Murphy & Price, LLP
24/7 support 410.777.8723
call today for a free initial consultation
Criminal Defense & Immigration Lawyers

ITT Educational Services accused of fraud

ITT Educational Services, a for-profit college operator, has been charged with fraud by the Securities and Exchange Commission. In its federal lawsuit, the agency has alleged that the defendant concealed from investors the poor results of its earlier decision to to provide guarantees to lenders participating in two of its student loan programs. ITTESI operates ITT Technical Institute, which has students from Maryland and around the country.

The losses that ITTESI incurred allegedly amounted to hundreds of millions of dollars, but it continued to reassure its shareholders that all was well. In an attempt by ITTESI to cover the poor results, the SEC has alleged that the company made delinquent payments on the student loans to keep them from going into immediate default and kept this information from the company's auditor. Also named as defendants are the company's CEO and CFO.

ITTESI says it disagrees with the charges, and says that it worked with many financial and legal experts with regards to the loan programs. In its statement issued by a spokesperson for the company, it said that it acted in good faith when making judgments on the accounting and disclosure of the matter. The statement went on to say that the company believes there is no evidence to support the claim of fraud by the SEC. The news of the federal lawsuit caused the trading price of the company's common stock to plunge by more than 40 percent.

Convictions on fraud and other white collar crimes can bring serious consequences to those who have been charged, including incarceration, restitution and significant fines. Those who find themselves in these types of situations will likely want to retain the services of an attorney as quickly as possible in order to develop a strong defense strategy.

Source: USA Today, "For-profit college operator accused of fraud", Kevin McCoy, May 12, 2015

No Comments

Leave a comment
Comment Information

Privacy Policy | Business Development Solutions by FindLaw, part of Thomson Reuters.