Apollo Group ed

Democratic presidential nominee Hillary Clinton received the most money from the education industry in 2016 by far, with a total of approximately $23.7 million. Her primary challenger Sen. Bernie Sanders (I-Vt.) came in second with almost $5.5 million, while her general election opponent Donald Trump was further down the list of top recipients at No. 8, with a total of about $778,000.

In recent years, the education industry’s lobbying spending has been on a downward slope, and 2016 was no exception. The industry’s lobbying total was about $74.4 million — over $3.6 million less than its 2015 total and $35 million short of the industry’s record-high lobbying total from 2010.

Last year, the biggest lobbying clients in the education industry were the Association of American Medical Colleges (more than $2.8 million), **Apollo Education Group**(about $1.4 million)and the education-related subsidiaries of Warburg Pincus (just over $1.1 million). The top education-related issues these groups focused on included cuts to graduate and professional student loan benefits, global health learning opportunities, financial aid (including Pell Grants), campus sexual assault and post 9/11 G.I. bill benefits.

https://www.opensecrets.org/lobby/clientsum.php?id=D000021846&cycle=2016

2018

Apollo Education Group$300,000-Brownstein, Hyatt et al-$60,000Crossroads Strategies-$50,000Subject Matter-$50,000Penn Hill Group-$40,000 $200,000

---

pollo Education Group	$300,000	Apollo Education Group	Acocella, Joanna Casillas, Conwey
Brownstein, Hyatt et al	$60,000	Apollo Education Group	Brownstein, Norman Lampkin, Marc Maier, Elizabeth A Mottur, Alfred Sonsalla, John
Crossroads Strategies	$50,000	Apollo Education Group	Dapper, Katherine Green, John Hall, G Stewart Hancock, Shay Michael Lapinski, Mathew Moorhead, Hunter Weiss, Todd M
Penn Hill Group	$40,000	Apollo Education Group	Klatt, Victor F III Nock, Alexander G
Subject Matter	$50,000	Apollo Education Group	Alexander, Stacey Askew, Whitaker Bousliman, Pat Elmendorf, Steven Kennedy, Kristina Kutler, Ed LaSala, Barry Ryan, James 'Jimmy' Stanton, Shanti Wall, Jamie Hollenberg

Apollo Group, Inc. is one of the world's largest private education providers and has been in the education business for more than 35 years. The Company offers innovative and distinctive educational programs and services both online and on-campus at the undergraduate, master's and doctoral levels through its subsidiaries: University of Phoenix, Apollo Global, Institute for Professional Development and College for Financial Planning. The Company's programs and services are provided in 41 states and the District of Columbia, Puerto Rico, Latin America, and Europe, as well as online throughout the world.

For more information about Apollo Group, Inc. and its subsidiaries, call (800) 990-APOL or visit the Company's website at http://www.apollogrp.edu.

halperin RRep

JUNE 21, 2016

Friends In High Places: Who Endorses America’s Troubled For-Profit Colleges?

POSTED AT 12:54 PM BY DAVID HALPERIN

Today Republic Report is releasing a brand-new investigative report: Friends In High Places: Who Endorses America’s Troubled For-Profit Colleges?

Our report describes in detail the network of prominent Americans — lawyers, lobbyists, board members, university presidents, politicians, celebrities, and others — who continue to lend their credibility and talents to defending or promoting seven of America’s biggest for-profit college companies, amid growing indications, including law enforcement investigations, that these companies have engaged in predatory practices that harm students and taxpayers.

You can read and download the report here (pdf). Or read it all below.

UPDATE 07-04-16: Friends in High Places is now also an Amazon Kindle book, available for download.

UPDATE: 06-22-16: I have updated this report to provide a more accurate and complete listing of attorney Timothy J. Hatch’s representations of for-profit colleges. If you want the updated pdf version, be sure to clear your browser cache before loading it.

Friends In High Places: Who Endorses America’s Troubled For-Profit Colleges?

A Report

by David Halperin, Republic Report

June 21, 2016

Summary

Timothy J. Hatch and Ronald L. Olson are two of the most prominent and successful lawyers in Los Angeles. Hatch is a partner at the national litigation powerhouse firm Gibson Dunn. Olson, a name partner at Munger, Tolles & Olson, has represented some of America’s biggest corporations. He is a former chair of the American Bar Association’s Litigation Section, and today he serves on the boards of directors of Warren Buffett’s Berkshire Hathaway, the RAND Corporation, the Mayo Clinic, and the California Institute of Technology.

Both Hatch and Olson also have been for years key parts of the protective infrastructure that has shielded predatory for-profit colleges, institutions that have deceived and abused U.S. students and taxpayers. Hatch has represented the giant publicly-traded for-profit college businesses Education Management Corporation (EDMC), Kaplan, ITT Tech, Bridgepoint, and Apollo/University of Phoenix against charges of fraud, and he has sued the U.S. Department of Education to halt regulations that would hold poorly-performing colleges accountable. Olson is on the board of directors of Graham Holdings Company, which owns Kaplan, and his law firm has represented Corinthian in major fraud litigation — which is fitting, as the Graham company owned a significant stake in Corinthian until its 2015 collapse. In the fraud case where Olson’s firm represented Corinthian, the other party that whistleblowers were suing was Corinthian’s auditor, giant accounting firm Ernst & Young. Their lawyer in the case was Timothy Hatch.

Although the notorious Corinthian Colleges is gone (sort of), many bad actors remain in business. Seven of America’s ten biggest for-profit college companies, which collectively received about $8 billion dollars in taxpayer money last year, have in recent months and years been under investigation or sued by federal and state law enforcement agencies for deceptive business practices. Despite the mounting evidence that these seven companies — Apollo/ University of Phoenix, EDMC, ITT Tech, Kaplan, Career Education Corporation, DeVry, and Bridgepoint Education — have engaged in predatory behavior against their own students, they continue to market themselves as affordable places to build successful careers, and they continue to enroll new students and deposit their federal grants and loan checks. These companies also have continued to fight reform measures by government to hold bad schools accountable for abuses.

A key reason why such predatory for-profit colleges have been able to continue receiving billions annually in taxpayer dollars while ruining the financial futures of students across the country is that national power players — politicians, lawyers, academic leaders, celebrities — have been willing to vouch for these companies, serving as their paid lobbyists, board members, investors, and endorsers. It’s not just Donald Trump who has made big money off a deceptive college operation.

Although some well-known Americans have severed their ties to the industry in recent years, the many prominent people who have continued to lend their credibility to one or more of these seven troubled for-profit college companies include: Columbia University president Lee Bollinger, University of Arizona president Ann Weaver Hart, Senator John McCain, publisher Steve Forbes, Democratic former U.S. Deputy Attorney General Jamie Gorelick, former House of Representatives GOP leaders Vin Weber and Deborah Pryce, senior Republican adviser Charlie Black, and talk show host Ellen DeGeneres.

These pillars of American society uphold a shining edifice protecting corporations that have been in the sustained practice of ripping off students and taxpayers on an enormous scale. The skills and reputations that they lease to predatory for-profit colleges help to deflect attacks and allow abuses to go on, year after year.

In our system, everyone accused is entitled to a lawyer, and companies are entitled to petition the government, advertise, and otherwise make themselves heard. But, in turn, the public is entitled to evaluate the records of individuals who choose to be lobbyists, investors, board members, or validators for a predatory company, consider whether their work is harming the public interest, and further consider whether such persons, despite all their accomplishments and good deeds, should continue to command our respect, and be eligible for positions of trust in more responsible corporations and institutions, and in government. That is a discussion I hope to advance with this report.

The For-Profit College Controversy

In recent years, America’s for-profit colleges — schools organized as businesses rather than non-profits or state institutions — have received as much as $32 billion a year in federal student aid. Although some for-profit programs do a good job training students for careers, and there are good teachers at even some of the worst-behaving schools, government and media investigations have revealed that many for-profit colleges have deceived and coerced prospective students, misled regulators, charged sky-high prices, and left numerous dropouts and graduates alike buried in debt and without improved job outlooks. As an advocate for students, I have spoken with, and written about, scores of Americans who wanted to train for careers as medical assistants, computer technicians, diesel mechanics, or other jobs and ended up ripped off, unemployed, and deep in debt. I’ve also spoken with many employees and executives in this industry who have recounted brazen, cynical efforts to defraud students and government overseers.

