Corinthian Colleges Will Pay $6.5-Million to Settle California Lawsuit

August 01, 2007

Corinthian Colleges Inc. has agreed to pay $6.5-million to avoid a lawsuit by the State of California, whose attorney general has spent three years investigating whether the company’s colleges misled students about job-placement rates and career opportunities after they graduated.

The settlement, which contains no admission of wrongdoing by Corinthian, comes weeks after the attorney general’s office announced that it was preparing to sue the company.

The lawsuit, along with the settlement resolving it, was filed on Tuesday in a state court in Los Angeles by the attorney general, Edmund G. Brown Jr. In a news release, Mr. Brown said the settlement “provides a measure of justice and fair restitution” to students at the company’s Corinthian Schools Inc. and Titan Schools institutions. “It also commits Corinthian to reforming its practices for the future.”

In the fall of 2006, company officials acknowledged that the California investigation had been expanded.

Most of the money in the settlement — $5.8-million — will serve as restitution to students, in the form of refunds ($4.3-million) and debt cancellation ($1.5-million). The settlement also requires the company to pay $500,000 in civil penalties and $200,000 in costs.

According to today’s Los Angeles Times, as part of the settlement Corinthian is barred for the next 18 months from offering specific courses at nine of its California campuses.

In a written statement released this morning, Corinthian’s chief executive officer, Jack Massimino, said: “While we disagree with the attorney general’s conclusions, we are pleased to have this matter behind us.” —Goldie Blumenstyk