Law Firm In Charge Of Corinthian Colleges Turnaround Fired By Dept. Of Education

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When Education Credit Management Corporation completed the purchase of 56 Everest University and WyoTech campuses from now-defunct for-profit education chain Corinthian Colleges, it agreed to hire an independent monitor to oversee the turnaround of the schools. Things apparently aren’t going so well, as the Department of Education announced it has fired the law firm hired for the task. 

The Washington Post reports that the Dept. of Education fired Hogan Marren Babbo & Rose after an investigation found that Zenith, the company created by ECMC to run the campuses, had hired the same firm as its own legal counsel.

As a result, Zenith benefited from an attorney-client privilege that obligated the monitor to act in the company’s interest, not students’.

The purpose of appointing the firm, which was headed by former Dept. of Education general counsel Charlie P. Rose, was to ensure that Zenith and ECMC didn’t make the same allegedly deceptive claims as Corinthian Colleges.

According to the Associated Press investigation, the deal between Zenith and Hogan Marren Babbo & Rose shielded the firm’s work from outside scrutiny. However, the department updated the terms to prevent Zenith from making changes to the monitor’s reports before the government got a look.

“We approved Mr. Rose’s appointment as monitor because he has a unique understanding of our regulations and expectations,” Dorie Nolt, a spokeswoman for the Education Department, tells the Post. “He’s also someone who was instrumental in crafting the Gainful Employment regulations. That said, we have informed Zenith and Mr. Rose that as we enter this next phase of Zenith’s development, we believe it is time for a new monitor with a different background and set of capabilities.”

Still, the Department faced criticism for appointing the firm as it represents several for-profit colleges, and brokered the sale of Corinthian’s assets.

Despite the concerns of conflict-of-interest, reports submitted by the monitor have shown that ECMC was struggling to clean up the issues caused by Corinthian, such as inaccurately describing financial aid process and pressured prospective students to enroll, the Post reports.

Additionally, the monitor found errors in the way the company calculated completion rates on its website, but the issue has since been fixed.

The Post reports that the company has been able to reduce tuition by 20% and issue up to $10,000 a year in grants to needy students in the first five months after the sale.

ECMC chief executive David Hawn tells the Post that the company continues to have a long way to go to turn around the schools.

“No one knows better than we do that we still have work to do,” he said. “Our disappointment is that the story failed to report on the magnitude of change we have made in our first year.”

The Dept. of Education says it is looking for a new monitor with a more investigative and prosecutorial background.

Education Department fires law firm overseeing the turnaround of Corinthian Colleges’ former schools [The Washington Post]