More than half of the students who have enrolled in for-profit colleges — many of them veterans, single mothers and other low- and middle-income people seeking a better future — dropped out within about four months. The relentless drive to meet recruiting and revenue goals — to get “asses in classes” — has led many for-profit schools to enroll numerous students whom their programs are not strong enough to adequately assist. Many of these colleges have been caught using deceptive advertising and misleading prospective students about matters like program costs, accreditation, transferability of credits, job placement rates, and likely starting salaries. Although for-profit colleges often promise that their programs are affordable, the real cost can be nearly double that of Harvard or Stanford. But the quality and reputation of the programs are often weak, so even students who manage to graduate often struggle to find jobs beyond the Office Depot shifts they previously held.

The U.S. Department of Education has reported that 72 percent of the for-profit college programs it analyzed produced graduates who, on average, earned less than did high school dropouts. A May 2016 study published by the National Bureau of Economic Research concluded that for-profit college students, graduates and dropouts combined, earned less after leaving school than they did before they enrolled.

Today, 10 percent of all college students attend for-profit colleges, on campuses and online — but these institutions account for 40 percent of student loan defaults. For-profit schools are driving a national student debt crisis that has reached $1.3 trillion in borrowing. They absorb 20 percent of all federal student aid, diverting sums from better, more affordable programs at nonprofit and public colleges.

Just a few years ago, this badly-behaving industry was flying high, with large Wall Street institutions like Goldman Sachs and Wells Fargo taking major shares in large publicly-traded higher education companies, and private equity firms dominating some others. Industry revenues had soared, as students, lured by powerful sales pitches, had flocked to enroll. The industry’s main trade group, the Association of Private Sector Colleges and Universities (APSCU), was holding lavish conventions, and industry executives enjoyed fancy homes, private planes, nights on the town, Park Avenue dinner parties, and fancy ski junkets.

The industry thrived, also, by always remembering that it was fueled almost entirely by federal aid dollars — some schools were getting 90 percent or more of their money from the U.S. Departments of Education, Defense, and Veterans Affairs. Recognizing that federal policy was the key to making more and more revenue, the for-profit college industry set aside some of its earnings to build a powerful Washington D.C. presence, and it lobbied successfully for changes that opened the federal spigots even wider — at the expense of accountability and student outcomes.

Faced with the reality in 2009 that the new Obama Administration was prepared to start cracking down on industry abuses, the for-profit colleges could have pursued a deal that would mandate certain reforms but perhaps allow bad actors to keep some of their predatory business model intact. Instead, the industry decided to wage war — hiring the most expensive and connected Washington lobbyists and lawyers; ramping up campaign contributions; making phony attacks on advocates for reform; and buying the endorsement or partnership of celebrities, think tanks, even media outlets to try to improve its public image.

As described in news reports, pressure from the for-profit college industry, and from Members of Congress in both parties who have accepted campaign contributions from the industry, helped weaken the Obama Administration’s leading initiative to reform the sector: the “gainful employment” rule, which imposes penalties, and possible loss of federal aid eligibility, for career education programs that consistently leave former students with insurmountable debt. The for-profit college industry, in fact, has fought the Administration aggressively on every relevant issue.

But while the gainful employment rule lost some of its force as compared with its initial incarnation, the rule has survived, and several other Obama administration initiatives have gone forward to increase accountability on the sector. Meanwhile, with the industry choosing an all-out fight, scrutiny of for-profit colleges — in the U.S. Senate, especially when Democrats controlled the chamber; in the media; and by state and federal law enforcement agencies — has increased. And advocacy on behalf of abused for-profit college students, which in 2009 was mostly limited to a small group of organizations, has expanded to an increasingly cohesive and determined coalition of more than 50 student, veterans, civil rights, consumer, educator, and education policy groups. (Disclosure: Going back to my time at Campus Progress / Center for American Progress and continuing after I became a self-employed lawyer in 2012, I have worked to build and increase the influence of this coalition.)

All of this effort, spurred in large part by industry intransigence, has helped produce a dramatic reversal of fortune for for-profit colleges. In recent years, exposure of abuses have helped send enrollments and share prices plummeting, regulators have pressed for greater accountability measures, and many companies are closing campuses as they face mounting federal and state law enforcement probes, as well as financial and administrative instability.

Some major for-profit colleges have now collapsed or are in peril. Billions of dollars in for-profit college student loans are already in default, and former students across the country are now demanding that the Department of Education, having vouched for fraudulent schools, forgive their debts. Many of the big for-profit colleges, which had egged on the trade group APSCU to engage in all-out war in Washington against the Obama Administration, have now quit that group, leaving the organization short of funds and with a depleted staff. APSCU was so desperate to start over that in June 2016 it changed its name to Career Education Colleges and Universities, its second name change in six years.

But today, some $20 billion annually in taxpayer money continues to flow to for-profit colleges, and for some of the biggest, baddest actors in the industry, the business model has stayed fundamentally the same: deceptive online, TV, and radio marketing; coercive recruiting; enrollment of students in programs that cannot help them succeed; mixed-quality instruction; and high prices. As you read this, for-profit colleges are using bait-and-switch tactics, and misleading, high-pressure sales pitches, to convince your fellow citizens — single parents, returning veterans, and others seeking a better future — to enroll in education programs that will ruin their financial futures, and further burden U.S. taxpayers.

Just as disturbing, the Washington D.C. business model has not changed much either. At least some in the industry remain in a take-no-prisoners mode, continuing to spend millions annually buying influence in Washington. Industry players, including APSCU, continue to try to overturn the gainful employment rule in the courts and in Congress. Powerful members of Congress like Rep. John Kline (R-MN), Rep. Virginia Foxx (R-NC), and Rep. Alcee Hastings (D-FL), once agressive public champions of this industry, seem less interested in defending for-profit colleges in public forums, but they remain reliable votes to overturn Obama Administration reforms to hold the industry accountable, just as they have continued to receive campaign contributions from industry executives.[1] For-profit colleges continue to hire revolving door lawyers and lobbyists to pressure the Administration against imposing penalties for abuses. They fight tenaciously in court against industry whistleblowers and students seeking relief for abuses — paying high-priced corporate litigators out of revenues that often are 90 percent taxpayer dollars.

The industry continues to have traction because it retains enough cash to hire some of the most expensive and esteemed validators and defenders that money can buy.

Endorsers of for-profit colleges in the past decade

The lure of for-profit college money is so strong that both of the leading candidates for president in 2016 are linked to the industry. Donald Trump ran his own for-profit Trump University, which was unaccredited and thus not eligible for federal student aid; Trump’s “school” is now the subject of fraud lawsuits by New York’s attorney general and by former students who feel cheated and want their money back. Meanwhile, in 2009, as Secretary of State, Hillary Clinton pressed to include in a State Department event on education policy the giant for-profit college company Laureate Education, which several months later hired Bill Clinton to be “honorary chancellor” of its international division and paid him $16.5 million between 2010 and 2014. (However, while Trump continues to defend the conduct of his predatory “university,” Hillary Clinton, to her credit, has criticized for-profit college abuses and pledged to crack down on bad actors.)

But Clinton and Trump are far from the only ones. Here are just a few more examples of other powerful Americans linked in recent years to for-profit colleges:

2012 GOP presidential nominee Mitt Romney (R-MA), as a candidate in that race, extolled the virtues of for-profit colleges, including the University of Phoenix and Florida’s Full Sail University. Romney didn’t disclose that the private equity owners of Full Sail and Vatterott College, both schools with troubling records, were major donors to his campaign – or that Romney’s own private equity firm, Solamere Capital, was invested in those schools.

