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.