* New York state says for-profit company inflated job
* Career Education agrees to independent monitor
By Jonathan Stempel
Aug 19 Career Education Corp has agreed
to pay $10.25 million to settle a New York state probe in which
the for-profit education company was accused of inflating job
placement rates to attract prospective students to its schools.
The settlement was announced on Monday by Eric Schneiderman,
the state's attorney general.
New York accused Career Education of inflating job placement
rates from 2009 through the spring of 2011, disclosing annual
placement rates of 54.9 percent to 80.2 percent that should have
instead been 24.1 percent to 64.1 percent.
The settlement requires Career Education to make $9.25
million in restitution to students, pay a $1 million penalty,
hire an independent company to verify placement rates for three
years and change what employment qualifies as placements.
Career Education did not admit or deny the state's findings,
but Schneiderman said the Schaumberg, Illinois-based company
fired several high-level managers involved in inflating
placement rates and took steps to modify its practices.
Mark Spencer, a spokesman for Career Education, said the
settlement "closes an important chapter and allows us to move
forward with a heightened focus on student outcomes, including
our critically important job placement services."
Career Education said it has more than 90 campuses serving
roughly 57,600 students. The New York probe focused on activity
at seven campuses and two online institutions.
The state said Career Education inflated placement rates
through such means as counting employment at one-day "health
fairs," and the employment of criminal justice graduates in
retail sales and data processing.
It cited one example in which a criminal justice graduate
who processed parking ticket data was credited as having
obtained a "related field" placement because the graduate's
duties involving dealing "with the courts."
"Students pay thousands of dollars to for-profit colleges
because they rightly believe education is the ticket to success
in their careers," Schneiderman said in a statement. "That's why
it's so unfortunate that this company exploited students'
aspirations and published misleading information."
In a regulatory filing this month, Career Education said
other regulators, including Illinois' attorney general and the
U.S. Securities and Exchange Commission, have inquired about its
placement rate practices, and that it is cooperating. It also
said it had set aside $10 million to cover a settlement with New
Matt Mittenthal, a spokesman for Schneiderman, confirmed
that the New York attorney general's office has open
investigations of practices at other for-profit schools.