Career Education Corporation and the terrible, horrible, no good, very bad day

Last week, Career Education Corporation’s stock took a breathtaking fall. It started with the resignation of Gary McCullough, the CEO. That happened so quickly, he did not even have time to offer the usual walk-the-plank rap that he was leaving to spend more time with his family.

The next day, November 2, the company provided earnings information to investors in their earnings call. The earnings call reportedly included revelations that about an internal  investigation by outside counsel.

It seems that independent counsel reviewed the calculation of placement rates at some of CEC’s schools. CEC revealed that placement rates at some of its schools were improperly calculated. That is when CEC’s stock took its breathtaking fall.

The upshot is that Career Education Corporation is facing serious problems. Or, in the words of a favorite kid’s book, CEC had a terrible, horrible, no good, very bad day. Against this backdrop, we continue to pursue our consumer fraud class action against Career Education Corp. and the Western Culinary Institute/Le Cordon Bleu Portland for former culinary students at the Portland campus. The calculation of placement rates is one of the major issues in our case.

I’ll be interested to see what else comes out from these investigations. Regardless of what else comes out, we’re getting ready to complete depositions and get ready for trial.

Update: NPR did a story two days ago. Access it here

Updated: 9 Nov 2011

Teresa N. Stoker says

Great job as usual, David.

David Sugerman says

Aw shucks ma'am, it was nothing.

David Sugerman says

Ms. Stoker-
I understand that you and Mr. Sugerman go back a ways. Frankly, I find it hard to believe that he has friends, but, well, to each her own, I guess. I make this modest request for all of us who must put up with him. You do realize that any favorable comments--even from old friends--swell his head? He becomes almost insufferable. So if you're going to say anything at all, please add something critical. Please.

I remain ever your humble servant,
The Editor

Bobby says

Hi David,

Yes, let's get those thugs!

I am a victim of CEC's devious & fraudulent practices as well. I am wondering if there is anyway I can take action against them? Wish I were in Portland but sadly I live in Los Angeles.



Kath says

I worked for a CEC school for a year following college. I needed the health insurance. My experience in for-profit education is one of the reasons I chose to pursue a career in non-profit law. I'll probably never be rich, but I sleep much better at night. Many other former employees feel the same way. Best of luck with your suit.

Kara Smith says

Hello-I just became informed about this class action lawsuit and am a former employee of CEC Aiuonline and a graduate of a masters degree in which I have had no help getting placement for the school and no employers want to hire me unless I have 5-10 years experience. I have been out of work for over a year and half after having been wrongfully fired. I have gone to mediation over this but wanted to go to trial...was talked out of it so its a done deal now. I also had stock in the company but no more. I worked from 2006-2010.

TAS says

If no one that worked for CEC is willing to testify that they knew about the decepetive recruitment practices, is it really going to help to sue them? I went to a CEC school, now have a $350,000 (yes, that says 350) private loan debt for the loans they led me to believe had federal loan protections. I was involved in a class action where, of course, CEC refused to admit any wrong doing and I got a measly $7,000.00 for a life of ruined credit and no hope of any way out...

Former CEC empolyees need to man up and do the right thing if it actually weights on their conscience.

David Sugerman says

TAS-Thanks for your comment. We are all ears and interested in hearing from and talking to former CEC employees. I imagine there are a lot out there and more and more everyday. These cases are tough, but we remain committed.


David Sugerman says

I suggest you talk to a lawyer in San Antonio who specializes in handling consumer fraud cases.


Anonmous says

CTU online is a fraud? The education provided for the same price of higher institution of education is completely below college level. "more like a 10th grade level education"! With there predatory lending scheme, and sales tactics? They lure in there prey, with just about any information regarding a better future and a better job? The only real concern, is that CTU online likes to use innocent people's credit and FAFSA funding to borrow from multiple lenders, a dollar here and a dollar there to accumulate projected amount need from each student to pay stiff salary expenses to fake and fraudulent instructors and teachers? Once the lenders and CTU online reach a limit of how much they could ciphen from financial institutions is when they stop and bump you out of school! Knowingly that wouldn't be able to pay that money back, without a degree and job....Now your stuck with a debt, and no education, and the courses you took are even transferable to a local junior college? I already took my print of classes to a advisor at a local junior college and they couldn't get none of the courses transfered over, because the courses are below standards. I have been in debt since 2006 and yet i am paying for something i dont have, can't use, or get back into CTU online to finish school and graduate? FRAUD FRAUD FRAUD...........They are not ripping innocent people off, they are robbing everyone blind? Anyone that has a the same problem with CTU online - reply at buying1 @ and let's get together and fight what's right and get these clowns.....They know exactly what they are doing, so did carrington college? CLASS ACT LAWSUIT