Former 2016 presidential candidate Senator Marco Rubio (R-FL) in 2014 wrote to the U.S. Department of Education asking it to “demonstrate leniency” to for-profit giant Corinthian Colleges, despite the strong evidence that the company was deceiving students and government regulators alike. Corinthian was a donor to Rubio’s political action committee. Corinthian, one of the worst actors in the entire sector, has since collapsed under the weight of disturbing revelations and multiple law enforcement investigations.

Richard Gephardt (D-MO), the former House Majority Leader, was paid $360,000 in 2010-11 — the height of the first gainful employment rule fight — to lobby for Corinthian.[2]

Former Obama Secretary of Defense Leon Panetta and National Urban League president Marc Morial both joined Corinthian’s board of directors in June 2013 — long after it was clear that the company had engaged in troubling behavior. Facing public criticism, Panetta soon quit, but Morial stayed on, collecting $60,000 annually in director fees, plus stock options, until the company shut down.

Former Senate Majority Leader Trent Lott (R-MS), former Senator John Breaux (D-LA), and their firm, Squire Patton Boggs, received $1.44 million over four years, ending in late 2015, to lobby for the for-profit college trade group APSCU, which has included in recent years many of the industry’s most troubled companies, such as Corinthian, Education Management Corp. (EDMC), ITT Tech, Kaplan, Career Education Corporation (CEC), DeVry, and Bridgepoint Education. APSCU also included ATI, which was shut down by the Justice Department in 2013 for systematic fraud, and FastTrain College, whose CEO was sentenced to eight years in prison in May 2016 for defrauding the government.

Former Secretary of State Colin Powell has for a number of years been the chair of the advisory board of Leeds Equity Partners, which invests in for-profit education and until recently owned a major stake in the second-largest for-profit college company, EDMC. EDMC recently agreed to pay or forgive some $200 million to settle multiple fraud suits brought by federal and state law enforcement. The private equity firm’s founder, Jeffrey Leeds, has been an aggressive advocate against accountability for the sector, and he serves on the board of APSCU; Powell praised the industry when he was the keynote speaker at the APSCU convention in 2011. Bill Clinton (2009), George W. Bush (2012), and Jeb Bush (2014) also were keynote speakers at APSCU conventions, and in his APSCU speech Jeb Bush sharply attacked the Obama gainful employment rule that the for-profit college industry so despises.

Another EDMC insider was former Maine governor John McKernan (R), who was CEO and then executive chairman of the company from 2003 to 2008 and then served as chairman of the board — in the period when the company ratcheted up its predatory practices. Another private equity owner of for-profit colleges is former New Jersey governor Tom Kean (R), whose company, Quad Partners, has invested in colleges including Marinello School of Beauty, which was shut down for fraud by the Department of Education in February 2016. And former Pennsylvania governor Ed Rendell (D) joined with Kean in a for-profit college industry-funded group called the Foundation for Educational Success, which was supposed to create a voluntary code of conduct for the industry as an alternative to government regulation. The foundation and code of conduct were trumpeted in a press release and in a Politico op-ed by Kean and Rendell — neither of which disclosed that the foundation was funded by for-profit colleges or that Kean is an owner of for-profit colleges. The code of conduct dissolved into a mere public relations scheme when the Foundation for Educational Success, without explanation, simply ceased to exist.[3]

Former U.S. Department of Education officials have cashed in on their government experience to become lobbyists for for-profit colleges. Diane Auer Jones, who was Assistant Secretary for Postsecondary Education under President George W. Bush, was from 2010 until 2015 senior vice president and chief external affairs officer at Career Education Corporation. Sally Stroup, who had the same job at the Education Department earlier in the Bush administration, served as vice president and general counsel at APSCU from 2012 to 2015.

Celebrity personal finance expert Suze Orman created an online course for the University of Phoenix and in 2013 appeared at a Capitol Hill event hosted by the school, whose owner, Apollo Education, has been receiving as much as $4 billion a year from taxpayers and now is under investigation by multiple federal and state law enforcement agencies.

What’s The Problem?

In our system of democracy, everyone accused is entitled to a lawyer, and companies facing regulatory challenges are entitled to petition the government and make themselves heard. But, in turn, the public is entitled to evaluate the records of individuals who choose to become lobbyists or validators for a company, consider whether their work is harming the public interest, and further consider whether such persons should continue to hold or be considered for positions of trust in more responsible corporations and institutions, and in government.

We don’t always know who those people are. Although federal law requires people who meet the statutory definition of a lobbyist, or who serve on the board of a publicly-traded corporation, to publicly disclose their service and fees, others who work as consultants or lawyers for for-profit colleges can remain in the shadows until and unless the media or other watchdog finds out. These would include former Obama White House communications director Anita Dunn, who, having joined the firm SKDKnickerbocker, advised the troubled for-profit college Kaplan as it sought to stop the Obama Administration from issuing a strong gainful employment rule. It also includes former Bill Clinton Deputy Attorney General Jamie Gorelick, who, as discussed below, served as the lawyer for the University of Phoenix as it successfully lifted a Pentagon ban on recruiting military service members, following allegations of persistent abuses.

But when the truth is found, people who have built distinguished careers, and then trade on their reputations and connections to protect the interests of predatory companies, deserve scrutiny.

A key reason why predatory for-profit colleges have been able to receive billions annually in taxpayer dollars while ruining the lives of students across the country is that Washington power players — politicians, lawyers, lobbyists, spinmeisters, analysts, even journalists — have been willing to vouch for these companies and use their talents and connections to free them from accountability. These advocates either don’t take the time to find out how badly these companies behave, and how much harm these companies cause, or else they just don’t believe it or don’t care.

This report highlights some of the distinguished Americans who, despite all the evidence of industry abuses, have continued into the past year or so to lobby for, defend, or lend their reputations to predatory for-profit colleges. We will look at validators of seven of the top ten for-profit college recipients of U.S. Department of Education aid, according to Department of Education data — the seven companies on that top ten list that, in recent years, have been under investigation by multiple federal and state law enforcement agencies:

(1) Apollo/ University of Phoenix

(2) Education Management Corporation (EDMC)

(3) ITT Tech

(4) Kaplan

(5) Career Education Corporation (CEC)

(6) DeVry

(7) Bridgepoint Education.[4]

None of the recent law enforcement investigations of these seven companies has resulted in a trial verdict of liability, and although some of these companies have settled cases and agreed to pay fines and implement reforms, none has ever admitted wrongdoing. But the collective allegations of law enforcement, insiders, and former students as to each of these seven companies present a troubling picture of predatory operations that have deceived and abused students and taxpayers.

To be clear, these seven companies are far from the only for-profit college businesses against whom there is strong evidence of blatant misconduct. But I focus on these seven because they enroll the most students and take the most taxpayer dollars.

I attempted to reach for comment each of the for-profit college advocates and validators pictured below. Most did not respond at all. A few communicated with me only off the record. I have included in the text the on the record responses of all those who provided them.

Apollo Education Group

uphoenixwho

Schools: The University of Phoenix, BPP, Bridge School of Management, FAEL, IACC Professional Institute, Milpark Education, Open Colleges of Australia, Universidad de Artes, Ciencias y Comunicación (UNIACC), Universidad Latinoamericana (ULA), Career Partner Group, College for Financial Planning, Western International University.

Taxpayer aid (U.S. Department of Education funding) last year[5]: $1.99 billion

Current & recent law enforcement investigations or actions[6]:

U.S. Department of Education, Department of Defense, Federal Trade Commission, Consumer Financial Protection Bureau, Securities and Exchange Commission, attorneys general of California, Delaware, Florida, and Massachusetts. Details.

Sample troubling behavior:

Department of Education data has shown that the University of Phoenix’s graduation rate for first-time, full-time students is about 16 percent, and that graduation rate for the school’s online programs is about 4 percent.[7]

A 2012 comprehensive investigative report on for-profit colleges by then-Senator Tom Harkin (D-IA) found that the University of Phoenix spent $892 per student on instruction in 2009, compared to $2,225 per student on marketing, and $2,535 per student on profit. “This,” the report found “is one of the lowest amounts spent on instruction per student of any company analyzed.”

