Corinthian Colleges, Inc. d/b/a Everest College, WyoTech, and Heald College
Documents in this case
Case summary
The Bureau sued for-profit college chain Corinthian Colleges, Inc. for its illegal predatory lending scheme. The Bureau alleges that Corinthian lured tens of thousands of students to take out private loans to cover expensive tuition costs by advertising bogus job prospects and career services. Corinthian then used illegal debt collection tactics to strong-arm students into paying back those loans while still in school.
At the request of the CFPB, a federal court entered a final default judgment against Corinthian Colleges, Inc., resolving a lawsuit filed by the CFPB in September 2014. The court ordered that Corinthian was liable for more than $530 million and prohibited the company from engaging in future misconduct.
Complaint ()
PDF of this document (39 pages)
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UNITED STATES DISTRICT COURT NORTHERN DISTRICT OF ILLINOIS EASTERN DIVISION
CONSUMER FINANCIAL PROTECTION BUREAU, Plaintiff, v.
CORINTHIAN COLLEGES, INC. d/b/a Everest College, Everest Institute, Everest University, Everest University Online, Everest College Phoenix, Everest College Online, WyoTech, and Heald College, Defendant.
) ) ) ) Case No. 14-7194 ) ) ) ) ) ) ) )
COMPLAINT FOR PERMANENT INJUNCTION AND OTHER RELIEF Plaintiff, the Consumer Financial Protection Bureau (“Bureau”), brings this action against Defendant Corinthian Colleges, Inc. referred to herein as “Corinthian” and alleges the following:
INTRODUCTION 1.
Corinthian is a publicly-traded, for-profit school that marketed itself as a provider of career training. Corinthian’s business model is predicated on convincing consumers to obtain student financial aid to pay the high cost of tuition to enroll in its programs. Because most of its prospective students could not afford to pay tuition outof-pocket, from July 2011 through March 2014, students took out nearly 130,000 private student loans to pay Corinthian’s tuition and fees. The total outstanding balance of these loans is in excess of $568.7 million. Case: 1:14-cv-07194 Document #: 1 Filed: 09/16/14 Page 1 of 39 PageID #:1
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2.
Since at least July 2011, it has been Corinthian’s practice to induce prospective students to incur the loan obligations necessary to enroll by promising career training and graduate employment opportunities of the type that would enable a consumer to repay his or her debt upon completing Corinthian’s program. As detailed below, Corinthian induced students to enroll in its programs through false and misleading representations about its graduates’ career opportunities, including representations suggesting Corinthian would provide assistance in helping students find a job, and that students were likely to obtain a permanent job upon graduation. 3.
Corinthian falsely inflated its job placement statistics to induce students to enroll and to maintain its accreditation. Among other deceptive tactics, Corinthian defined a “placement” as any job that lasted one day, with the promise of a second day; paid employers to temporarily hire graduates from Corinthian schools; falsified placement information; and provided meager career services, and virtually no career services to graduates that Corinthian could already record as being placed. 4.
Prospective students received counseling from Corinthian admissions and financial aid staff concerning the value of a Corinthian education and the options available to them to pay the cost of tuition. Corinthian’s staff was instructed to, and did, seek to cultivate relationships of trust with these prospective students, and assuage any concerns they may have had about the affordability of a Corinthian education and their ability to repay the student loans needed to finance it. 5.
In internal communications, Corinthian described its prospective student population as individuals who have “low self-esteem” and “[f]ew people in their lives who care about them”; who are “isolated,” “stuck, unable to see and plan well for Case: 1:14-cv-07194 Document #: 1 Filed: 09/16/14 Page 2 of 39 PageID #:2
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future”; and “impatient, [and] want quick solutions.” Corinthian aggressively recruited these consumers, including through persistent telemarketing and subjecting consumers who visited its campuses to high-pressure sales efforts. 6.
Corinthian referred internally to its students as having “[m]inimal to nonexistent understanding of basic financial concepts,” as well as poor or no credit history. Corinthian assisted these students in applying for federal financial aid, but even with the maximum amount of available federal aid, many prospective Corinthian students were not able to afford Corinthian’s tuition. Corinthian referred to this shortfall as a “funding gap.”
7.
