Corinthian Executives Get Slap On the Wrist With SEC Fines | Press Release
February 26, 2019
Thousands of Former Corinthian Students Still Carry Massive Amounts Of Fraudulent Debts From The School
BOSTON – On Monday, it was announced that the SEC has filed and settled claims against former Executives of Corinthian Colleges for their role in the College’s failure to disclose material risks related to the company’s primary source of revenue, and for misleading investors regarding the company’s reliance on federal funding. The two Corinthian executives were fined penalties of $80,000 and $20,000 respectively to resolve the SEC’s allegations.
Meanwhile, nearly four years after Corinthian Colleges shut down, thousands of former students continue to struggle with massive sums of fraudulent debts from the college, which the Department of Education actively refuses to cancel, despite acknowledging Corinthian’s wrongdoing. At a court hearing earlier this month, the Department of Education continued to argue against granting full and complete loan cancellation to former Corinthian College students who were cheated by the for-profit college.
The following is a statement from Toby Merrill, Director of the Project on Predatory Student Lending.
“Considering the way Corinthian Colleges systematically lied and misled students in order to line its pockets with federal student loan money, it is no surprise that Corinthian also lied to investors about their dependency on those funds.
These meaningless fines imposed on Corinthian College’s former leadership are insulting to the hundreds of thousands of students who are still drowning in debt as a direct result of being scammed by this predatory for-profit college.
At a time when we should be strongly enforcing regulation to stop bad actors in higher education, the SEC is enabling them. We stand with the thousands of students who have been defrauded by Corinthian Colleges and will continue to fight for their illegitimate debts to be cancelled once and for all.”
Case background: Calvillo Manriquez v. DeVos
Under the Department of Education’s watch, Corinthian Colleges, the parent company to Heald, WyoTech, and Everest campuses, took in billions of dollars in taxpayer money. Corinthian used boiler-room-style pressure tactics and racially-targeted advertising to build its business, and produced outcomes for students so terrible that it had to lie to stay in business. Corinthian filed for bankruptcy, but the students it cheated were left thousands of dollars in debt for an education they never received.
The Department acknowledged that Corinthian cheated students, and that this entitled them to cancel their federal student loans. Prior to January 2017, the Department cancelled the loans of tens of thousands of former Corinthian students. In December 2017, the Department changed course and announced that cheated students should still have to repay their loans. In deciding to award “partial relief” to these students, the Department secretly and illegally gathered information about borrowers’ earnings from the Social Security Administration and compared them to earnings of other students who attended for-profit colleges. Perversely, the Department obtained the data from SSA pursuant to an information sharing agreement entered into for the purpose of protecting the public from predatory institutions like Corinthian by publishing “gainful employment” metrics.
In a groundbreaking May 26 decision, Judge Sallie Kim (N.D. Cal.)granted a preliminary injunction stopping the Department of Education from applying this illegal “average earnings rule” and ordered the Department to stop collecting on the plaintiffs’ loans. In response to that ruling, the Department refused to stop collecting from the thousands of borrowers hurt by its illegal actions and whose applications for relief it had adjudicated under its illegal rule, and only stopped collecting on the loans of the four named plaintiffs who represent the class in the case.
The Department appealed the injunction to the Ninth Circuit Court of Appeals. Oral argument was heard on February 8, 2019.
For more information about the case and the preliminary injunction, click here.
About the Project on Predatory Student Lending
Established in 2012, the Project on Predatory Student Lending represents former students of predatory for-profit colleges. Its mission is to litigate to make it legally and financially impossible for federally-funded predatory schools to cheat students.
The Project has brought a wide variety of cases on behalf of former students of for-profit colleges. It has sued the federal Department of Education for its failures to meet its legal obligation to police this industry and stop the perpetration and collection of fraudulent student loan debt.