New York probing Corinthian, Trump's for-profit colleges

Reuters News
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Posted: May 20, 2011 1:18 PM
New York probing Corinthian, Trump's for-profit colleges

By A. Ananthalakshmi

BANGALORE (Reuters) - The New York Attorney General is investigating colleges run by Corinthian Colleges and real estate magnate Donald Trump, adding to the list of states probing illegal business practices at for-profit schools.

Attorney General Eric Schneiderman has also issued a subpoena to Bridgepoint Education, the company revealed in a regulatory filing late on Thursday.

New York is the latest state to start probing for-profit schools that have come under the scanner for over-charging students and burdening them with debt.

The Obama government has threatened to cut off federal aid -- a big chunk of revenue for these colleges -- if the for-profit schools continue to show high student debt levels.

Involvement of state administrations started in October when Florida said it was probing Apollo Group, Corinthian, Washington Post's Kaplan colleges and Career Education for alleged unfair and deceptive enrollment practices.

In an emailed statement today, Corinthian spokesman Kent Jenkins said the company received a subpoena from the New York Attorney General on Thursday, and will cooperate fully.

Corinthian, which runs Everest, Heald and WyoTech colleges, has one campus in the state of New York.

Corinthian said in its latest quarterly filing with the SEC that its colleges are being investigated by Florida, California, Massachusetts and Atlanta.

A spokesperson for the Trump Entrepreneur Initiative said the college will cooperate with the inquiry and provide the information requested.

The Trump Entrepreneur Initiative was founded by billionaire Donald Trump in 2005 and offers online lessons on real estate, asset management among others. It does not offer degrees.

In the regulatory filing on Thursday, Bridgepoint said the subpoena relates to the attorney general's investigation on its compliance with certain New York State consumer protection, securities and finance laws.

Bridgepoint Education, which runs the Ashford University and University of the Rockies, said the attorney general has requested the company and its academic institutions for documents and detailed information since March 17, 2005.

According to some media reports, Career Education and Lincoln Education are also being investigated by New York.

Emails and calls to Career Education, Lincoln Education and the New York Attorney General's office were not immediately returned.

Bridgepoint shares were trading down 6 percent on Friday on the New York Stock Exchange. Corinthian's shares were down slightly.

(Reporting by A. Ananthalakshmi in Bangalore; Editing by Don Sebastian)