Rather than reduce tuition to eliminate this gap, Corinthian marketed and promoted private student loans, known as Genesis loans, to its students. During the time period material to this complaint, Corinthian represented to its students that the Genesis loans were made by an independent third-party entity and that Corinthian did not have a financial interest in the loans.
8.
Contrary to Corinthian’s representations, Corinthian did have an interest in the Genesis loans. At different times during the period July 21, 2011 to the present, Corinthian has been obligated to purchase all such loans immediately after origination, or all such loans on which a payment is more than 90 days past due. 9.
Corinthian took aggressive action to collect in-school payments on the Genesis loans as soon as they become past due, and Corinthian’s campus staff members received bonuses based in part on their success in collecting such past-due payments from students. Corinthian’s efforts to collect such payments included pulling students Case: 1:14-cv-07194 Document #: 1 Filed: 09/16/14 Page 3 of 39 PageID #:3
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out of class, preventing students from attending and registering for class, and terminating students’ computer access.
10.
Despite its aggressive collection efforts, to date, more than 60% of students with a Genesis loan have defaulted on that loan within three years. 11.
When Corinthian marketed, promoted, and facilitated these student loans, Corinthian expected that most student-borrowers would default. 12.
Despite the high default rate, Corinthian marketed, promoted, and facilitated the Genesis loan program because it could not rely solely on federal funding for 100% of its revenue. Federal law requires that no more than 90% of its revenue may come from federal financial aid provided under Title IV of the Higher Education Act of 1965, 20 U.S.C. §§ 1070 et seq. (Title IV aid). Every Genesis loan dollar that Corinthian induced its students to borrow, in effect, allowed Corinthian to receive up to an additional nine dollars in Title IV aid. As a result, Corinthian had strong financial incentives to induce its students into taking out Genesis loans, even given students borrowers’ high default rates.
13.
Because Corinthian deceptively and unfairly induced students to incur significant debt, and because Corinthian took illegal aggressive action to collect on that debt, the Bureau brings this action to stop these practices and make Corinthian’s consumers whole.
14.
On July 3, 2014, Corinthian and its wholly- and partially-owned subsidiaries entered into an Operating Agreement with the U.S. Department of Education (“Department”).
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15.
Corinthian entered into the Operating Agreement after the Department’s Federal Student Aid office placed Corinthian on Heightened Cash Monitoring on June 12, 2014. This required Corinthian to wait 21 days after submitting student enrollment data to receive Title IV funds. The Department placed Corinthian on heightened oversight after Corinthian failed to provide the Department with satisfactory information regarding Corinthian’s job placement data. 16.
Per the terms of the Operating Agreement, Corinthian has put a majority of its campuses up for sale and will close the remaining campuses. Corinthian further disclosed that for any school designated for sale, Corinthian “will seek to reach definitive sale agreements … within six months.”
17.
The Operating Agreement requires Corinthian to enter into an agreement with an independent monitor who will report to the Department and have full access to Corinthian’s personnel, financial forecasts, and cash receipts. 18.
On or about July 18, 2014, the independent monitor was appointed. 19.
The Operating Agreement also states that Corinthian and the Department “will work together to establish a reserve fund” of not less than $30 million to be used exclusively for student refunds. To date, no reserve fund has been established. 20.
On August 20, 2014, Corinthian sold virtually all of the Genesis loan notes that it owned, totaling approximately 170,000 loans with a face value of $505 million, to a third-party company for $19 million.
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NATURE OF ACTION 21.
The Bureau brings this action under sections 1031(a), 1036(a), 1054, and 1055 of the Consumer Financial Protection Act of 2010 (“CFPA”), 12 U.S.C. §§ 5531(a), 5536(a), 5564, and 5565, for Corinthian’s violations, from July 21, 2011 through the present, of sections 1031(a) and 1036(a)(1) of the CFPA, which prohibit unfair, deceptive, and abusive acts and practices, as well as for Corinthian’s violations of the Fair Debt Collection Practices Act (“FDCPA”), 15 U.S.C. § 1692d. JURISDICTION AND VENUE 22.
This Court has subject matter jurisdiction over this action because it is “brought under Federal consumer financial law,” 12 U.S.C. § 5565(a)(1), presents a federal question, 28 U.S.C. § 1331, and is brought by an agency of the United States, 28 U.S.C. § 1345.
