Corinthian College to Pay Over $1 Billion, What it Means to Students

As you know, I’ve handled a lot of out of control student loan situations and I’ve also covered the Corinthian Colleges debacle, their subsequent shutdown and bankruptcy, and subsequent judgments. Well, the state of California just came through with what might be the headshot that puts down the zombie student loan debt incurred by Corinthian’s students. California’s Attorney General Kamala Harris took Corinthian et al. to courtand obtained a $1.1 billion judgment against the following entities:

• Career Choices, Inc.
• Corinthian Colleges, Inc.
• Corinthian Schools, Inc.
• Everest College Phoenix, Inc.
• Florida Metropolitan University, Inc.
• Heald College, LLC
• MJB Acquisition Corporation
• Rhodes Colleges, Inc.
• Sequoia Education, Inc
• Titan Schools, Inc.

The judgment could provide relief to approximately 85,000 students. However, it is something of a symbolic victory as no attorney for Corinthian et al. showed up for the hearing. Evan Borges of Greenburg Gross, which represented the schools in bankruptcy, sent a note advising the judge that the schools ceased to exist last year, and motions were filed to withdraw the firm as counsel. The court makes twenty five paragraphs of findings against the above defendants based on the uncontested evidence represented by the State of California including:

• Made representations to students that were on that true or misleading related to job placement rates, and the rates were determined to be systematically false, misleading, and failed in cases to comply with state and federal regulations, and accredited standards.
• Systematically misrepresented placement rate to investors, and used data that may have been manipulated, and that Corinthian colleges new that the data was false even as they presented it to their investors.
• Advertised for programs that Corinthian colleges knew were not offered at specific schools, such as ultrasound, x-ray, radiology, and dialysis technician programs at their California campuses.
• Unlawfully used the official seals of the Armed Forces of the United States in advertising mailings, on websites, and in emails. Use of these emblems allowed the receiver to construe that the schools had military and federal government connections and endorsements and did not contain the disclaimers required by law disavowing any implied endorsement or approval.
• Inserted exemption and exclusion clauses into enrollment agreements that are expressly prohibited by law.
• Engaged in unlawful and unfair debt collection, engaged in predatory lending practices, and failed to disclose Corinthian Colleges interest and role in a private student loan program.

While these findings may not bring in a red cent of the judgment, they are invaluable as a tool to former students seeking debt relief from their student loans. In the meantime, students are still burdened and many are facing garnishment despite being the victims of fraud.  It appears that there are more lawsuits against for-profit colleges and news of subsequent abuses to come. If you are a victim of a fraudulent school, and are burdened with debt for trying to obtain a college education or vocational skill, please get in touch with my office for a free consultation.