Duayne Howard says

I graduated from LCB Los Angeles in 2013 with the false claim that I would make 60k to 75k as a pastry chef as well. I haven't been able to work in the industry since 2014 because no one will hire me. I want to sue these assholes; is it too late? Have any L.A. attorney references?

David Sugerman says

I don’t know whether you’re too late in CA. You might try Ray Gallo who is up in the Bay Area. He’s taken on LCB in CA in the past.

jeff says

Colorado Technical University is a accredited for-profit college with both online courses and physical locations in CO, offering Bachelor’s and Master’s degrees. Their parent company, Career Education Corp., has recently paid out $10M in a settlement concerning allegations of falsified job placement practices, and deceiving students about accreditation.
'Technical' Problems While enjoying a wealth of students from around the country, Colorado Technical University has also come under nationwide scrutiny for a series of complaints, lawsuits, and fraud reports that include alleged incidents of the following:

• Refusal of access to transcripts
• Fabricated charges in excess of $4k, with no available contact for recourse or appeal.
• Deception with regard to career potentials and job placement programs.
• Circular bureaucratic transfer being used to deter students from resolving false charges.
• Students receiving poor or no customer service.
• Failed promises of guidance from a advisor
• Deceptive recruiting tactics, misrepresent of job placement rates and have high rates of student loan default and student withdrawal.
• Student debts being sold to multiple collection agencies.
• Abuse of US veterans and VA loan programs.
• Predatory sales practices.

Not once did the school ever bother to ask for a transcript, but yet on there website and enrollment catalog? It states that if student does not provide this information, that the student would be withdrawn from school by the second class session? So how was i able to continue class for almost a whole year? Because, they acted as a recruitment and profit mill and more!

I understand where the school is coming from, they lied and used deceptive tactics to lure me into signing a attestation form that is incorrect and untrue? And on the attestation form itself says it's invalid if the form is found UNTRUE? Now, you should why would they ask me to sign up again in 2008 using the same fraudulent documents....I have been dealing with these crooks since 2006!

My question is that, why was the enrollment advisor, and registrar to eager to enroll me without even asking for high school transcript? 
Even after i specifically told that i never graduated from high school, and they told me that a diploma was needed and that all i needed to do was sign my application and a attestation form stating i went to high school and not graduated? Deception and lies, thats why? And they tried again after a few years........

The school ombudsman keeps using the fraudulent attestation obtained by false prentenses and deception over and over again to deny my discharge for a education or debt that i should of never been in the first place.

Colorado Technical University online is owned and operated by Career Education Corps.

This company is committing school fraud, like a mill.....................

VIctim Of CTU ONLINE says

Career Education Corps - Also owns and operates (Colorado Technical University Online) Folks! I got a call from a telemarketer in 2005 on a cold day from a sales rep, begging, and bugging me to enroll into a university for a Bachelors Degree in Criminal Justice, of all career fields - Right! I never graduated from high school, so therefore i did not meet the requirements of the Department of Education for funding or university level studies? The school, used deceptive tactics, forgery on many incidents, illegal (ATTESTATION FORMS), fraudulent forms that are not correct and false, to sign me up only to obtain money under false pretenses from the department of education! Well the department of education does not find any wrong doing, since they are in on the scam? Career Education Corps has many employee;s in many offices to offset the decision of any claim? CTU used fraudulent forms to borrow money against my name, in the amount of two years of school in less than six months of time. Yet the loan service GREAT LAKES does not see it after all the proof i slap them with against there those rosy cheeks. Basically it;s a one way road and once they have lied, and defruaded you good luck doing a u turn.....Career Education Corps is the parent company, they use school likes CTU online, Alliance, and others as a tool to obtain funding and provide crap of a education for the money that take or vacuum from the public! They have employees that are participants of this crime and scheme that work for loan services that handles all the debt and defaulted loans, and moles that work for the Department of Education! Basically your talking to yourself at some point, Its been over a decade now and i keep getting the same answer?

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