Around 25 percent of University of Phoenix students default on their loans within three years of leaving school.

A 2015 investigative media report exposed that the University of Phoenix paid the U.S. military for exclusive access to bases through sponsoring concerts and other events, sidestepping a 2012 Obama executive order. The school also held “résumé workshops” that seemed to be recruiting sessions, and it handed out “challenge coins” that included Phoenix logos on one side and, without the required permission, military branch insignias on the other side. The Pentagon concluded that “the frequency and scope of” Phoenix violations of the rules was “disconcerting,” and it temporarily suspended the school from recruiting on bases and receiving DoD student tuition assistance. (See below.)

Paul Rieckhoff, founder and CEO of Iraq and Afghanistan Veterans of America, said in October 2015 that the University of Phoenix has been the “worst by far“ for-profit college in terms of taking advantage of the veterans who are members of his organization. A letter sent that same month to Secretary of Defense Ashton Carter by more than 30 veterans, civil rights, and consumer organizations supported the Pentagon’s investigation and cited, as support, the complaints of hundreds of servicemembers and veterans “who experienced deceptive recruiting” by the University of Phoenix.

Based on accounts of whistleblowers, as well as online research, I have uncovered multiple scams in which companies build web sites promising help with jobs, food stamps, veterans benefits and other things needed by low-income people and vets, but the sites actually collect personal information so that it can be sold to marketers who then relentlessly pressure people into enrolling in expensive for-profit college programs. Among the companies whose recruiters have bought leads from lead generation companies using deceptive sites are the University of Phoenix, as well as all the other companies addressed in this report: Bridgepoint, EDMC, Kaplan, CEC, DeVry, and ITT. The FTC has begun to take action against these deceptive lead generation practices.

CEO: Gregory W. Cappelli

cappelliwho

Prominent advocates & validators:

Degenereswho

Ellen DeGeneres. In May 2016, the plucky TV talk show host and Finding Dory star promoted the University of Phoenix’s “RISE TO YOUR DREAM” Scholarships on her website, her Twitter and Instagram account, and on her show, where she gave an Oklahoma stay-at-home mom a $25,000 “scholarship” to the school in honor of Mother’s Day. In the same breath, DeGeneres announced that Phoenix would award ten students a full-ride scholarships. Given Phoenix’s high prices and high dropout rates, the mom’s “scholarship” — really, just a coupon from the company — may not have been such a great gift. It was obviously a paid promotion. After student advocates complained, the Twitter and Instagram posts were removed, but the promotion remained on Ellen’s website. My guess is that the kind-hearted DeGeneres was not aware of the depth of controversy at the University of Phoenix and wishes she had never gotten involved, but that the corporate suits may have told her it would be too expensive to untangle the promotion now and to just ride it out. But given how many people admire and trust Ellen, she owes them better than that.

elmendorfwhomotturwho

Steve Elmendorf and Alfred Mottur. Long-time Democratic party strategist Steve Elmendorf, a Hillary Clinton 2016 bundler and advisor who runs the lobby firm Subject Matter, has been a registered lobbyist for Apollo since 2011, getting $200,000 a year from the company, according to federal lobbying disclosure forms. Another Clinton bundler, Alfred Mottur, was a registered lobbyist for the University of Phoenix from 2012 until late 2015, with his firm, Brownstein Hyatt, getting $320,000 a year from Apollo. More recently, in March 2016, Mottur and his firm registered as lobbyists, and declared $80,000 in first quarter 2016 fees, to work on “Issues related to higher education and proprietary schools” for “AP VIII Queso Holdings LP,” a limited partnership which, according to a Politico Pro story, is an affiliate of Apollo Global Management, one of the private equity firms that recently acquired Apollo Education Group. Other registered lobbyists for Apollo Education in the past year include Liberty Partners LLC (including the firm’s chairman, major political donor Andrew Woods; getting $120,000 from Apollo in the past six months), Penn Hill Group (including Alex Nock, a former Democratic deputy staff director of the U.S. House Committee on Education and Labor under Representative George Miller (D-CA); $180,000 in the past twelve months), and Crossroads Strategies LLC (including Jake Perry, a former “senior political advisor and confidante” to Senate Democratic leader Harry Reid (D-NV); $200,000 in the past twelve months).

kirschnerwho

Ann Kirschner. Dr. Ann Kirschner has served on the Apollo Education Group board of directors since 2007. From 2006 until early 2016, she was the University Dean of Macaulay Honors College of the City University of New York (CUNY); she is now Special Advisor to CUNY’s Chancellor. According to the Apollo website, Kirschner also has been president of Comma Communications, a higher education consulting company, founded Fathom, “an online knowledge network” in association with Columbia University, and “co-created NFL Sunday Ticket and NFL com for the National Football League.” She has a Ph.D. in English literature from Princeton.

kdawhoSchneiderwho

Jorge Klor de Alva and Mark Schneider. If you read the Wall Street Journal on March 5, 2016, you would know that Jorge Klor de Alva, identified as “president of Nexus Research and Policy Center in San Francisco” and Mark Schneider, “a fellow and vice president of the American Institutes for Research in Washington” wrote an op-ed in that newspaper opposing broad student loan debt relief for people who were deceived by their colleges. These think tank co-authors contended that such relief will be expensive — potentially more than $1 billion for students of now-shuttered for-profit Corinthian Colleges alone. They noted that the U.S. Department of Education is considering not only issuing new debt relief rules and beefing up enforcement efforts against school misconduct, but also pondering new rules to allow the Department to recoup discharged loan costs from the offending schools. They expressed concern about that: “Bankruptcies at the for-profit schools are the likely outcome, which will decimate this form of career education that today includes well over 10% of all postsecondary students.” And, they warn, “taxpayers will be left holding the bag.”

The two authors implied that, instead of making student victims whole or using financial penalties to deter bad behavior, the Department of Education should just tell offenders to straighten up: “In the past … colleges found to have questionable practices have been forced to discontinue false advertising and required to establish policies and procedures that produce accurate and verifiable documentation on job-placement rates and postgraduation earnings.”

What the authors, and the Wall Street Journal, didn’t mention was that these writers are connected to the University of Phoenix and the for-profit college industry.

Jorge Klor de Alva was from 1996 to 2010 a senior vice president at the Apollo Education Group, parent company of the University of Phoenix. For six years in that period, Klor de Alva also served as the president of the University of Phoenix. The very same Apollo Education Group created and is the funder of the Nexus Center, the think tank where Klor de Alva now works.

Given the mounting law enforcement investigations against the Apollo Education Group, it is the very kind of for-profit college company whose students could be seeking the debt relief that Klor de Alva’s op-ed argues against.

Klor de Alva also failed to make such disclosures when he published a 2014 op-ed in The Hill opposing the Obama Administration’s gainful employment rule, aimed at holding colleges accountable for consistently leaving students with insurmountable debt.

Nexus thus presents itself to the public as an independent think tank, and Klor de Alva as an independent scholar, arguing against tighter regulation of for-profit colleges, when the institution is in fact a creation of the University of Phoenix and the supposed scholar was a long-time employee of the University of Phoenix.

As for Klor de Alva’s op-ed co-author, Mark Schneider, a long-time Department of Education official, he is identified in the op-ed as affiliated with the American Institutes for Research. Not mentioned is that Schneider is on the Apollo-funded Nexus Center’s board of directors. In 2015, Schneider filed an amicus brief in federal court in Manhattan supporting a lawsuit by for-profit college companies to strike down the gainful employment rule. Schneider’s attorney in that matter was Dennis Cariello, a long-time for-profit college lawyer who recently represented the industry in the rulemaking proceedings about which Schneider’s 2016 op-ed complains. (The judge in the New York case declined to admit Schneider’s amicus brief and ruled against the companies.)

Meanwhile, some more prominent, long-established think tanks in Washington, such as the American Enterprise Institute and the Cato Institute, also have criticized Obama administration rules and actions affecting for-profit colleges, while accepting contributions from predatory college interests.

