Last fall, the state of California sued Corinthian Colleges, Inc. — better known as the company that operates a number of the for-profit colleges whose ads dominate daytime TV commercial breaks — over allegations that it lied to students about job-placement stats and to investors about its graduates’ success rate. Yesterday, CCI revealed that it’s also being investigated by two federal agencies and can’t open any new locations for the time-being.
In its quarterly earning report statement, CCI discusses the ongoing lawsuits by California Attorney General Kamala Harris and a separate mult-state inquiry involving more than a dozen attorneys general, but the real disclosures involved new probes by the Dept. of Education and the Consumer Financial Protection Bureau.
CCI says that it recently received a letter from the Education folks in which the regulator “denied many of the Company’s pending new program applications and mandated that all of the Company’s institutions request and receive ED’s prior approval for any new locations and programs,” effectively putting the company’s growth on hold. The feds are also asking for contact information of Corinthian alumni and their employers so that they may verify the school’s placement data.
The reason for the department’s actions, according to CCI, involves “on-going government investigations of the Company and certain instances when the Company had ‘admitted falsifying’ placement, attendance and/or grade information.”
The company says it never admitted to deliberately posting bogus job-placement claims on its website or its marketing materials, but that it actually learned about this inaccurate information and took it down of its own accord.
The CCI report also mentions a letter sent in December by the CFPB, stating that the federal agency is considering legal action against the company for allegations that CCI violated the Consumer Financial Protection Act “as it relates to the student lending programs offered to Corinthian students.”
According to the company, it filed a response to the CFPB letter on Jan. 13 and it maintains that its “acts and practices relating to student loans are lawful.”