One of the nation's most prominent investigators, former U.S. Attorney Patrick Fitzgerald, will monitor the sale and closure of for-profit career colleges owned by the failing Corinthian Colleges, the U.S. Department of Education announced Friday.
Fitzgerald and his firm will have full access to the financial records, student rosters and closure plans at the Heald, Everest and Wyotech campuses as part of an agreement earlier this month between the department and the company to let it wind down slowly.
"Mr. Fitzgerald and his team will play a critical role in making sure that the department is provided with an accurate accounting of Corinthian's operations to ensure students are protected as well as protecting the integrity of taxpayers' investment," said U.S. Under Secretary Ted Mitchell.
As a federal prosecutor, Fitzgerald built a reputation as a corruption-buster. His investigations led to the convictions of two former Illinois governors, George Ryan and Rod Blagojevich. He probed the leaks that outed Valerie Plame as a CIA operative in 2003 and later tried the federal perjury and obstruction of justice case against Lewis "Scooter" Libby, a top Bush administration official.
Fitzgerald and his firm Skadden, Arps, Slate, Meagher & Flom LLP & Affiliates will review the company's sale of some campuses to other institutions to ensure it makes good on its agreement to allow students at the closing schools to complete their educations.
It will also establish a complaint and feedback system for Corinthian's more than 70,000 students, the announcement said.
Corinthian plans to sell 85 of its 97 U.S. campuses, including all of its California schools, and close the rest. The agreement between the department and Corinthian allows only some of the students to receive full federal loan discharges and refunds but requires an appeal process.
The extraordinary buckling of the career-college giant began last month when the education department announced it was putting a three-week hold on the company's access to federal financial aid as a sanction for failing to fully comply with a federal investigation into allegations it falsified student records. The publicly traded company told its investors June 19 it might go under as a result.
Like others in the for-profit college sector, Corinthian has depended heavily on taxpayer-funded aid, receiving about $1.4 billion per year in federal student loans and grants, according to the department.
A federal investigation into Corinthian's practices is ongoing, the department said Friday.
Attorneys general in a number of states, including California, have investigated whether Corinthian deceived students to get them to sign up for expensive training programs that they can't afford.
California's attorney general, Kamala Harris, filed a class-action suit last fall saying Corinthian routinely preyed on vulnerable students. She is now accusing the company of lying to prospective students about the stability of the colleges.
A judge last week denied an emergency injunction to order the company to inform students of its status; a full hearing is set for next month.
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