This also wasn’t the first time that the Wall Street Journal editorial page, which consistently rails against efforts to curb for-profit college abuses, has failed to disclose the financial relationships of its op-ed writers on these issues. In 2013, the Journal published an op-ed by private equity firm owner Jeffrey Leeds, then one of the key investors in EDMC, and former Senator Bob Kerrey, arguing against the gainful employment rule without disclosing the writers’ extensive ties to for-profit education companies.

gorelickwho

Jamie Gorelick. Lawyer Jamie Gorelick, who served in the Bill Clinton Administration as general counsel of the Department of Defense and later as the number two official at the Justice Department (Deputy Attorney General), in 2016 successfully pressed the Pentagon on behalf of the University of Phoenix to lift a suspension of the school for alleged recruiting abuses directed at U.S. military servicemembers.

Gorelick is one of the top lawyers associated with the Democratic Party. Although Gorelick supported Hillary Clinton for president in 2008, she was considered a candidate for Attorney General in President Obama’s administration, until she reportedly took herself out of the running. Gorelick also is the former boss of Obama Supreme Court nominee Merrick Garland. Garland worked for Gorelick when she held her powerful post at the Clinton Justice Department. She has described Garland, a Harvard college and law school classmate, as “one of my closest friends.” Gorelick has consistently contributed to Hillary Clinton’s Senate and presidential campaigns. And in 2015, Gorelick, now a partner at the powerhouse law firm WilmerHale, represented the Clinton Foundation in its successful defense of an absurd lawsuit filed in Miami by conservative activist Larry Klayman of Judicial Watch.

After leaving the Clinton Administration, Gorelick served as vice chair of Fannie Mae, the giant mortgage lender, from 1998 to 2003, and received some $26.4 million in total compensation, including bonuses. (In 2006, DC-based Fannie Mae was fined $400 million for accounting manipulation tied to executives’ bonuses that occurred from 1998 to 2004; Gorelick was not charged with any wrongdoing.) In that period, Gorelick also served as a Democratic appointee on the 9/11 Commission.

At WilmerHale, Gorelick has represented a wide range of major corporate clients. Federal disclosure forms show she has lobbied for Google, JPMorgan Chase, Lazard Freres, and others. She lobbied for BP in the face of government efforts to hold the energy giant responsible for the massive Gulf of Mexico oil spill.

Of interest to students, Gorelick lobbied on behalf of student loan giant Sallie Mae regarding, according to disclosure forms, “Student loan issues as they relate to reform of the Federal Family Education Loan Program” in the years 2009 to 2010. As media reports confirm, Gorelick was part of the intense lobbying campaign by Sallie Mae and big banks to block the Obama Administration’s effort to reform the student loan system by eliminating nonsensical, wasteful loan subsidies to private lenders. The Obama Administration ultimately prevailed over Gorelick and the other special interest lobbyists, and the reform has saved billions for students and taxpayers.

Gorelick’s well-paid effort to undermine this signature Obama education initiative was just part of the Washington game, though — apparently no hard feelings. She was rumored to be a candidate for FBI Director in early 2011, and later that year she was appointed by Secretary of Defense Leon Panetta to the Pentagon’s Defense Policy Board.

In August 2015 Gorelick visited the White House, visitor logs show, and dined at the mess with Neil Eggelston, the White House Counsel — President Obama’s top in-house lawyer.

Federal Election Commission records show that Gorelick has donated more than $165,000 to federal candidates or committees since 1997, mostly to Democrats but also, when she worked at Fannie Mae, to Republican Senators Orrin Hatch (UT). Richard Shelby (AL), and Phil Gramm (TX), members of the finance and banking committees. Gorelick has, since 1999, donated more than $11,000 to Hillary Clinton’s campaigns, including the maximum $2700 contribution in 2015.

Gorelick brought this record as a powerful Democratic insider to her effort to convince the Obama Pentagon to drop its penalties against the University of Phoenix.

After an investigative media report in June 2015 highlighted troubling, potentially unlawful recruiting practices by the University of Phoenix directed at service members, the Defense Department in October put the school on probation, kicking the school’s recruiters off bases and suspending student tuition assistance to the company.

The investigative report, in Reveal, a publication of the California-based Center for Investigative Reporting, found that the University of Phoenix paid the military for exclusive access to bases through sponsoring concerts and other events, sidestepping a 2012 Obama executive order whose aims included preventing for-profit colleges from gaining preferential access to U.S. troops. The school also reportedly held “résumé workshops” for troops that seemed to serve as recruiting sessions, and it handed out “challenge coins” that included University of Phoenix logos on one side and, without the required permission, military branch insignias on the other side.

On October 7, 2015, a Pentagon official, Dawn Bilodeau, sent a letter to the University of Phoenix imposing the suspension. She cited the Reveal report and wrote that a Department review “revealed several violations” of a Memorandum of Understanding (MOU) between the Pentagon and the school including “transgression of Defense Department policies regarding use of its official seals or other trademark insignia and failure to go through the responsible education advisor for each business related activity requiring access to the DoD installations” at Fort Worth, TX, Fort Bragg, NC, Fort Carson, CO, Fort Hood, TX, and Fort Campbell, KY.

Bilodeau wrote that the school had “responded to these infractions with appropriate corrective action at this time,” but she concluded, “the frequency and scope of these previous violations of the DoD MOU is disconcerting.” She also noted that the company was being investigated for deceptive practices by both the Federal Trade Commission and California’s attorney general.

But in January 2016, the Pentagon reversed course, ending the probation, and simply put the school on “heightened compliance review” for a year. In ending the suspension, the Pentagon issued a statement offering little information:

The department determined that the removal of probationary status was warranted based on the department’s internal review, the university’s response to the department’s concerns as set forth in multiple potential non-compliance notifications including the department’s letter dated Oct. 7, 2015, the active engagement and cooperation by representatives of the University of Phoenix, and other relevant materials.

What had not been disclosed until I found out is that Gorelick, according to government officials, served as the attorney for the University of Phoenix as it managed, behind the scenes, to free itself from penalties imposed by the Department where she once was the top lawyer.

A Pentagon spokesman, Matthew Allen, citing DoD policy, declined to provide me with information regarding meetings and communications between DoD and the University of Phoenix related to DoD’s decision to end the suspension. He even declined to confirm what I already knew: that Gorelick served as Phoenix’s lawyer in the matter. (While federal law requires lobbyists to file regular disclosure forms identifying clients and payments with respect to activities aimed at affecting legislation or regulation, attorneys engaged in an adjudication don’t have to make such disclosures.)

Government officials also said that the three-month suspension did punish Apollo with loss of revenue and bad publicity and might deter bad behavior going forward, and they noted that the Pentagon office overseeing education is too small to conduct an adequate investigation that could have sustained a longer punishment.

In January 2016, the University of Phoenix president, Timothy B. Slottow, issued a statement in response to the lifting of the ban that said, in part, “we are grateful to leaders at the Department of Defense and in Congress for supporting a clear process and high standards from all educational institutions, and for ensuring military students are able to use their educational benefits for career-relevant programs at University of Phoenix.”

But others already had contended that the University of Phoenix was harming servicemembers and veterans.

Senator Dick Durbin (D-IL), a strong advocate for students, in October 2015 had praised the Pentagon decision to suspend the school: “This is a decisive action by the Department of Defense to protect service members and taxpayers from a company that offers degrees of questionable value. With below-average graduation rates and a student loan default rate almost forty percent higher than the national average, the University of Phoenix is going to have a hard time explaining why students should continue to enroll in this institution.”

Gorelick’s successful work to end the Pentagon punishment was not her law firm’s only recent effort to prevent executive branch measures to hold for-profit colleges accountable for abuses. WilmerHale recently represented the U.S. Chamber of Commerce, which is subsidized by for-profit colleges, in a lawsuit brought by the industry trade group APSCU to overturn the Obama Administration’s “gainful employment” rule. This rule, a cornerstone of the Administration’s effort to protect students from predatory practices, penalizes career education programs that consistently leave graduates without sufficient income to pay down their student loans.

