Corinthian Colleges to be monitored by ex-US Attorney Fitzgerald

July 18 Fri Jul 18, 2014 1:58pm EDT

July 18 (Reuters) - Former federal prosecutor Patrick Fitzgerald agreed to serve as an independent monitor of Corinthian Colleges Inc, the struggling for-profit education company that agreed to sell or close its campuses, the U.S. Department of Education said on Friday.

Fitzgerald, 53, is a partner at Skadden, Arps, Slate, Meagher & Flom, which he joined in 2012 after a decade as U.S. Attorney for the Northern District of Illinois, which includes Chicago.

As a prosecutor, he won the convictions of former Illinois governors George Ryan and Rod Blagojevich; and the conviction of Lewis "Scooter" Libby, a former aide to Vice President Dick Cheney, related to the leak of covert CIA officer Valerie Plame's identity.

Corinthian serves about 72,000 students, operates 107 campuses under such names as Everest, Heald and WyoTech, and also offers degrees online.

It agreed on July 3 with the Education Department to put 85 campuses up for sale, wind down 12 others, and try to sell its Canadian schools.

As monitor, Fitzgerald will oversee the sales' process, have full access to Corinthian's personnel and budget records, make sure the company complies with federal laws, and help ensure that already-enrolled students complete their courses of study.

He will also oversee the establishment of a reserve fund of at least $30 million, which will be used to offer full refunds to eligible students.

Fitzgerald, through a Skadden spokeswoman, was not available on Friday to comment.

Like other for-profit education companies, Corinthian has relied heavily on government funds to conduct business.

Problems mounted in 2014 as Corinthian lost $79.6 million from January to March, causing a breach of bank debt covenants, and saw its cash stake shrink to $28 million from $46.6 million.

Corinthian remains subject to multiple federal and state probes into such matters as whether it misled investors about its finances, and misled students about job placement rates.

The Education Department on Friday said it has for several months been looking into "serious concerns" about the Santa Ana, California-based company's compliance with federal law. (Reporting by Jonathan Stempel in New York)