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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."
(Score: 5, Interesting) by Gravis on Tuesday May 19 2015, @04:41PM
i'm tired of companies fucking people over and claiming they did nothing wrong. just take all of ITT's money, sell their assets, ban all people involved from working in finance and be done with it.
(Score: 1, Flamebait) by That_Dude on Tuesday May 19 2015, @06:01PM
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.
(Score: 4, Interesting) by BK on Tuesday May 19 2015, @05:27PM
Not that I want to defend it, but how is this any different than the hedge funds' openly paying RadioShack (covering expenses...) to declare bankruptcy in February because how their default swaps were structured? It seems like this is the same thing. They postponed defaults because postponing defaults was cheaper for the company than allowing them. The
gamblersinvestors here don't look like angels at ITT either. Hell, as near as I can tell, students came out winners since ITT was paying down their debt.It seems that both actions are fraud, or both are not.
I know that on SN, nobody wants to root for the private college or the hedge fund, but...
...but you HAVE heard of me.
(Score: 0) by Anonymous Coward on Tuesday May 19 2015, @08:29PM
> how is this any different than the hedge funds' openly paying RadioShack (covering expenses...)
> to declare bankruptcy in February because how their default swaps were structured?
Seems like that word in bold might have something to do with it.
Just sayin.
(Score: 4, Funny) by Tork on Tuesday May 19 2015, @05:54PM
🏳️🌈 Proud Ally 🏳️🌈
(Score: 0) by Anonymous Coward on Tuesday May 19 2015, @07:37PM
Anyone that goes to a for-profit school is a dumbass.
(Score: 3, Informative) by Tork on Tuesday May 19 2015, @07:51PM
I don't really disagree with the spirit of your comment, rather just the letter of it. Whether you're self taught or you go to a private school whatever you get from it depends on what you put into it. These five people went to that school and kicked enough butt to get noticed. The rest of their 30 or so classmates, not as much. I don't know what happened to them but if at least 5 of them moved on to different careers I would not be surprised at all. If I'm right, they're probably still paying that off. Frankly, if I didn't do enough work to make this career a possibility, I'd be in the same boat. Perhaps not as much debt, but also I may not have gotten here because I'd rather watch youtube videos of cats than sit at home doing work.
🏳️🌈 Proud Ally 🏳️🌈
(Score: 0) by Anonymous Coward on Tuesday May 19 2015, @08:41PM
First, gotta get the pedantry out of the way - all for-profit schools are private schools, but not all private schools are for-profit schools.
As for those butt-kickers, my first stab at explaining that would be to think of it like a glass of water. Everybody comes in with a different amount of water and the school siphons off the same amount from each of them. The people who start off with with a near full glass can still come out the other end with enough water to succeed. The people who start off on the low side may end up being sucked dry. Obviously the reality is not nearly so one-dimensional as that. But I'd be more inclined to say that they succeeded in spite of the school rather than because of it, if they had taken another path they might have done even better.
(Score: 2) by aristarchus on Tuesday May 19 2015, @09:48PM
C'mon, Tork, your anecdote is not making anything any clearer!
At a place I worked we needed to staff up. My supervisor and I knew an instructor at a private school and we asked him to send us five of his best students. All of them soundly kicked butt and, frankly, you've seen and enjoyed their work.
The super knew the instructor, not the school, and hired the instructor's five best, who may have not been the school's best and who many not have learned anything at said school. So other than the fact that the super knew someone whose judgment was trustworthy who happened to the an instructor at a for-profit school (some times a job is just a job, when it comes to teaching), what does this have to do with the quality of education at for-profit schools?
You know that Einstein went to a for-profit school? Seriously! They got him a job in a patent office! Top-notch placement rates! But you know who else went a for-profit art school? --Wait for it!--- Hitler!!! He did not get a job and was forced to go into politics. (For the sarcasm impaired: neither of these anecdotes are true, in case you were wondering.)
(Score: 2) by Tork on Tuesday May 19 2015, @10:11PM
So other than the fact that the super knew someone whose judgment was trustworthy who happened to the an instructor at a for-profit school (some times a job is just a job, when it comes to teaching), what does this have to do with the quality of education at for-profit schools?
They arrived already trained to do the job we assigned them. Either they learned that at the school they attended or they failed to put valuable work experience on their resume that would have earned them higher pay.
🏳️🌈 Proud Ally 🏳️🌈
(Score: 1) by Ethanol-fueled on Tuesday May 19 2015, @11:40PM
There are some people around here who are successful with for-profit Master's Degrees, but they all got their bachelor's at a State School or an otherwise more legit place and just need some more resume padding.
ITT Tech will get you an hourly entry-level technician job making between 10 and 20 (most likely starting around 15ish) bucks an hour depending on your previous experience.
(Score: 1, Interesting) by Anonymous Coward on Tuesday May 19 2015, @07:16PM
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.
Oh My! Poor, poor investors... my heart bleeds for them! Clearly these people didn't get an economics degree at ITT which would or wouldn't have explained to them that investing is risky and that this is the reason you get dividends. It's a compensation for the risk you as an investor take on.
The downside of getting a dividend is that one day the dividend may stop and even the initial investment may be lost.
But who am I kidding... I'm sure these poor, poor investors would not be able to feed themselves if they lost the money they invested in ITT. So let's all bail out/bring relief to those poor investors!
(Score: 0) by Anonymous Coward on Tuesday May 19 2015, @07:26PM
Also... free market!
(Score: 0) by Anonymous Coward on Tuesday May 19 2015, @10:22PM
Clearly these people didn't get an economics degree at ITT which would or wouldn't have explained to them that investing is risky and that this is the reason you get dividends. It's a compensation for the risk you as an investor take on.
The downside of getting a dividend is that one day the dividend may stop and even the initial investment may be lost.
Maybe an ITT economics degree would tell them this, but that would be appropriate because it's so wrong.
Dividends are not in compensation for the risk. Dividends are merely one of the mechanisms used to transfer money from a company to the owners for whatever reason. Buying back stock is another mechanism. Risk affects the valuation of the company and thus indirectly affects the dividend/price ratio, but that's like saying the purpose of a computer is to generate heat and the better the computer you have the more heat you'll generate.
(Score: 0) by Anonymous Coward on Tuesday May 19 2015, @08:12PM
For what it's worth, ITT Tech had been around longer than the Heald College/federal loan scams, and they presented themselves as a trade school upfront.
(Score: 0) by Anonymous Coward on Tuesday May 19 2015, @08:44PM
You are right. But it sure sounds like they abandoned their integrity as the industry of for profit-schools was colonized by wall-street. Corruption is contagious.