The amicus brief submitted by Gorelick’s firm argued that the appeals court was required to strike down the Obama rule as “irrational” because many for-profit college students “come from traditionally underserved and underprivileged communities” and the result of the rule would be that “the individuals perhaps most in need of these higher education programs will be deprived of the chance to matriculate and graduate, and in turn will lose the opportunity for social mobility that postsecondary education provides.” On March 8, a federal appeals court panel, in a four-page opinion, summarily and soundly rejected the challenge to the rule and the industry’s offensive arguments; the court wrote, “It would be a perverse system that, by design, wasted taxpayer money in order to impose crippling, credit-destroying debt on lower-income students and graduates.” The three-judge panel included Gorelick’s friend Judge Merrick Garland.

mccainwho

John McCain. Jamie Gorelick’s persuasive skills may not have been the only factor leading to the Pentagon’s lifting of the suspension of the University of Phoenix. The reversal also followed an aggressive public push to lift the ban by Arizona’s senior senator, Armed Services Committee chairman John McCain (R), along with Senate Education and Labor Committee chairman Lamar Alexander (R-TN).

Government officials tell me they were not surprised when the Pentagon lifted the suspension of the University of Phoenix, in light of the aggressive effort on behalf of Apollo led by powerful Armed Services chair McCain, who aggressively attacked the Obama Administration and charged that DoD had relied on “overly technical violations” of the agreement. GOP senators also threatened to block confirmation of presidential appointees until Apollo was let off the hook.

In an October 2015 speech on the Senate floor, McCain charged that fellow Senator Dick Durbin had “orchestrated” a “shameful … vendetta against for-profit universities.” McCain upped the ante by asserting that Durbin has a “well-known record of not supporting the men and women who are serving in the military.”

Alleging a larger conspiracy, McCain repeated accusations in a recent Wall Street Journal editorial that “the Obama Administration’s military tribunal is punishing” the University of Phoenix “for being a target of the political left” and that “General Durbin has commanded the Education Department and Department of Veterans Affairs to ‘take appropriate action’ against the company. Bombs away.”

In fact, it was McCain, by using his power as chairman of the Senate Armed Services Committee to pressure the Department of Defense to back off a legitimate investigation of the University of Phoenix, who was doing a disservice to servicemembers and veterans, who deserve to be protected against deceptive recruiting, poor quality programs, and other predatory practices.

Remarkably, McCain, in his floor speech, defended not only his home state-based University of Phoenix but also the disgraced, collapsed Corinthian Colleges. Even some for-profit college executives stopped defending Corinthian after it shut down; they started saying Corinthian was the one bad apple in the bunch. But McCain repeated the Wall Street Journal claim that the U.S. Department of Education, the Consumer Financial Protection Bureau, and California attorney general Kamala Harris “mounted a coordinated campaign that drove for-profit Corinthian College out of business.” McCain claimed these agencies acted “without any proof of misconduct.”

Senator McCain, Senator Alexander, and Senator Jeff Flake (R-AZ), who joined in the effort to end Phoenix’s suspension, all have received campaign contributions from the company. Indeed, Apollo is the largest donor in the 2016 election cycle to both Flake and Alexander.

McCain, who is up for re-election in 2016, benefitted from very early TV ads supporting him from the for-profit college industry’s paid ally, the U.S. Chamber of Commerce. The last time McCain ran for his seat, in 2010, Apollo CEO Greg Cappelli invited University of Phoenix employees to a town hall meeting with McCain, whom he called “a strong supporter of proprietary education.”

Millerwho

Tony Miller and Martin Nesbitt. The University of Phoenix appears far from done hiring prominent Democrats as it seeks to maintain its access to federal billions. In February 2016, Apollo Education Group announced a deal to sell the public company to a group of private equity firms, led by the controversial (but no-relation) Apollo Global Management and including Vistria, a firm founded by Marty Nesbitt, one of President Obama’s closest friends and the chairman of the Obama Foundation, and former Obama Deputy Secretary of Education Tony Miller. Under the deal, Miller will become the new chairman of Apollo Education, while Gregory Cappelli, who has presided over nearly a decade of predatory behavior by the company, remains CEO. When word of this potential deal surfaced, Reuters reported that sources said that “[b]ringing in Vistria was a strategic decision … to smooth relations with government regulators once a deal is completed.”

In a letter to the Wall Street Journal, Miller explained Vistria’s intentions, and seemed to push back on suggestions that his firm’s involvement was aimed at improving Phoenix’s position in political Washington:

It is our foundational belief that success is solely rooted in graduating the vast majority of students who enroll with the knowledge and skills that employers value, at a cost to the student that is not burdensome and that ensures a compelling return on their educational investment. Success in today’s environment isn’t predicated on special treatment from regulators or legislators.

We are committed to building on and enhancing the efforts already under way at University of Phoenix to help reach the goal of becoming the most trusted provider of career-relevant higher education for working adults in the country.

But political Washington is certainly on Miller’s mind. At a March 2016 conference on for-profit education hosted by Credit Suisse, Miller sat among for-profit college industry executives and consultants and, according to Credit Suisse’s account of the event, bemoaned the current weakened support of the industry on Capitol Hill: “[Miller] further suggested that the for-profit sector’s support in Congress was tepid as progressive Democrats were firmly opposed to the sector, conservative Republicans were ambivalent about the student aid program in general, and moderate Republicans had been embarrassed by bad publicity and unwilling to risk political capital anymore to defend the sector.”

As the new University of Phoenix seeks to smooth relations in Washington, its new owners have hired the public relations firm SKDKnickerbocker, whose principal Anita Dunn, a former Obama White House communications director, also has advised for-profit Kaplan.....

no links

http://www.help.senate.gov/imo/media/for_profit_report/Contents.pdf

http://www.republicreport.org/2014/law-enforcement-for-profit-colleges/

Apollo Group (The University of Phoenix)

Florida attorney general investigation of Apollo

Apollo Group SEC 8-K, 10-22-10:

“Today, Apollo Group, Inc. announced that its subsidiary, The University of Phoenix, Inc. (“University of Phoenix”), has received notice that the State of Florida Office of the Attorney General in Fort Lauderdale, Florida has commenced an investigation into possible unfair and deceptive trade practices associated with certain alleged practices of University of Phoenix. The notice includes a subpoena to produce documents and detailed information for the time period of January 1, 2006 to the present about a broad spectrum of University of Phoenix’s business. The Company is evaluating the notice and subpoena.”

https://www.sec.gov/Archives/edgar/data/929887/000095012310095156/p18257e8vk.htm

Delaware attorney general investigation of Apollo

Apollo Group SEC 8-K, 08-04-11:

“Today, Apollo Group, Inc. announced that on August 3, 2011, its subsidiary, The University of Phoenix, Inc., received a subpoena from the Attorney General of the State of Delaware to produce detailed information regarding University of Phoenix students residing in Delaware. The time period covered by the subpoena is January 1, 2006 to the present. Apollo Group is evaluating the subpoena.”

https://www.sec.gov/Archives/edgar/data/929887/000095012311072900/p18993e8vk.htm Investigation has been [closed.]

