05.06.15

Senators Call for Attorney General Investigation of Corinthian Colleges Failure

Ask whether or not DOJ can hold executives personally accountable for violations of federal law

[WASHINGTON, D.C.] – Citing a claim that the Department of Education has limited tools for holding individual executives responsible for any misconduct of the recently failed Corinthian Colleges, 7 U.S. Senators called it critical that Attorney General Loretta Lynch get to the bottom of whether the for-profit college and its executives violated federal civil or criminal laws. 

  

U.S. Senators Dick Durbin (D-IL), Elizabeth Warren (D-MA), Richard Blumenthal (D-CT), Jack Reed (D-RI), Ed Markey (D-MA), Chris Murphy (D-CT) and Al Franken (D-MN) signed on to the letter.

  

“Corinthian’s collapse over the past year has come at the cost of hundreds of millions in taxpayer dollars and at the expense of thousands of students who were enticed to enroll in - and to incur massive debt for - failing school programs.  At the same time that Corinthian’s executives were enriching themselves on federal student loan dollars, with the CEO making an annual salary that exceeded $3 million, allegations of Corinthian’s misbehavior grew increasingly widespread,” the Senators wrote.  “While corporate accountability for Corinthian is important, so is personal accountability for those who led this company.” 

 

Yesterday – one week after closing its remaining 28 campuses and leaving 16,000 students in the lurch – Corinthian Colleges, Inc. formally filed for bankruptcy.  At the time of closure, they were still participating in the federal Title IV program – receiving taxpayer dollars and in several states, continuing to enroll new students.  Corinthian was under investigation by the Securities and Exchange Commission, the Department of Justice, and at least 20 state Attorneys General, including Illinois Attorney General Lisa Madigan. They were sued by the Consumer Financial Protection Bureau and the state Attorneys General of California, Massachusetts, and Wisconsin for false and misleading advertisements. All the while, the institution raked in more than a billion dollars from taxpayers a year.

  

Text of today’s letter is below:

  

                                                May 5, 2015

The Honorable Loretta Lynch

Attorney General
United States Department of Justice
950 Pennsylvania Avenue, NW
Washington, DC 20530

 

Dear Attorney General Lynch:

 

We congratulate you on your recent confirmation to the Senate, and we thank you for the dedication you have shown throughout your career to the pursuit of justice.

 

We write today to urge the Department of Justice to fully investigate the misconduct of the recently failed for-profit education company Corinthian Colleges, Inc. (“Corinthian”) and of its executive leadership.  We further request that the Department identify the tools it has at its disposal to hold executives of for-profit education companies personally accountable for their involvement in the companies’ violations of federal civil or criminal laws. 

 

Corinthian’s collapse over the past year has come at the cost of hundreds of millions in taxpayer dollars and at the expense of thousands of students who were enticed to enroll in - and to incur massive debt for - failing school programs.  At the same time that Corinthian’s executives were enriching themselves on federal student loan dollars, with the CEO making an annual salary that exceeded $3 million, allegations of Corinthian’s misbehavior grew increasingly widespread.   These included allegations that Corinthian officials falsified and manipulated data that were provided to students and to the federal government, among other deceits and misrepresentations.

 

It is critical that the Justice Department get to the bottom of whether Corinthian and its officials violated laws within the Department’s jurisdiction.  While we recognize that investigations by certain Justice Department components may not be disclosed publicly, we seek your confirmation that the Department is fully aware of the Corinthian situation and is responding diligently.  We note that Corinthian has reportedly been the subject of investigations in one or more False Claims Act cases and that federal prosecutors have issued grand jury subpoenas to Corinthian in at least three states.   We also note that in recent years Corinthian has been the subject of civil complaints by the Consumer Financial Protection Bureau and three state attorneys general, has been under investigation by the Securities and Exchange Commission and at least 20 more attorneys general, and was placed on heightened cash monitoring and fined $30 million dollars by the Department of Education.  With this much smoke surrounding Corinthian, it is incumbent on the Justice Department to search carefully for fire.  

 

While corporate accountability for Corinthian is important, so is personal accountability for those who led this company.  Earlier this week, the Under Secretary of Education was asked “will Corinthian executives be held accountable for the disruption to so many students’ lives?”  He responded: “our tools for holding executives responsible individually are limited.”  In light of the Department of Education’s limitations, it is vital that Congress and the public understand what tools the Justice Department can use to hold such executives responsible individually.  If these tools are inadequate, Congress may need to act.  

 

Thank you for your attention to this request.  We look forward to your response and to working with you on behalf of the American people. 

 

Sincerely,