Monday, October 24, 2016

Good grief

A Whistle Was Blown on ITT; 17 Years Later, It Collapsed
(New York Times)

     Dan Graves, a mental health aide in San Jose, Calif., had mixed feelings when he heard that ITT Educational Services had filed for bankruptcy in mid-September.
     As a former employee who had blown the whistle on ITT, an operator of some 140 for-profit schools, Mr. Graves was happy that the government had finally taken action to protect students from the company’s aggressive sales tactics, which lured them into debilitating debt and provided little in the way of an education.
     Still, he wondered what had taken the government so long. After all, it has been 17 years since Mr. Graves and another former ITT employee brought a suit alleging that the company had systematically violated the law governing compensation of sales representatives.
     The two former employees shared extensive documentation with a half-dozen federal prosecutors and regulators. These officials expressed keen interest, Mr. Graves said, and estimated that the government could recover $400 million in damages from the case. But by 2004, the lawsuit was dead and Mr. Graves’s effort to provide the government with damning evidence had come to naught.
. . .
     “It was an institutional failure by the government and a complete abdication of responsibility to enforce the Higher Education Act,” said Scott D. Levy, the Houston-based lawyer who represented Mr. Graves in his suit.
     Not everybody was a loser in this tale, of course. Going through ITT’s financial filings from 2000 to 2016, I found that the company generated over $12 billion in revenue, roughly 70 percent of it in government-backed student aid.
     ITT’s top five executives received princely compensation over the period — $117 million in total, regulatory records show. Lobbyists for ITT Educational Services also benefited. The company has spent almost $1 million on lobbying since 1998, according to the Center for Responsive Politics….

—I highly recommend that you read the entire article. —RB

1 comment:

Anonymous said...

Why should we be surprised.

Read Richard Reeves' essay titled "The Last Angry Men".

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