23.
Venue is proper in this district because Corinthian maintains campuses and does business in the Northern District of Illinois. 28 U.S.C. § 1391(b); 12 U.S.C. § 5564(f).
PLAINTIFF 24.
The Bureau is an independent agency of the United States charged with regulating the offering and provision of consumer financial products or services under federal consumer financial laws. 12 U.S.C. § 5491(a). The Bureau has independent litigating authority to commence civil actions to enforce federal consumer financial laws, including the CFPA and the FDCPA. 12 U.S.C. §§ 5564(a)-(b); 5481(12), (14). Case: 1:14-cv-07194 Document #: 1 Filed: 09/16/14 Page 6 of 39 PageID #:6
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DEFENDANT 25.
Corinthian is one of the largest for-profit, post-secondary education companies in the United States. With more than 100 school campuses, Corinthian operates schools under the following names: Everest College, Everest Institute, Everest University Online, Everest University, Everest College Phoenix, Heald College, and WyoTech.
26.
Corinthian Colleges, Inc. is headquartered in Santa Ana, California and, during times material to this complaint, has transacted and continues to transact business in the Northern District of Illinois. Corinthian operates five Everest College campuses in this district: Bedford Park, Burr Ridge, Melrose Park, Merrionette Park, and Skokie.
27.
Corinthian engaged in promoting, marketing, offering, and providing “consumer financial products or services,” within the meaning of the CFPA, 12 U.S.C. § 5481(5). Specifically, Corinthian participated in designing, funding, promoting, and marketing the Genesis private loan program and facilitating students’ application for Genesis loans that were made available to its prospective and current students to pay a portion of the tuition and fees that Corinthian charged students to enroll. 28.
Corinthian brokered loans to its students by, among other things, serving as the single point of contact that introduced the students to the Genesis loan program, assisted them in completing the application for a Genesis loan, and submitted the application to the loan originator. Corinthian received a benefit in arranging such loans, which were exclusively provided to Corinthian students. Case: 1:14-cv-07194 Document #: 1 Filed: 09/16/14 Page 7 of 39 PageID #:7
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29.
Corinthian provided financial advisory services to students and prospective students regarding the payment of tuition and fees required to enroll in and attend Corinthian’s schools. Corinthian, through its financial aid staff, provided substantial advice and assistance regarding private student loans and federal financial aid to students enrolling in its schools. This included advising students on what financial aid and loan programs were available to them to pay for school, assisting students in completing the necessary applications and paperwork, and ensuring that such applications and paperwork were completed to ensure receipt of funds. 30.
Because Corinthian engages in offering or providing consumer financial products and services as described above, Corinthian is a “covered person” under the CFPA, 12 U.S.C. § 5481(6).
FACTUAL BACKGROUND
31.
Corinthian depends upon tuition and fees to generate revenue. 32.
The amount of tuition and fees Corinthian charged varied among Corinthian’s schools and educational programs. In 2013, tuition and fees to earn a diploma from a Corinthian school, typically an 8 to 12 month program, were between $13,100 and $21,338. In the same year, the tuition and fees for an associate’s degree, which is a 24 month program, were between $33,120 and $42,820. The tuition and fees for a bachelor’s degree for the same time period were between $60,096 and $75,384. 33.
Most students attending Corinthian’s schools are low-income, or the first in their families to seek an education beyond a high school diploma. Many Corinthian students struggle economically. In 2012, Corinthian reported that approximately 85% percent of its students had family incomes of less than $45,000 a year. A 2011 survey of Case: 1:14-cv-07194 Document #: 1 Filed: 09/16/14 Page 8 of 39 PageID #:8
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its campus operations indicated that over 57% of Corinthian’s student population had a household income of $19,000 or less, and 35% of Corinthian’s student population had a household income of less than $10,000.
34.
Students attending Corinthian’s schools could very rarely pay for the school’s tuition out-of-pocket. Students relied on private loans and aid provided by the federal government under Title IV to pay Corinthian’s tuition and fees. 35.
