Posts Tagged ‘for profit college’

James Hoyer Partner Interviewed about For-Profit ITT Tech’s Closing

Jesse-ITT pic1
James Hoyer partner Jesse Hoyer provided insight on the closing of for-profit college ITT Tech, during an interview with ABC Action News in Tampa.  Hoyer has extensive experience investigating and bringing suit against for-profit colleges for questionable practices.

ITT suddenly closed its doors Tuesday impacting 35,000 students and 8,000 employees. The school blamed the shutdown on recent action by the U.S. Education Department to ban ITT from enrolling new students who use federal financial aid, but Hoyer pointed out the DOE did so with good reason.

“It’s not the government that shut them down. They shut themselves down. If they were offering a viable, legitimate business, they would be able to get financial funding from other sources.” Hoyer explained.

ITT, like many for-profit colleges, depends heavily on taxpayer funding for students.  In fact, some 80-percent of ITT’s tuition was paid through federal financial aid dollars.  With that money source cut off, the school anticipated that it could no longer attract students to pay for its courses.

ITT was being investigated for several problems prior to the closing. In August, a group that accredits ITT found that the chain failed to meet several basic standards and was unlikely to comply in the future.

ITT’s closure comes after Corinthian Colleges Inc. shut the doors of its schools and filed for bankruptcy last year. The Education Department agreed to forgive $171 million in loans owed by former students, most of them in California.

Click on the video above to see the ITT Tech closing story by ABC Action News.

 

For-profit College Whistleblower Interviewed on ABC World News

Whistleblower Jason Sobek

The whistleblower case against for-profit college giant Education Management Corporation (EDMC) was profiled in an investigative report on ABC World News.  James Hoyer Client Jason Sobek was interviewed and explained why he came forward to expose practices he believes are hurting, not only students, but also taxpayers.

Reporter Mark Greenblatt shared internal documents that show EDMC falsely inflated job placement statistics.

“They manipulated the job placement rates by counting students working in a job that they did not need the degree for,” Sobek told ABC News. “In my opinion, it’s a wretched fraud.”

EDMC is the 2nd largest for-profit college operator in the country.  It owns The Art Institutes, Brown Mackie, South University and Argosy University.  Sobek is a former Assistant Director of Admissions who recruited students to sign up for South University Online.

The story also profiles Brown Mackie student Sarah Fisher who graduated with an Associate’s Degree in Business Management.  Fisher works as a Customer Service Representative at Walmart, a job she found on her own while still attending school.  Since graduating, she’s been unable to find a job in her field of study, but internal EDMC documents show the school counted her as a successful job placement.

In addition, the documents Sobek shared show a Fashion Marketing graduate who works as a shoe salesman and an Accounting graduate who works as a McDonald’s cashier were also counted as successful job placements. Sobek believes counting these graduates as successful job placements is misleading.  He says the company uses them to inflate job placement statistics presented to potential students to get them to sign up and get their financial aid dollars.

ABC News asked U.S. Senator Dick Durbin, the Assistant Majority Leader of the Senate, to review the internal EDMC job placement records.  After his review, Senator Durbin issued a powerful rebuke.

“It’s just plain fraud and your whistle-blower has brought it to light,” Durbin told ABC News. “These students get sucked in by these ads, sign up for debt, sign up for courses that lead to nowhere,” Durbin says.

Click here to watch the ABC World News story and to read the online report.  You can also post a comment on the ABC News website.

Click here to watch another investigative report from WTAE TV in Pittsburgh, the hometown for EDMC’s headquarters.

 

 

Magistrate Judge Recommends Case Against EDMC Move Forward

Positive news for a whistleblower represented by the James Hoyer Law Firm in a case against Education Management Corporation (EDMC), the 2nd largest for-profit college provider in the country. Magistrate Judge Cynthia Reed Eddy, of the U.S. District Court for the Western District of Pennsylvania, recommends that the case move forward on several key counts.

Former EDMC employee Jason Sobek alleges in the lawsuit that EDMC defrauded the federal government by making misrepresentations which led students to sign up for federal student loans and grants.  Among the issues are misrepresentations on program accreditation and job placement statistics and failing to track student academic progress.

Magistrate Judge Eddy recommends that those three main counts put forth in the suit regarding job placement, accreditation, and satisfactory academic progress proceed–  denying EDMC’s Motion to Dismiss those counts. EDMC schools named in the suit include South University, Agrosy and The Art Institutes.

An article in Law360 reports:

U.S. Magistrate Judge Cynthia Reed Eddy said that  several allegations made by Jason Sobek, a former
EDMC associate admissions officer, are strong enough to go forward, including claims that the Pittsburgh, Pa.-based education company lied to students about its programs’ accreditations and their job prospects.

Magistrate Eddy also says Sobek met the burden of evidence for a claim on “incentive compensation”  to continue, but because the plaintiff was not “first filed” on that issue, she recommends dismissing that count. The “incentive compensation” claim will move forward in a separate whistleblower suit which was first to file on that issue.

The Magistrate recommended that there was not sufficient evidence put forth to continue two other counts in the suit, which had to do with misrepresentations of  cost and a “violation of reverse false claims.”

District Judge Terrance McVerry will now take the Magistrate’s recommendation under advisement and is expected to rule in the near future.