the new owners, to recruit students using large-scale telemarketing and paid media campaigns that sometimes advertise programs that no longer exist. Executives who formerly oversaw Corinthian's business practices, which state and federal officials said were fraudulent, remain employed at Zenith.
As with Corinthian, Zenith still requires students to waive their right to sue the school in a class action — a legal power play unheard of among traditional colleges. Zenith continues to recruit students using the very same ads that Corinthian ran during the very same daytime TV talk shows.
Ominously for students and the government, recent graduates told the AP they are struggling to find work that would allow them to pay back their student loans. That raises the prospect the U.S. is seeding a new crop of loan defaults.
"I graduated in April at the top of my class, with honors," said Shane Satterfield, a roofer in Georgia who now owes more than $30,000 in debt for the associate's degree in computer science he completed last year. "And I can't get a job paying over $8.50 an hour."
Trouble remains following failed for-profit schools' revival