In its Annual Report Form 10-K for fiscal year 2013, filed with the United States Securities and Exchange Commission, Corinthian reported that its operations in the United States derived 84.8% of net revenue from Title IV aid programs. 36. Under Title IV, a for-profit company that owns a school receiving federal student aid funds is subject to the “90/10 rule,” 34 C.F.R. § 668.14(b)(16). Under this rule, a for-profit college must not receive more than 90% of its net revenue from Title IV aid. A minimum of 10% of such an entity’s revenue must come from non-Title IV aid, such non-Title IV federal aid, state aid, ordinary tuition payments from students, or as private student loans. Non-Title IV federal aid, which is not counted toward the 90% limit, includes educational benefits available to service members and veterans from the U.S. Department of Defense or the U.S. Department of Veterans Affairs. Schools that do not comply with the “90/10” rule risk losing their eligibility to participate in federal student aid programs.
37.
To be eligible for Title IV aid, a for-profit company that owns a school must be accredited by an accrediting agency recognized by the U.S. Department of Education. 34 C.F.R. § 600.5.
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38.
In order to maintain its accreditation, Corinthian must meet any accrediting agency’s minimum standards in several areas including job placement and graduation rates. Corinthian must report these rates to both its accreditors and its prospective students.
Corinthian Created an Artificial “Funding Gap” to Increase Students’ Need for Private Student Loans.
39. In order to comply with the 90/10 rule, Corinthian made sure that the cost of attending its schools was high enough that students would not be able to pay solely through using Title IV aid.
40. In September 2011, Corinthian’s CEO distributed a presentation to his executive team, describing efforts by Corinthian to meet the requirements of the 90/10 rule by instituting “above market price increases to create ‘funding gaps.’” By increasing tuition, Corinthian caused students, who otherwise would have been able to pay for the entire cost of tuition through Title IV aid, to take out private student loans in order to maintain 90/10 compliance. Regardless of whether students were able to repay the private student loans, Corinthian would profit from the increased availability of Title IV monies.
41.
In or about Spring 2011, for example, Corinthian increased tuition at Heald College by 14% to ensure that the school received additional non-Title IV funds in order to meet 90/10 requirements.
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Corinthian Used Misrepresentations About Likely Student Outcomes to Induce Students to Incur Debt and Enroll.
42.
Corinthian induced students to take out private student loans to enable them to enroll at its schools through a series of misrepresentations about the likely employment outcomes for Corinthian students.
43.
Internally, Corinthian emphasized that its admissions representatives were salespeople. A training manual for Corinthian’s Directors of Admissions instructed them to look for “sales” experience when hiring admissions representatives. A March 2012 training for admissions representatives trained them on “closing the sale” and instructed them that “all interactions with a customer are sales interactions.” 44.
Rather than instructing Corinthian’s admissions representatives to help prospective students find appropriate educational options, this training advised admissions representatives: “As our customer seeks to learn more about our college, your role will be more to bring about agreement that Everest is the right choice for him or her.”
45.
Corinthian trained its admissions representatives to pressure prospective students who were parents by telling them that enrolling in a program was their best or only chance to help their children.
46.
Corinthian also recruited students by falsely implying urgency in the enrollment process by, for example, training admissions representatives to falsely tell prospective students that seats might not be available in the future. 47.
Corinthian admissions representatives put prospective students under constant pressure. At the Everest College in Melrose Park, Illinois, Corinthian trained Case: 1:14-cv-07194 Document #: 1 Filed: 09/16/14 Page 11 of 39 PageID #:11
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admissions representatives not to let prospective students leave their offices until they had enrolled in a Corinthian program.
48.
At the Everest College Burr Ridge, Illinois campus, managers instructed admissions representatives to keep calling the same prospective student until that prospective student explicitly told them not to call back again. Corinthian Promised a Career, But at Best, Only Helped Graduates Find Temporary Employment.
49.
While Corinthian promoted its schools to consumers as providing a “career-focused” education, Corinthian and its schools deliberately overstated the likelihood that students would be able to find a job that would enable them to pay off their loans. Corinthian and its schools promised “career training” and promoted Corinthian’s “lifetime career services” and successful “career placement” rate. 50.
