Important consumer information on Career Education Corporation (
http://www.careered.com/ ). Schools of
Career Education Corporation include:
McIntosh College in Dover, NH
Sanford-Brown in Springfield, MA
Gretchen Morgenson wrote
The
Career Education Corporation, a for-profit provider of technical and
business education at 80 campuses around the world, is in the closed-mouth
camp. That is unfortunate, for its owners anyway, because some of the stuff
they may not know about seems disturbing.
The company, which had $1.7 billion in revenue last year, offers diploma
programs in information technology, health education, business and culinary
arts. As of April 30, Career Education had some 71,000 students at its
campuses; 25,500 more students were enrolled in its online education group.
A substantial portion of the company's revenue comes from federal education
programs paid for by United States taxpayers. In the first quarter of 2005,
for instance, the company said 60 percent of its tuition payments came from
the federal government. That makes the Career Education story of interest not
only to its shareholders, but to taxpayers everywhere.
As Career Education noted in its latest quarterly filing, it is the subject
of investigations by both the Justice Department and the Securities and
Exchange Commission. It is also a defendant in four lawsuits filed since July
2004, the filing noted. These cases accuse the company of improprieties in
both financial aid and admissions practices, or of misleading potential
students regarding postgraduate placement rates.
Another matter of interest to shareholders is the company's internal
review, begun a year ago by a committee of its board, into allegations of
securities laws violations made in a class-action suit. Last week, the company
said that the committee had concluded its inquiry and that it had not found
support for claims that its senior management had violated securities laws.
The company said the review examined accounting practices and the reporting of
student population and placement figures.
The Career Education Corporation, a for-profit provider of technical and
business education, is also in the business of being less than candid with its
shareholders.
By Sam Kennedy from Of
The Morning Call wrote:
The expectation was that 90 percent of applicants would be
packaged upon enrollment, he said. ''If you get them enrolled, they better be
packaged before they leave the door,'' he said.
Pressuring customers to make an immediate decision is a defining trait of
hard-sell sales tactics. Traditional colleges give students and their parents
months to explore their financial aid options.
Career Education's methods benefit the company in two ways, the former director
said: Students are less likely to back out of plans to attend college if they've
put their signatures on student loan forms. At the same time, the company gets
the guarantee students will be able to come up with tuition money.
The former director, who said he quit the school because he came to believe
Career Education did not have the students' interests at heart, said few of the
financial aid advisers who worked under him were well-trained or otherwise
qualified to counsel applicants on student loans. Some did not have college
degrees, he said.
Asked if he or the advisers were given incentives to package students, he
responded: ''If you would classify keeping your job as an incentive, then yes,
there was a major incentive.''
Career Education declined to comment on the issues raised by the former
financial aid director. The company requested questions in writing; The Morning
Call complied, but Career Education did not respond.
On the CEC website management writes:
CEC also produces outstanding financial results for its investors, setting
new records for revenues and net income in every quarter since its initial
public offering in February 1998.
Recent article of interest:
NEW YORK, April 4, 2005 (PRIMEZONE) -- Goodkind Labaton Rudoff & Sucharow LLP
has filed an amended complaint in the United States District Court for the
Northern District of Illinois on behalf of persons who purchased or otherwise
acquired publicly traded securities of Career Education Corporation ("Career
Education" or the "Company") (Nasdaq:CECO) between January 28, 2003, and
February 15, 2005. The lawsuit was filed against Career Education and John M.
Larson, and Patrick K. Pesch.
The complaint alleges that Defendants violated sections 10(b) and 20(a) of
the Securities Exchange Act of 1934, and Rule 10b-5 promulgated thereunder.
Specifically the complaint alleges that certain of the defendants' public
statements were false or contained material omissions in terms of their
financial and business results. As a result, the company historically was
publicized as "never missing," and usually surpassing, analysts' projections of
its operations. The allegations include that revenue and earnings were
overstated, and the Company's bad debt ratio was understated. Individual
defendants named in the allegations sold their personally held CEC stock at
artificially inflated prices, reaping aggregate proceeds of more than $46
million. A copy of the complaint is available online at
http://www.glrslaw.com/index.cfm/hurl/SectionID=96/getGlobalID=23827 and
includes information about the 26 witnesses that have stepped forward.
CEC recently announced that it would (i) restate its previously reported
financial results for 2000 through 2004 to reduce revenues and earnings for
these periods; and (ii) that it would take a $19 million charge in the 2004
fourth quarter to increase its estimate of its allowance for doubtful accounts.
On this news, the price of CEC stock fell, from a closing price on February 15,
2005, of $39.21, to close at $37.19 on February 16, 2005. The stock continued to
fall as analysts became further aware of the extent of the Company's problems,
closing on March 15, 2005, at $32.74 per share.
Lead Plaintiff is represented by Goodkind Labaton Rudoff & Sucharow LLP, one
of the country's premier national law firms that represent individual and
institutional investors in class action, complex securities and corporate
governance litigation. The firm has been a champion of investor rights for over
40 years and has been recognized for its reputation for excellence by the
courts. Goodkind Labaton was recently ranked fourth in total recoveries in 2003
among the top 50 plaintiffs' law firms by Institutional Shareholder Services (ISS),
the world's leading provider of proxy and corporate governance services.
Notably, Goodkind Labaton recovered over half a billion dollars for its clients
in the last two years.
More information on this and other class actions can be found on the Class
Action Newsline at
www.primezone.com/ca