Capitol Alert: Kamala Harris sues for-profit parent of Heald College, WyoTech

jwhite@sacbee.comOctober 10, 2013 

5B26COMPLIMENTS

Rich Pedroncelli Associated Press Attorney General Kamala Harris accepted President Barack Obama's apology for a compliment that some perceived as sexist.

A for-profit college chain intentionally deceived prospective students and investors about the value of its degrees and sought out the socially isolated and disadvantaged, according to a lawsuit California Attorney General Kamala Harris filed Thursday.

According to the complaint, Corinthian Colleges Inc. boasted of unrealistically high job placement rates -- as high as 100 percent in some cases -- while discussing in internal documents how to recruit low-income and disillusioned students who are "impatient," have "low self-esteem" or can claim "few people in their lives who care about them."

Part of that strategy entailed "aggressive and persistent internet and telemarketing campaigns" and placing spots on daytime television shows.

Corinthian Colleges Inc. tried to lure students with connections to the military by using the seals of various branches of the armed forces without government approval, according to the attorney general's office.

Originally organized under Delaware state law and based in Santa Ana, Corinthian Colleges Inc. manages more than 20 campuses around the United States. That includes Heald College locations in Fresno, Modesto, Rancho Cordova, Roseville and Stockton and a WyoTech campus in Fremont.

The complaint also charges the college chain with misrepresenting the value of its schools to investors by skewing job placement rates. Unlike traditional college models, for-profit schools rely on investor dollars to remain financially viable. And the complaint alleges that officials, including CEO Jack Massimino, knew they were presenting false data.

"The predatory scheme devised by executives at Corinthian Colleges Inc. is unconscionable. Designed to rake in profits and mislead investors, they targeted some of our state's most particularly vulnerable people -- including low income, single mothers and veterans returning from combat," Harris said in a news release.

In recent years, the for-profit college industry's rapid growth has come under fire from watchdogs and public officials who say many of the schools charge exorbitant tuition rates, often causing students to go into debt to acquire degrees of questionable value.

Policymakers in California have already acted to limit the flow of financial aid to for-profit colleges. The 2012 budget imposed new eligibility requirements on receiving Cal Grants, effectively excluding under-performing for-profit schools.

According to Harris' office, an associate's degree from Corinthian Colleges Inc. schools comes with an average price tag of $40,000. The complaint charges that the chain engaged in "unlawful, unfair, and fraudulent practices in connection with the sale of programs that are very expensive."

A spokesman from Corinthian Colleges Inc. was not immediately available for comment.

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