A coalition representing some of the nation’s for-profit colleges sued the Government Accountability Office on Wednesday for alleged professional malpractice and negligence in its investigation of so-called career colleges.
The lawsuit—Coalition for Educational Success v. U.S.—was filed under the Federal Tort Claims Act in Washington federal court on behalf of the Chicago-based coalition by Paul Smith, a partner at Jenner & Block. It charges that the GAO “issued a negligently written, biased and distorted report that foreseeably caused substantial financial injury” to the coalition.
Last June, the Senate Health, Education, Labor and Pension Committee, chaired by Sen. Tom Harkin (D-Iowa), began a series of hearings to examine federal education spending at career colleges, such as Strayer University and ITT Technical Institute. In preparation for the hearings, Harkin, a critic of career colleges, asked the GAO to conduct an undercover investigation to determine if career college representatives engaged in fraudulent, deceptive, or otherwise questionable marketing practices.
The GAO sent individuals posing as applicants to 15 career colleges in six states and Washington, D.C. In August, the government auditor released a highly critical report, stating that four of the career colleges engaged in fraudulent practices and that all 15 colleges made deceptive or otherwise questionable statements. The August report was submitted as testimony to the Senate committee. But in November, the GAO issued a revised report and testimony that corrected findings for 13 of the 15 colleges.
The revised report has triggered an inquiry into the GAO’s forensic audit and special investigations unit by House Oversight and Government Reform Chairman Darrell Issa, R-Calif.
“We have a theory that the [GAO] has certain basic, nondiscretionary standards that it is supposed to follow,” said Smith. The August report, he said, “was so clearly not an unbiased effort to find out the truth. Essentially the answer was predetermined.”
The lawsuit states that in the days following the August report’s release, the market capitalization of the publicly traded organizations that own and operate career colleges dropped nearly $4.4 billion—or about 14%. “In addition, to combat the factual inaccuracies and biased conclusions contained in the GAO’s report, the Coalition was forced to incur substantial additional costs and expenses to advocate for its numerous career college members and to set the record straight,” the complaint says. “The Coalition’s damages continue to accrue because the GAO refuses to withdraw its reports and conclusions.”
GAO spokesman Charles Young said, “The bottom line remains that a GAO review team independent from the investigators who did this work examined the report and found no material flaws in the evidentiary support for the overall message of the testimony and consequently our findings did not change. We continue to stand by the overall message of this report."
The coalition and the Association of Private Sector Colleges and Universities also are engaged in a battle with the Department of Education over new regulations governing federal student financial aid to career colleges. The association, represented by Douglas Cox, a partner at Gibson, Dunn & Crutcher, challenged those regulations on Jan. 21 in a suit against the department in Washington federal court. (Career College Association v. Duncan).
I agree with Mike,
I represent two whistleblowers in a false claims act case against Kaplan..
I agree with the GAO report.
I receive e-mails daily from students who indicate they were deceived or misled. They are upset when they find that the credits are not transferable. They are further upset when they find that the student loan that they were misled into obtaining is nondischargeable in bankruptcy.
I have to admit I am absolutely shocked at what I have found out.
Former recruiters are coming forward disclosing the misleading and deceptive tactics used in recruiting students.
I can go on for weeks.
Please write all US Senators, all U.S. Congress , all Governors, the Department of Education and ask them to stop the predatory practice of the predatory for-profit educational corporations..
I believe a Wall Street hedge fund manager
appropriately called the predatory for-profit education corporation industry "marketing machines masquerading as colleges and/or universities."
We have to stop this $28 billion year ripoff of the Federal Government and we taxpayers .
Posted by: John W. Andrews | February 03, 2011 at 05:45 PM
I agree with Mike totally. There have been enough complaints over years and years to warrant an investigation. I say Better Late Than Never. If these schools' reputations are suffering, it can't be by much since those who hire already know the relative lack of value of such an education. How much poorer can their reputation be? They serve the desperate. State-run community colleges and technical schools are a much better value. It is possible that the other poster may just be a disgruntled former employee.
Posted by: jwt | February 03, 2011 at 01:03 PM
This lawsuit is garbage stall tactics. As a victim of EDMC and CEC's schools, I must fully agree with the GAO report because I went through the same thing.
Posted by: Mike | February 03, 2011 at 08:17 AM
What a BS investigation. GAO targeted these schools without even knowing if they had done anything wrong. As will all FSI jobs- its was a fishing expedition. Glad I left GAO when it had its good name.
Posted by: Harvey Carter | February 02, 2011 at 10:40 PM