Justice Department Launches Probe into College Operator The already battered for-profit education sector received more bad news this week when the U.S. Department of Justice launched a grand jury investigation into the Career Education Corporation (CEC), operator of 81 colleges including American Intercontinental University and the Katherine Gibbs Schools. According to the Financial Times, the probes result from allegations by two former employees that student records were falsified to maximize federal aid dollars. The paper also said another former employee was interviewed jointly by the Securities and Exchange Commission and the Office of the Inspector General concerning how the company reports bad debts. Regulators have also sought information regarding the compensation of admissions recruiters to determine if CEC has violated incentive compensation rules in Title IV of the Higher Education Act of 1965. ### Related Links: The Financial Times (subscription req.) http://news.ft.com/cms/s/e725e8d2-f6d4-11d8-a879-00000e2511c8.html Reuters http://www.reuters.com/aitoolkit/aitArticle.jhtml?type=hotStocksNews&storyID=6079706
It seems CECO, COCO, and ESI are all being investigated. And we had a thread about APOL recently. Is DV next?
In my previous life as Academic Director for Le Cordon Bleu International, I visited many of our US based campuses, which are wholly owned and operated by Career Education Corporation. Without doubt, education is BIG business in the USA, and this is a major shock. I certainly hope CEC can weather the storm. Cheers, George
