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March 16, 2016 The Skanner Page 9 News US to Fire Monitor Overseeing Formerly For-Profit Colleges By Jeff Horwitz Associated Press WASHINGTON (AP) — The Education Depart- ment is removing a law firm hired to oversee the turnaround of schools owned by Corinthian Colleges Inc., a for-prof- it education company whose financial collapse had placed at risk more than $1 billion in federal student loans. An Associated Press investigation identified conflicts with the osten- sibly independent mon- itor. The department said it was removing the firm, Hogan Marren Babbo & Rose Ltd. of Chicago, af- ter the AP reviewed with senior agency officials its findings last week af- ter a nine-month inves- tigation examining the Obama administration’s response to Corinthian’s extraordinary collapse in 2014 amid allegations of mismanagement and fraud. The department had previously said only that it intended to review “ fronting the Education Department and its new leadership. John B. King Jr., who won Senate con- firmation late Monday as education secretary, was hired as an advis- er in January 2015, af- ter the department had set Zenith’s path under then-Secretary Arne Duncan. The AP’s review of Ze- nith found that the way the monitor had been hired created an attor- ney-client privilege re- lationship that shielded its work from outside scrutiny and obligated it to act in Zenith’s interest. After the AP ques- tioned the arrangement, the Education Depart- ment and Zenith altered the terms of its moni- toring arrangement last fall. Contract addendums expressly warned that Zenith was not permitted to edit Hogan Marren’s compliance reports be- fore they were presented to the department. Nor could the firm solicit additional work from Zenith during its moni- The Department of Educa- tion can’t accept them as in- dependent, period the firm’s performance going forward. The chairman of the firm’s education prac- tice, Charles P. Rose, de- clined Monday to discuss his firm’s removal. A spokeswoman for Zenith did not respond to an email and phone call ask- ing how much the compa- ny had been paid. The monitor has been overseeing the business practices of Zenith Ed- ucation Group, an off- shoot of a student-loan debt collection firm that took over Corinthian’s operations. It was serv- ing as the U.S. govern- ment’s close-up eyes and ears, reviewing Zenith’s marketing materials and admissions phone calls and the accuracy of grad- uation and employment statistics. “I’ve notified Zenith and Hogan Marren that we do not intend to ap- prove renewal of Hogan Marren as the indepen- dent monitor,” Educa- tion Undersecretary Ted Mitchell told the AP. “We believe we need a moni- tor with different capac- ities to serve in this next phase of Zenith’s devel- opment.” The mess of how to deal with Zenith and its strug- gling for-profit former peers is among the most serious problems con- toring. The changes also allowed the government to request copies of the firm’s underlying work product. The AP found that the firm also had advocated on behalf of for-profit col- leges, helped broker the purchase of Corinthian’s assets and argued in a legal brief that for-profit schools had a free speech right not to inform pro- spective students about poor graduate employ- ment outcomes. Also, two lawyers over- seeing the new for-prof- it operations, Rose and Dennis Cariello, were former Education De- partment officials who had worked at law firms employed by Corinthi- an in the months before it collapsed financially. Neither Zenith nor the attorneys would tell the AP whether they had personally performed le- gal work for Corinthian. “The Department of Ed- ucation can’t accept them as independent, period,” said Sen. Sherrod Brown, D-Ohio, the top Demo- crat on the Senate Bank- ing, Housing and Urban Affairs Committee and a critic of for-profit college practices. The Education Depart- ment said it will hire a new monitor with a more prosecutorial mindset, though it has not out- lined the structure of the arrangement or identi- fied potential candidates. The AP’s investiga- tion found that signifi- cant problems remain at the formerly for-profit college — including its flagship Everest College brand — even after Ze- nith’s takeover. Zenith still recruits students through large-scale tele- marketing. Major chang- es to its curriculum have not yet occurred. It has retained senior Corin- thian executives in key posts. And it continues to recruit students using some of the same ads that Corinthian ran during the same daytime TV talk shows. AP PHOTO/CHRISTINE ARMARIO, FILE Law firm removed from investigatory role after AP investigation identifies conflicts of interest Students wait outside Everest College in Industry, Calif., hoping to get their transcriptions and information on loan forgiveness and transferring credits to other schools. Despite pledging to distance itself from the poor business practices of the for-profit Corinthian Colleges Inc, the new owner of the Everest career college chain has retained key members of its staff and some of its hard-charging sales tactics. Recent graduates told the AP they are strug- gling to find work that would allow them to pay back their student loans, raising the prospect that the government is seed- ing a new crop of loan defaults.