Massachusetts attorney general investigation of Apollo

Apollo Group SEC 8-K, 05-13-11:

“Today, Apollo Group, Inc. announced that its subsidiary, The University of Phoenix, Inc., has received a Civil Investigative Demand from the Office of the Attorney General of Massachusetts. The Demand relates to an investigation under Massachusetts General Laws, Chapter 93A, Section 6, of possible unfair or deceptive methods, acts, or practices by for-profit educational institutions in connection with the recruitment of students and the financing of education. The Demand requires the University to produce documents and detailed information and to give testimony regarding a broad spectrum of the University’s business for the time period of January 1, 2002 to the present. Apollo Group believes that Massachusetts is one of a coalition of several states considering investigatory or other inquires into recruiting practices and the financing of education at proprietary educational institutions. Apollo Group is evaluating the Demand.”

https://www.sec.gov/Archives/edgar/data/929887/000095012311050367/p18877e8vk.htm

California attorney general investigation of Apollo

Apollo Group SEC 8-K, 08-07-15:

“On August 6, 2015, Apollo Education Group, Inc. (“Apollo” or the “Company”) received an Investigative Subpoena from the Office of the Attorney General of the State of California. The Subpoena requires Apollo to produce documents and information regarding the business and practices of its wholly-owned subsidiary, University of Phoenix, Inc., relating to members and former members of the U.S. military and California National Guard, including marketing, recruiting, billing, financial aid, accommodation and other services for military personnel, compliance with Executive Order 13607 (Establishing Principles of Excellence for Educational Institutions Serving Service Members, Veterans, Spouses, and Other Family Members), and use of U.S. military logos and emblems in marketing, for the time period of July 1, 2010 to the present.

Apollo is evaluating the Subpoena and intends to cooperate fully with the California Attorney General’s Office.”

https://www.sec.gov/Archives/edgar/data/929887/000092988715000084/apol-august072015x8k.htm

Apollo Group SEC 8-K, 02-05-16:

“On February 4, 2016, we received a Second Investigative Subpoena from the Office of the Attorney General of the State of California in the Matter of the Investigation of For-Profit Educational Institutions, following the Investigative Subpoena we received in August 2015. The Second Investigative Subpoena seeks the production of documents and information regarding a broad spectrum of the business and practices of Apollo Education Group, Inc. and each of our subsidiaries, including University of Phoenix, Inc., relating to marketing, recruiting, compensation of enrollment advisors, complaints, financial aid, compliance, accreditation, other governmental investigations, private litigation and other matters, as well as additional information relating to marketing and services to members and former members of the U.S. military and California National Guard, for the time period of July 1, 2010 to the present. We are cooperating with the Attorney General in this investigation. We cannot predict the eventual scope, duration or outcome of the investigation at this time.”

https://www.sec.gov/Archives/edgar/data/929887/000119312516452435/d115329d8k.htm

SEC enforcement inquiry to Apollo

Apollo Group SEC 8-K, 04-19-12:

“Apollo Group has been contacted by the Division of Enforcement of the SEC requesting documents and information relating to certain stock sales by company insiders and the filing of our Form 8-K on February 28, 2012 in which we announced that new degreed enrollment growth at University of Phoenix was less than previously expected. We have robust policies and procedures regarding insider trading and we intend to fully and voluntarily cooperate with the SEC. We cannot predict the eventual scope or outcome of this preliminary investigation.”

https://www.sec.gov/Archives/edgar/data/929887/000119312512169783/d337407d8k.htm

Department of Education Inspector General subpoena to Apollo

Apollo Group SEC 10-Q, 04-01-14:

“On March 21, 2014, University of Phoenix received a subpoena from the Mid-Atlantic Region of the OIG. The subpoena seeks the production by the University of documents and detailed information regarding a broad spectrum of the activities conducted in the University’s Centralized Service Center for the Northeast Region located in Columbia, Maryland, for the time period of January 1, 2007 to the present, including information relating to marketing, recruitment, enrollment, financial aid processing, fraud prevention, student retention, personnel training, attendance, academic grading and other matters. We intend to cooperate with these requests but cannot at this time predict the eventual scope, duration or outcome of this matter.”

http://www.sec.gov/Archives/edgar/data/929887/000092988714000036/apol-feb282014x10q.htm

Federal Trade Commission investigations of Apollo

Apollo SEC 8-K 07-29-15:

“Apollo Education Group, Inc. (“Apollo” or the “Company”) announced that it received yesterday a Civil Investigative Demand from the U.S. Federal Trade Commission (the “FTC”). The Demand indicates that it relates to an investigation to determine if certain unnamed persons, partnerships, corporations, or others have engaged or are engaging in deceptive or unfair acts or practices in or affecting commerce in the advertising, marketing, or sale of secondary or postsecondary educational products or services or educational accreditation products or services. The Demand requires Apollo to produce documents and information regarding a broad spectrum of the business and practices of its wholly-owned subsidiary, University of Phoenix, Inc., including in respect of marketing, recruiting, enrollment, financial aid, tuition and fees, academic programs, academic advising, student retention, billing and debt collection, complaints, accreditation, training, military recruitment, and other compliance matters, for the time period of January 1, 2011 to the present.

Apollo is evaluating the Demand and intends to cooperate fully with the FTC.”

http://www.sec.gov/Archives/edgar/data/929887/000119312515267187/d23737d8k.htm

Apollo SEC 10-K 10-22-15:

“In addition, in August 2015, we received a notice from the FTC that it had commenced an inquiry into the University of Phoenix’s practices and procedures for safeguarding student and staff personal information, with a request for relevant information from the University.”

http://www.sec.gov/Archives/edgar/data/929887/000092988715000131/apol-aug31201510k.htm

Department of Defense Actions Against Apollo

Department of Defense letter to Apollo, 10/07/15:

“[A Department] review revealed several violations of the DoD MOU attributed to the University of Phoenix, including, but not limited to, transgression of Defense Department policies regarding use of its official seals or other trademark insignia and failure to go through the responsible education advisor for each business related activity requiring access to the DoD installations identified in the aforementioned article (i.e., Navy Operational Support Center, Fort Worth, TX; Fort Bragg, NC; Fort Carson, CO; Fort Hood, TX; and Fort Campbell, KY). Although the University of Phoenix has responded to these infractions with appropriate corrective action at this time, the frequency and scope of these previous violations of the DoD MOU is disconcerting. Now it has come to our attention that the University of Phoenix is under review by both the Federal Trade Commission (FTC) and the California State Attorney General….

Please be advised that, as of the date of this letter, we have placed the University of Phoenix in probationary status and we are considering whether to terminate our MOU with you pursuant to paragraphs l.r(l) and 6(f) of the MOU. Such termination would preclude your

participation in the DoD Tuition Assistance (T A) program. While in a probationary status, and with a view to minimizing harm to students, the University of Phoenix will be permitted to “teach-out.” This means that a current University of Phoenix student receiving DoD TA will be

permitted to complete courses already in progress and enroll in new courses deemed to be part of that student’s established academic program. However, other than as required to complete the “teach-out” process for current students, the University of Phoenix will not be authorized access to DoD installations for the purposes of participating in any recruitment-type activities, including but not limited to job training, and career events and fairs. Further, no new or transfer students at your institution will be permitted to receive DoD TA.”

http://www.republicreport.org/wp-content/uploads/2015/06/Suspension-Letter-to-University-of-Phoenix_7Oct20151.pdf

Apollo SEC 8k, 10-09-15:

https://www.sec.gov/Archives/

Apollo SEC 8k, 01-15-16:

“On January 15, 2016, our wholly-owned subsidiary, University of Phoenix, Inc., was notified by the U.S. Department of Defense (“DoD”) that the University’s probationary status in respect of its participation in the DoD Tuition Assistance Program for active duty military personnel has been lifted, effective immediately. The University had been placed on probation in October 2015 pending a review by the Department of the University’s compliance with the DoD Voluntary Education Partnership Memorandum of Understanding with the University, which is the basis on which the University’s active duty military students participate in the DoD Tuition Assistance Program.

The Department determined that the removal of probationary status was warranted based on the Department’s internal review, the University’s response to the Department’s concerns, and the active engagement and cooperation by representatives of the University.