For example, in promoting Heald College, Corinthian advertised, “[y]our education might mean the difference between a rewarding career or just another job.” Similarly, Everest Colleges, Universities, and Institutes advertised on its websites that it provided students “[a] better career, a better life, a better way to get there.” 51.
But while Corinthian promoted “career” opportunities, its placement policies reflected a definition of “career” that does not correspond with that of a reasonable consumer. The “career” Corinthian schools promised is in fact just any job that a Corinthian graduate worked at for at least one day. 52.
Corinthian’s Policy on Graduate Employment, effective since at least January 2010, states, “a graduate shall be counted as employed only if… The employment is for a reasonable period of time, is based on program objectives, and can be considered sustainable (e.g., not a single day of employment).” Case: 1:14-cv-07194 Document #: 1 Filed: 09/16/14 Page 12 of 39 PageID #:12
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53.
Corinthian maintained a distinct policy for graduates who became employed by an “employment agency that finds employees to fill short-term temporary jobs.” As Corinthian’s policy explained, these agencies may offer “positions where the position starts out as a temporary job, but, could become permanent if the employer decides to hire the candidate.” For an agency employment to be counted for reporting purposes, Corinthian required that “a graduate must have actually worked on an assignment (e.g., a paid orientation does not count as an employment unless the graduate works for an additional day in an actual assignment).” 54.
Corinthian’s written policy contained a broad exception to the two-day employment requirement. In bold-faced type, Corinthian’s employment policy states, “In the event a graduate is hired for an ongoing (sustainable) position and does not return after one (1) day, this employment can remain in the system.” 55.
So when Corinthian advertises on its website, www.mycareercounts.org/outcomes, “In 2012, over 69 percent of our 38,721 graduates found careers in their field of study,” this really meant that 69 percent of Corinthian graduates found a job that lasted as little as one day. 56.
In contrast to Corinthian’s definition, a reasonable consumer would understand the promise of a career—consistent with its dictionary definition—to mean “a job or profession that someone does for a long time.” 57.
Corinthian’s promise of a “career” was material to consumers’ decision to enroll in Corinthian and to take out a private student loan.
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Corinthian Falsified its Job Placement Rate.
58.
In order to maintain accreditation and eligibility for Title IV aid, Corinthian must meet any accrediting agency’s job placement minimum standards and report these rates to its accreditors and to prospective students. 59.
In addition to its misleading promotion of career opportunity, Corinthian has a history of falsely representing its job placement rate in its marketing materials and disclosures provided to consumers, and in documents submitted to accreditors. 60.
Corinthian promoted its career-focused education and job placement rate to induce students to enroll at its schools and take out Genesis loans. Corinthian attempted to bolster the credibility of its job placement claims by trumpeting, “In 2006, we formed a corporate verification team that confirms the accuracy of our job placement statistics …” Yet Corinthian continued to misrepresent its job placement rates. 61.
At Everest College’s Decatur, Georgia campus, school employees created fictitious employers and reported students as having been placed with those fake employers. The school employees then had friends falsely verify the employment. This resulted in increasing placement rates by as much as 37% per program on reports that Corinthian gave to accreditors in 2009 and 2010. 62.
In another example, at Everest Institute’s Mid-Cities, Texas campus in 2010, two career services employees coordinated with employers to improperly verify 251 placements, only 7 of which were confirmed upon later review. 63.
At the Everest Institute’s Hialeah, Florida campus in 2010, Corinthian had to lower the campus-wide placement rate that it had reported to its accreditor by 6.6 Case: 1:14-cv-07194 Document #: 1 Filed: 09/16/14 Page 14 of 39 PageID #:14
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percentage points because it had falsely reported that graduates had been placed when, in fact, they remained unemployed.
64.
In April 2011, Corinthian management instructed an employee at the Everest Institute’s Jonesboro, Georgia campus to list 70 unemployed graduates as employed for a report that Corinthian sent to its accreditor. Days later, after the report was sent, that employee was directed to change those 70 graduates’ status back to unemployed.
65.
In the spring of 2012, a manager at WyoTech’s Long Beach, California campus reported 366 self-employment placements after graduation, while most other WyoTech campuses had only three or four such placements during the same time period.
66.
