ITT Technical Institute finally settled their fraud case with the Securities and Exchange Commission (SEC). In 2015 the SEC alleged, “the national operator of for-profit colleges and the two executives fraudulently concealed from ITT’s investors the poor performance and looming financial impact of two student loan programs that ITT financially guaranteed. ITT formed both of these student loan programs, known as the “PEAKS” and “CUSO” programs, to provide off-balance sheet loans for ITT’s students following the collapse of the private student loan market. To induce others to finance these risky loans, ITT provided a guarantee that limited any risk of loss from the student loan pools.” – Source
It seems ITT apparently lied to students to enroll them and top executives allegedly lied to lenders to keep the money flowing.
Top executives at ITT are still fighting charges brought by the SEC. ITT Chief Executive Kevin Modany and former chief financial officer Daniel Fitzpatrick are trying to get off without any blame or guilt.
Just goes to show any school can screw the students but they will pay hell if they screw the banks.
The LA Times is reporting, “In a letter sent Friday, Democratic Sens. Richard J. Durbin of Illinois and Sherrod Brown of Ohio urged SEC Chairman Jay Clayton to bar Modany from serving as an officer of any public company and to impose stiff penalties on him and Fitzpatrick. The lawmakers expressed outrage that Modany, who did not immediately respond to requests for comment, is seeking more than $3.3 million in deferred compensation and severance pay, after receiving more than $36 million in total compensation from 2007 to 2014 at ITT.
“Justice demands that any outcome in this matter include the highest applicable civil money penalties and disgorgement of the ill-gotten gains with which Mr. Modany and Mr. Fitzpatrick have thus far absconded,” the senators wrote. “Preventing future misconduct in the for-profit college industry requires that the SEC hold executives in the ITT case accountable.” – Source
I’m not holding my breath.
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