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posted by cmn32480 on Tuesday May 19 2015, @04:23PM   Printer-friendly
from the money-makes-you-crooked dept.

The Center for American Progress reports:

One of the most recognizable brands in the for-profit education industry is now facing fraud charges after the Securities and Exchange Commission (SEC) filed a civil complaint in an Indiana federal court on [May 12].

The agency claims that ITT Educational Services, Inc. and a pair of executives intentionally misled investors and financial analysts about the failure of ITT's private student loan programs. The court filing asserts that ITT even went so far as to start secretly making payments on behalf of students who were in default so as to avoid having to make far larger payments to the investors who had backed the loans. It's an unusual twist on a common story in the for-profit industry, where reliance on federal tax dollars for revenue means that companies have significant incentive to manipulate statistics about how their students fare.

An SEC victory would bring relief to ITT's investors, who suffered losses when the student loan information eventually came to light and sent the firm's stock price tumbling. But ITT's students and graduates, whose inability to repay their loans on time is the prime mover behind the alleged fraud, won't see their debts alleviated or their job prospects enhanced.

The company disputed the fraud charge in a statement Tuesday, calling it an "unfair case" and welcoming the chance "to have the court clear our reputation that has been unnecessarily endangered by the SEC's action."

 
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  • (Score: 1, Flamebait) by That_Dude on Tuesday May 19 2015, @06:01PM

    by That_Dude (2503) on Tuesday May 19 2015, @06:01PM (#185153)

    But then those same companies get to file bankruptcy and then those from finance get assistance to retrain and qualify as displaced workers. I fail to understand this as a fitting form of punishment when mercy is taken as weakness instead of kindness.

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