Corinthian’s employees reported inaccurate job placements so often that when, in May 2012, a senior employee told the West Division President that the Everest College’s Renton, Washington campus would fail an audit for inaccurate placement records, the West Division President argued that the campus was being unfairly singled out. She wrote, “[I]f this is going to be how stringent we are, there’s going to be a ton of failures. These people [Corinthian’s employees responsible for verifying placements] don’t know what they are doing.”
67.
Corinthian’s senior management knew that Corinthian’s job placement representations were inaccurate.
68.
In September 2011, for example, Corinthian’s chief executive officer acknowledged, “we have placement a compliance problem [sic] now and need to get back into compliance.”
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69.
Yet, despite the recognition of non-compliance, a March 2012 internal audit at Everest College’s San Francisco, California campus found that Corinthian could not verify 53% of its reported placements.
70.
Also in March 2012, the former director of career services at Everest College’s Milwaukee, Wisconsin campus, in an email titled “The Integrity of Career Services Management,” informed Everest College’s corporate office that the Milwaukee campus was “fudging the numbers, with the approval of [the] Director of Career Services.” When the former employee raised questions after the placement rate increased from 6% to 33% in a short period of time, Corinthian terminated her employment.
71.
In August 2012, when an accreditor conducted a sample review of job placement rates for Everest College’s Reseda, California campus, it found Corinthian was unable to verify 30% of its reported placements.
To Inflate its Placement Statistics, Corinthian Falsely Classified Graduates as Unemployable.
72.
Not only did Corinthian falsely inflate the number of graduates it placed, it also deflated the number of graduates who were “available for employment.” 73.
A graduate was considered unavailable for employment, and therefore removed from the employment rate calculation, for reason of death, incarceration, active military service deployment, the onset of a medical condition that prevents employment, continuing education, or because the student was an international student who returned to his or her country of origin.
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74.
According to Corinthian’s Policy on Graduate Employment, a graduate’s incarceration could be documented with publicly-available documents such as “a copy of the arrest record, police report or booking/intake documentation… [or] a warrant that could lead to possible incarceration would be considered acceptable documentation.” 75.
This verification policy enabled Corinthian employees to search the Internet for graduates’ names for any purported evidence of incarceration. When Corinthian employees were able to match a graduate’s name to some evidence of possible incarceration – irrespective of whether the name match was, in fact, an identity match – in some cases, Corinthian removed that graduate from the employment rate calculation.
Corinthian Inflated its Job Placement Statistics by Paying Employers to Temporarily Hire its Graduates.
76.
Corinthian further inflated the job placement rate that it promoted to consumers and on which its accreditation was based by paying employers to temporarily hire its graduates.
77.
In 2011, at Everest Institute’s Brighton, Massachusetts campus, the Campus President and Director of Career Services organized a scheme to pay a company to employ graduates for two days at a health fair. The school then counted those students as “placed,” which inflated placement rates by 8 and 15 percentage points for the relevant programs.
78.
To further inflate the placement numbers it reported to consumers and accreditors, Corinthian engaged in a “pay to place” scheme exemplified by its “Calvary Initiative” (“Initiative”). In or about June 2011, Everest Institute’s Decatur, Georgia campus, which risked losing its accreditation due to low placement rates, started the Case: 1:14-cv-07194 Document #: 1 Filed: 09/16/14 Page 17 of 39 PageID #:17
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Initiative to improve its placement rates. Under the Initiative, Corinthian paid employers $2,000 for each graduate that the employer hired if the employer promised to keep the graduate employed for 30 days.
79.
Corinthian did not inform graduates that their employment was subsidized or that it was temporary.
80.
According to the terms of the Initiative, and consistent with Corinthian’s written policy, a graduate was counted as placed if the graduate worked one day and returned to work for a second day of work. Corinthian counted these jobs as placements, provided that information to accreditors, and included the placements in rates subsequently provided to prospective students.
81.
Corinthian management credited the Initiative and its implementers with placing 307 Decatur graduates, which raised the campus’s placement rate sufficiently to allow it to meet accreditation standards.
82.
Due to the success of the Initiative in improving placement rates, Corinthian implemented similar programs at other campuses, including Everest Institute’s Jonesboro, Georgia campus.
83.
