itt ed

<div>ITT Educational Services</div><div>
</div><div>ITTwho</div><div>
</div><div>Schools: ITT Tech, ITT Breckenridge School of Nursing, Daniel Webster College</div><div>
</div><div>Taxpayer aid (U.S. Department of Education funding) last year: $664 million</div><div>
</div><div>Current & recent law enforcement investigations or actions:</div><div>
</div><div>Securities and Exchange Commission; Consumer Financial Protection Bureau; attorneys general of New Mexico, Arkansas, Arizona, Connecticut, Idaho, Iowa, Kentucky, Missouri, Nebraska, North Carolina, Oregon, Pennsylvania and Washington. Details.</div><div>
</div><div>Sample troubling behavior:</div><div>
</div><div>ITT training documents obtained by Senate investigators in 2011 included a “Pain Funnel and Pain Puzzle” providing questions for recruiters to ask prospective students in order to “poke the pain” and compel enrollment. Examples: “What has not having a college education cost you?” and “What are you willing to change now, or have you given up trying to deal with the problem?”</div><div>The Consumer Financial Protection Bureau has sued Indiana-based ITT, charging in a 2014 complaint that “ITT subjected consumers to undue influence or coerced them into taking out ITT Private Loans through a variety of unfair acts and practices designed to interfere with the consumers’ ability to make informed, uncoerced choices.” (ITT denies the charges in this case and all the cases described below.)</div><div>In May 2015, the Securities and Exchange Commission sued ITT, CEO Kevin Modany, and ITT’s former CFO, charging that the company “made various false and misleading statements and omissions to defraud ITT’s investors by concealing the extraordinary failure” of its student loan programs. The SEC charged that ITT management “engineered a campaign of deception and half-truths that left ITT’s auditors and investors in the dark concerning the company’s mushrooming obligations” regarding its private student loan program.</div><div>In January 2016, ITT agreed to pay $1.1 million and commit to a series of corporate governance reforms to settle a series of lawsuits brought by shareholders that charged ITT with securities law violations, including that ITT had engaged in breach of fiduciary duty, unjust enrichment, abuse of control, corporate waste, and gross mismanagement.  </div><div>The attorney general of New Mexico has sued ITT for alleged “unfair, deceptive, and unconscionable acts and practices … in connection with the advertising, marketing, and selling of educational services” to prospective students.</div><div>A federal whistleblower lawsuit unsealed in January 2016 alleges, among other claims, that a blind student applied to the ITT computer networking program, which requires students to read codes and identify plugs and wires by color in order to repair computers. The employee who has filed the suit, Rodney Lipscomb, says he raised concerns about whether the ITT program would actually help this blind student, but ITT’s recruiting director told him “it was not ITT’s problem” to dissuade the student. Lipscomb says he contacted a Florida disability agency and was told that federal law did not require ITT to admit the student, because he could not perform this computer repair work even with a reasonable employer accommodation. But a supervisor reprimanded Lipscomb for making that inquiry, and the student was enrolled. He dropped out after four weeks with an entire academic quarter’s worth of loan debt, no degree, and no job. Lipscomb further alleges that ITT recruiters in Florida were instructed by management to tell prospective students that if they enrolled in ITT’s criminal justice program, they could get jobs doing forensic science work like they saw on “CSI Miami.” In fact, the ITT program did not train students to do such work, and Lipscomb claims that upon discovering what recruiters were saying, he and Kysha Fedd, the campus chair of the criminal justice program, went to classrooms to inform current students, many of whom “became upset … and dropped out,” but still had to pay back their loans. Fedd resigned, saying “she could ‘no longer work for the devil’ and that she was extremely disappointed that the students were leaving ITT with almost $50,000 in debt and no job prospects except to work as a security guard in the mall.”  ITT Tallahassee subsequently shut down its criminal justice program. Subsequently, the director of recruiting told his staff that prospective students interested in criminal justice “should be steered to the business management program and told that they will be able to open their own private investigation business, even though that is not what the Business Management program is designed to train students to do.”  According to Lipscomb, ITT Tallahassee held weekly “show meetings” where managers required recruiters to discuss their efforts to sign up students. When one recruiter expressed concern about enrolling a single mother who lived two hours from campus, the campus recruitment director instructed this subordinate “that it was not his role to judge what would be best for the student” and to instead say “two hours isn’t really insurmountable.” After Lipscomb complained about the tenor of these meetings, his superiors barred him from attending them. Lipscomb also alleges that ITT pressured students to stay enrolled by telling staff to “keep the student’s financial aid ramifications in front of their face” and threatening to refer student loans to collections agencies if they dropped out, while explaining that if they stayed in school, the loans would be deferred.