For-Profit College Coalition Sues over GAO Report

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The Coalition for Educational Success, a group of for-profit colleges that earlier issued a report blasting  the methods and findings of a GAO report on recruiting by 15 such colleges, filed suit today in U.S. District Court claiming “professional malpractice” and seeking unspecified damages.

The Coalition, headed by Willis Stern of Chicago, whose firm is a major owner of the privately held Education Corp. of America, blamed what it called the Government Accountability Office’s “biased” report that included many “unsubstantiated conclusions” for a 14 percent drop in market capitalization of publicly traded educational corporations, or about $4.4 billion.

The suit contains most of the claims contained in the Coalition’s previous report.

The suit also claims that the for-profit education industry had to spend “substantial sums” to counter the report and that the damages continue to accrue.

GAO spokesman Charles Young said today, "The bottom line remains that a GAO review team independent from the investigators who did this work examined the report and found no material flaws in the evidentiary support for the overall message of the testimony and consequently our findings did not change. We continue to stand by the overall message of this report."

The GAO report was released in connection with an August hearing by the Senate Health, Education, Labor and Pension Committee headed by Sen. John Harkin (Iowa) and asserted that recruiting irregularities were found at all 15 campuses to which the GAO sent undercover agents posing as students.  The GAO issued a revised report in November, and said that none of the revisions changed the findings of the report.

The GAO said it had the visits, as least two to each location, on audio and video tape. The Coalition has been seeking all of these tapes under Freedom of Information Act requests.  About 75 percent of the audio tapes have been released on the Senate HELP committee’s website.

Sources familiar with the investigation said unreleased tapes have been forwarded to other investigative agencies for possible civil penalties or criminal cases. None of the video tapes has been released, partly because of the effort needed to redact them.  Some of them may also be evidence in other proceedings, the sources said.

The Coalition contends in its suit that the GAO introduced new errors in the revised report and that overall the errors and changes all reflected negatively on the for-profit education industry. A handful of senators has asked the GAO to provide “substantive evidence” that the report was not biased against the for-profits.