The University will be subject to a heightened compliance review for a period of one-year following the removal of probationary status. During this period, the University will continue to engage with the Department and complete the production of information and documents previously requested by the Department. In addition, the University will be subject to an enhanced compliance review in fiscal year 2017.”

http://www.sec.gov/Archives/edgar/data/929887/000119312516431197/d121603d8k.htm

http://www.militarytimes.com/story/veterans/best-for-vets/2016/01/15/dod-reinstates-university-phoenix-military-tuition-assistance/78848088/

Department of Education fine and related False Claims Act lawsuit against Apollo

Arizona Republic, 09-14-04:

“A government review of the University of Phoenix, the country’s largest for-profit university, paints a picture of a school so hungry to enroll new students that it has threatened and intimidated its recruitment staff in meetings and e-mail, pressured them to enroll unqualified students and covered up its practices to deceive regulators. In a 45-page report obtained by The Arizona Republic, the U.S. Department of Education describes corporate culture overly focused on boosting enrollment. The review, based on site visits and interviews with more than 60 employees and former employees, led to the largest settlement of its kind last week. The Phoenix-based university agreed to pay $9.8 million without admitting any wrongdoing.”

http://www.azcentral.com/families/education/articles/0914apollo14.html

Justice Department statement, 12-15-09:

“ The Justice Department announced today that the University of Phoenix has agreed to pay the United States $67.5 million to resolve allegations that its student recruitment policies violated the False Claims Act…. Whistleblowers Mary Hendow and Julie Behn, two former University of Phoenix employees, alleged that the university accepted federal student financial aid while in violation of statutory and regulatory provisions prohibiting post-secondary schools from paying admissions counselors certain forms of incentive-based compensation tied to the number of students recruited. Though the United States did not intervene in this action, the Government provided support and assistance to the whistleblowers at many stages of the case, including filing friend-of-the-court briefs when the case was on appeal to the Ninth Circuit.”

http://www.justice.gov/opa/pr/2009/December/09-civ-1345.html

Ashworth College...

For-Profit Colleges Ready to Rumble Again

by Brandon Conradis on September 10, 2013 11:11 AM

With students enjoying their first weeks on campus and President Obama's call to bring more accountability to colleges still reverberating,for-profit schools are gearing up for what could beanother round of battles over government efforts to tighten regulation of their operations.

The for-profit education industry has been under fire for the past few years, thanks in part to charges that their students are more likely to graduate with higher levels of debt and fewer prospects of employment than students at nonprofit colleges.

In 2010, the Obama administration attempted to take the industry to taskby proposing a set of new rules that would clamp down on the schools. Among these was a measure that would bar them from the government's financial aid programs -- their main source of profit -- if fewer than 35 percent of their graduates were actively repaying their student loans.

That same year, for-profit colleges ramped up their spending on lobbying to unprecedented levels in an effort to weaken the regulations. After they spent a record high $10.2 million in 2011, the Department of Education issued a series of softer regs, including a multi-year grace period in which for-profit schools would have time to meet the DOE's stricter requirements. Many saw this concession as a victory for the for-profit schools.

Still, the schools fought the 35 percent rule -- the key component of the Obama administration's newly issued regulations -- in court, and in 2012, a federal judge struck it down for being "arbitrary." The industry shaved its lobbying expenditures to less than $8 million that year.

Now, a 15-member panel has been established by the Department of Education to rewrite those regs.

The for-profit institutions seem ready to slip into war footing again. A look at the industry's current lobbying totals in 2013 shows that its spending could by year's end match that of last year. Companies like the Apollo Group (which operates, among other institutions, the University of Phoenix) and Corinthian Colleges, both of which are in the for-profit niche, continue to be among the top spenders on lobbying in the education industry as a whole.

The hefty increase in campaign contributions from the industry last year -- totaling nearly $4.5 million in 2011-2012, up from $2.5 million in the 2010 cycle and $1.6 million in 2007-2008 -- could help, too, as lawmakers often weigh in with regulators to comment on the impact of actions affecting their favored industries. Tops in that department were the Apollo Group, which gave $525,902, and Bridgepoint Education, which gave $472,637, with the majority going to Republican candidates.

http://www.opensecrets.org/news/2013/09/for-profit-colleges-ready-to-rumble-again.html?utm_source=CRP+Mail+List&utm_campaign=1e96a8d5f8-Newsletter_9_12_20139_12_2013&utm_medium=email&utm_term=0_9df8578d78-1e96a8d5f8-210710609

Carnegie Learning, Inc. is an American publisher of math curricula for middle school, high school, and post-secondary students. The company uses a blended approach, with a textbook and software (called Cognitive Tutor) for each subject. The company also produces products for the homeschool and tutoring markets. Based inPittsburgh, PA, Carnegie Learning was founded by cognitive science researchers from Carnegie Mellon University in conjunction with veteran mathematics teachers.

[hide]

Cognitive Tutor

All of the Cognitive Tutor curricula are based on extensive scientific research from Carnegie Mellon University, along with field tests in schools throughout the United States. The Cognitive Tutors are based on the ACT-R theory of learning, memory and performance, which has been validated by hundreds of lab and field studies. The Tutors themselves were developed using a rigorous empirical testing process resulting in over 50 publications validating the effectiveness of cognitive modeling.^[1]

A review by the United States Department of Education concluded that Carnegie Learning's Cognitive Tutor had “no discernible effects” on the standardized test scores of high school students.^[2]

Awards

On May 6, 2009, Carnegie Learning was announced as the winner of the The Software & Information Industry Association (SIIA) CODiE for Best Mathematics Instructional Solution. This was the third win for Carnegie Learning, having also won the CODiE in 2005 and 2007.^[3][4]

Acquisition by Apollo Group

Main article: Apollo Group

On August 2, 2011, The Apollo Group announce their intent to acquire Carnegie Learning for $75 million.^[5]The Apollo Group also acquired related technology from Carnegie Mellon University for $21.5 million paid over a period of ten years. The transaction was completed in September of 2011.^[6]

Carnegie Learning retained its name and its offices in the Frick Building in Pittsburgh. It was reported that Carnegie Learning's work force, 105 employees at the time of the deal, would expand under Apollo.^[6]

References

:{Jump up:(style="top:-99999px;clip:rect(1px 1px 1px 1px);overflow:hidden;position:absolute !important;padding:0px !important;border:0px !important;height:1px !important;width:1px !important;-webkit-user-select:none"):}:^ Koedinger, Kenneth R.; Corbett, Albert T.; Ritter, Steven; Shapiro, Lora J. (2000-06-22). "In this paper, we describe various evaluations that demonstrate the power of the Cognitive Tutor solution.". Carnegie Learning's Cognitive Tutor: Summary Research Results. Carnegie Mellon University.
:{Jump up:(style="top:-99999px;clip:rect(1px 1px 1px 1px);overflow:hidden;position:absolute !important;padding:0px !important;border:0px !important;height:1px !important;width:1px !important;-webkit-user-select:none"):}:^ Inflating the Software Report Card By TRIP GABRIEL and MATT RICHTEL, New York Times, October 8, 2011
:{Jump up:(style="top:-99999px;clip:rect(1px 1px 1px 1px);overflow:hidden;position:absolute !important;padding:0px !important;border:0px !important;height:1px !important;width:1px !important;-webkit-user-select:none"):}:^ "2009 Codie Award Winners Announced" (Press release). SIAA. 2009-05-06.
:{Jump up:(style="top:-99999px;clip:rect(1px 1px 1px 1px);overflow:hidden;position:absolute !important;padding:0px !important;border:0px !important;height:1px !important;width:1px !important;-webkit-user-select:none"):}:^ "22nd Annual Codie Award Winners Announced" (Press release). SIAA. 2008-04-18.
:{Jump up:(style="top:-99999px;clip:rect(1px 1px 1px 1px);overflow:hidden;position:absolute !important;padding:0px !important;border:0px !important;height:1px !important;width:1px !important;-webkit-user-select:none"):}:^ "Apollo Group to Acquire Carnegie Learning" (Press release). Apollo Group. 2011-08-02.
^ :{Jump up to::(style="top:-99999px;clip:rect(1px 1px 1px 1px);overflow:hidden;position:absolute !important;padding:0px !important;border:0px !important;height:1px !important;width:1px !important;-webkit-user-select:none"):}:^a ^b(http://en.wikipedia.org/wiki/Carnegie_Learning#cite_ref-CMU_6-1) "CMU software spinout acquired". Pittsburgh Tribune Review. 3 August 2011.

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