</div><div>In October 2015 the U.S. Department of Education put delays and new restrictions on the delivery of student aid to ITT, after the Department concluded that ITT had failed to properly account for federal aid money since at least 2009 and failed to comply with prior Department orders to strengthen financial controls. The Department had already, in 2014, placed ITT on a probationary “heightened cash monitoring” status and required the company to post an $80 million letter of credit. Then, in June 2016, the Department announced it has doubled the amount that ITT Tech must post in a letter of credit to 20 percent of the company’s annual haul of federal financial aid — $124 million. The Department said it was acting after ITT, on April 20, got a show-cause letter from its accreditor, the Accrediting Council for Independent Colleges and Schools (ACICS) stating “that a number of actions called into question ITT’s administrative capacity, organizational integrity, financial viability and ability to serve students in a manner that complies with ACICS standards.”  Failure to meet even ACICS’s historically lax standards could be a problem. (On June 15, 2016, the Department of Education staff recommended to the Secretary of Education that ACICS be terminated as a Department-approved accreditor.)  The new ITT letter of credit level is needed, the Department explained, as such letters “cover certain liabilities if a school closes at a time other than at the end of an academic period. Funds from the surety could be used to make refunds, provide teach-out facilities, and meet institutional obligations to ED.”</div><div>CEO: Kevin Modany</div><div>
</div><div>modanywho</div><div>
</div><div>Prominent advocates & validators:</div><div>
</div><div>weberwho</div><div>
</div><div>Vin Weber has served, since 1994, on ITT’s board of directors. A former U.S. congressman from Minnesota, Weber is one of the most influential Republican strategists and lobbyists in Washington.</div><div>
</div><div>Weber was elected to the House in 1980 and rose to be secretary of the House Republican Conference and a top adviser to Rep. Newt Gingrich. Weber quit Congress in 1992, after he was implicated in the notorious House banking scandal, accused of writing 125 bad checks worth about $48,000.</div><div>
</div><div>As a lobbyist, Weber has pressed his former colleagues in Congress on behalf of clients including AT&T, the pharmaceutical trade association PHRMA, Russia’s state-owned gas company Gazprom, mortgage giant Freddie Mac, student loan giant Sallie Mae, and student debt collection companies Navient and ECMC.</div><div>
</div><div>Meanwhile Weber has served as a campaign advisor to Republican presidential candidates including Bob Dole, George W. Bush, Mitt Romney, and, in the current election cycle, Jeb Bush. Weber is the former chair and current vice-chair of the board of the National Endowment for Democracy, a government-funded bipartisan non-profit charged with promoting democracy overseas, and a board member of the Council on Foreign Relations and the Aspen Institute.</div><div>
</div><div>walkerwho</div><div>
</div><div>Scott Walker. In 2014, Wisconsin governor Scott Walker (R) publicly defended ITT Tech; touring an ITT campus and asked about law enforcement investigations of the company, Walker called ITT’s record in his state “positive.”  In 2015, Walker tried to eliminate the tiny agency in his state that approves and oversees for-profit colleges; the Wisconsin legislature blocked the move.</div><div>
</div><div>8/2/07 - BOSTON, MA Cooley Godward Kronish-- Robert Lovett</div><div>
</div><div>Robert Lovett.  In 2014, Robert Lovett, a Boston attorney with the law firm Cooley LLP, sued Massachusetts attorney general Maura Healey in federal court on behalf of a group of some 40 for-profit colleges, claiming that she lacked authority to issue rules regulating the industry and that the rules violated the First Amendment’s free speech protections. The group suing included ITT Tech’s two campuses in Massachusetts — Norwood and Wilmington — as well as the Cambridge, MA, campus of Le Cordon Bleu, owned by Career Education Corp.</div><div>
</div><div>Cooley has a history of serving the for-profit college industry. The firm was listed as one of Corinthian Colleges’ 30 largest unsecured creditors in Corinthian’s May 2015 bankruptcy filing. Cooley D.C. lawyer Mike Goldstein, “co-chair of the Firm’s Higher Education practice,” is named as the firm contact on Corinthian’s bankruptcy papers. Cooley also filed a September 2015 comment in response to the Department of Education’s notice that it was planning a rulemaking on the issue of federal student loan debt relief for students defrauded by their schools; the comment, on Cooley letterhead, questions whether the Department would have authority to recover student debts from the colleges involved. The filing is notable because it not only fails to identify any client on whose behalf Cooley might be writing but it also fails to identify any Cooley lawyer or other staff member involved in preparing the comment. In addition, Cooley has publicly touted its expertise in advising for-profit colleges in converting to non-profit status; such conversions have been questioned in the media and by The Century Foundation over concerns about financial self-dealing, abuse of non-profit status, and evasion of regulations aimed at preventing predatory practices.</div><div>
</div><div>In response to my inquiry, Robert Lovett stressed in an email that the firm was seeking to protect constitutional rights issues regarding the Massachusetts regulation, and he noted that the U.S. District Court judge hearing the case had granted his clients summary judgment on, and invalidated as violative of the First Amendment, two of Massachusetts’ regulation provisions at issue in the case.  (The court further decided that the remaining eight rules did not violate the law and granted judgment for Massachusetts on those.) Lovett added that his clients did not challenge the Attorney General’s prerogative “to pursue businesses in Massachusetts under the Commonwealth’s consumer protection statute.” When I followed up to ask if he had any concerns that his firm’s skilled, zealous efforts on behalf of companies like ITT, CEC, and Corinthian might be harming students and taxpayers, Lovett politely declined to provide further comment. </div>