Villalba et al. v. ITT

Overview

On January 3, 2017, a group of former ITT Tech students filed claims in ITT’s bankruptcy proceedings in the Southern District of Indiana. They sought to act as representatives of hundreds of thousands who have been defrauded by ITT. The students filed over a thousand pages of first-hand accounts from students who attended ITT, affidavits from several whistleblowers, and evidence developed in state and federal law enforcement investigations in addition to their legal documents. Along with the students, the CFPB, and multiple state attorneys generals are parties in the bankruptcy proceedings.

Information for Former ITT Students

If you are a former student of ITT Tech, please visit this page for information and to sign up for updates.

Background

ITT Tech was one of the country’s largest for-profit college chains. Over the past decade alone, it took in over $11 billion in revenue, 98% of which came from tuition, and 76% of which came from federal student aid. Headquartered in Carmel, Indiana, it grew at incredible rates after becoming a publicly traded entity in 1999, and came under increasing scrutiny for its recruitment practices. ITT was featured prominently in the Senate HELP Report of 2012, which detailed consumer fraud and misuse of federal funds at many for-profit colleges around the country. By the time it declared bankruptcy in late 2016, ITT had been subject to lawsuits by numerous state and federal enforcement agencies, as well as multiple whistleblowers

In 2016, the Department of Education cut off federal student aid to ITT. Because almost all of ITT’s revenue came from federal student aid, it declared bankruptcy weeks later. Despite extensive evidence of illegal behavior, the Department of Education continues to collect on the federal student loans that funded ITT’s fraud.

Case Updates

Update | ITT Students’ $1.5 Billion Settlement Heard by Judge In Bankruptcy

Today, former ITT students proposed a $1.5 billion settlement claim in bankruptcy court that would cancel more than $500 million in debts. All participants in the case and members of the class have until April 24 to submit their views of the settlement with the court before it is heard for final approval on June 13.  This is good news for former ITT students, but there is still a long way to go.

Update | Proposed Settlement to be Heard January 24

A year ago former ITT students filed a complaint against ITT and a class Proof of Claim in the ITT bankruptcy case. In this last year we have worked hard to fight on behalf of the Student Class, including urging the Trustee to stop collection on all debt owed directly to ITT.

Update | ITT Trustee to Stop Collection on All “Temporary Credit” Accounts

On May 18, the court overseeing ITT’s bankruptcy case approved a motion to stop collection on all ITT “Temporary Credits.” ITT used unfair and deceptive tactics to get students to sign up for Temporary Credits, including by describing Temporary Credits as grants and threatening to expel students if they did not agree to the debt. Even after ITT filed for bankruptcy, its servicers and debt collectors continued to harass students to collect these Temporary Credits.

“One employer told me that he had plenty of applications from potential candidates that had ITT Tech on their resume and that he would immediately discard those applications because he didn’t consider ITT Tech a real college.”

Former ITT Tech Student

“After graduating from ITT, I struggled with the stigma of having their name on my resume and I have gotten further with certifications than with having my degree on my resume. I have found that when ITT is mentioned most employers will frown upon it because of the previous employees they have had from ITT.”

Former ITT Tech Student

“When I graduated they made it seem like they would help me find a decent job. When in fact all they would help me get was jobs through a temp agency. When I started work I worked next to a kid who didn't even have a high school diploma. Made it seem like I wasted my time going to school I could have got the job with out them."

Former ITT Tech Student

Case Documents

01/03/2017

Adversary Complaint

This lawsuit filed in ITT’s bankruptcy seeks to establish the liability of ITT for consumer protection and contract violations against the class of students who attended ITT over the past ten years. The Complaint seeks to establish ITT students as creditors of the ITT bankruptcy estate. The students are asking for a legal finding from the bankruptcy court that ITT engaged in widespread consumer protection violations against students, which could create a path to debt cancellation for students’ federal student loans. The Complaint also asks for an injunction against the continued collection of certain ITT student loans, including debts allegedly owed to ITT and to private lenders who are functionally alter-egos of ITT...

01/03/2017

Declaration Describing Student Testimony

The student testimony was collected from ITT Tech students via the Debt Collective’s online tool for creating and submitting Defense to Repayment applications. This web-based application launched in March of 2015. By November 1 2016, over 2000 students had used it to present claims to the Department of Education about ITT’s wrongdoing, and these 29 exhibits demonstrating common student claims are drawn from their testimony...

01/03/2017

Declarations Attached to Adversary Complaint

Two additional sets of declarations and exhibits were filed along with the Complaint. One presents documentation of some of ITT’s most egregious recruiting and financial aid practices and trainings, as well as its extraordinary cost. The other presents sworn testimony (affidavits) from a number of former high-level ITT employees and others knowledgeable about its practices.

Coverage

SEC’s $300,000 ITT Settlement Leaves Trail of Questions | Indianapolis Business Journal

The Securities and Exchange Commission came at ITT Educational Services Inc.’s two top executives with guns blazing three years ago, declaring that CEO Kevin Modany and Chief Financial Officer Daniel Fitzpatrick “engineered a campaign of deception and half-truths.”

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Students Cry for Debt Relief After For-Profit College Collapse, While Executives Admit No Wrongdoing | Market Watch

As a young high school graduate, Joseph Schettler had dreams of working for the FBI or becoming a forensic psychologist. He took steps to make those dreams a reality. Schettler became the first person in his family to go to college, enrolling in the criminal justice program at ITT Tech in 2006 with assurances from the school that he would surely get a job in his field.

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ITT Execs Offered ‘Sweetheart Deal’ | Politico

That’s how lawyers representing defrauded ITT students are describing the settlement reached late last week between the Securities Exchange Commission and two former senior executives of ITT Educational Services Inc., the company behind a troubled for-profit college that shuttered in 2016.

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