Corinthian management also considered implementing this Initiative at schools in Florida, including its Jacksonville, Miami, Kendall, Hialeah, South Orlando, and North Orlando campuses. Corinthian’s Executive Vice President opposed implementing the Initiative at these Florida campuses, stating that “the potential for negative press in Florida is much higher than it is in Atlanta and while [Corinthian has] put as much positive spin on the approach as we can the detractors will still use the program to detract.”
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Corinthian Deceptively Promoted the Utility of its Career Services.
84.
While marketing and promoting its programs to prospective students, Corinthian falsely promised prospective students that they would receive career assistance while enrolled, and lifetime career assistance after graduation. Corinthian promoted “career-focused education” and career services that were available “whenever you need help finding a job, or want some advice on improving your resume or interviewing skills.” Corinthian further promotes that it “not only help[s] you find a job after you graduate, we help you find a job any time you need one, throughout your career… From graduation to retirement, we’ll help you advance your career whenever you need it.”
85.
Contrary to Corinthian’s representations that it would provide “career assistance for life,” Corinthian schools did not provide meaningful career assistance while students were in school or after graduation. 86.
Corinthian’s limited career services included distributing job postings from Craigslist. Students often had trouble contacting anyone in the career services office or getting any meaningful support.
87.
Once a student was initially placed, and Corinthian could report the placement to its accreditors, Corinthian refused to provide further career assistance to graduates. This was particularly problematic in light of Corinthian’s policy of finding students temporary employment to pad its placement statistics. 88.
The career services Corinthian promised to provide were an important selling point for the school, which emphasized its nationwide network of employers and lifetime support for graduates. For prospective students incurring significant debt, Case: 1:14-cv-07194 Document #: 1 Filed: 09/16/14 Page 19 of 39 PageID #:19
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including Genesis loans, for the promise of a career, Corinthian’s representations about its career services were material.
Corinthian Implemented the Genesis Loan Program to Fill the “Funding Gap” That Corinthian Created.
89.
Before 2008, third-party providers of private education loans offered Corinthian students the opportunity to apply for loans to fund their educational expenses.
90.
In or about January 2008, these third-party lenders ceased making private student loans available to students who presented high credits risks (i.e. subprime borrowers), such as those enrolled at institutions owned by Corinthian. 91.
Rather than reduce tuition in response to the decision of these third-party lenders not to make funds available to subprime student borrowers, Corinthian launched its own institutional loan program – the Genesis Loan Program – which it developed together with a third-party entity (“Company A”) already engaged in financing and servicing “funding gap” loans for other educational institutions. 92.
Under the Genesis loan program, pursuant to written agreements, Corinthian marketed the loan and a partner bank acted as the originator for each Genesis loan, disbursing the loan funds to Corinthian after each student’s loan application was approved. Shortly after a student’s loan funds were disbursed to Corinthian on the student’s behalf, Company A purchased the loans from the bank. Corinthian then paid a “discount fee” to Company A equal to 50% of the face value of the loans that Company A purchased from the bank.
93.
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from Company A. Corinthian paid Company A the face value of the loans minus any discount fee that it had already paid and Company A operated as the servicer of the loans.
94.
Accordingly, from in or about 2008 through approximately July 2011, Corinthian knew that it would own all Genesis loans that its students took out within a period of approximately two weeks after the loan funds were disbursed. 95.
The lending criteria applicable to Corinthian students’ applications for Genesis loans were developed jointly by Corinthian, Company A, and the originating bank.
96.
In 2011, the third-party lenders who had previously made loans to Corinthian’s students that were considered prime borrowers ceased lending to Corinthian students altogether.
97.
In June 2011, Corinthian entered into an agreement with a private lending group (Company B) and changed the Genesis Loan program. Corinthian launched this version of the loan program in or about August 2011. Company B assumed the role of intermediary between Corinthian and the bank. As in the original version of the program, Corinthian marketed the loan and a partner bank originated loans to Corinthian students and disbursed the loan funds to Corinthian on behalf of the student borrower. Company B then purchased the loans from the bank, and Corinthian was then required to pay Company B a “discount fee” equal to 50% of the face value of each loan that Company B bought from the bank. Company A continued to service the loans. 98.
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Corinthian to purchase from Company B only the Genesis loans that were more than 90 days delinquent.
99.
From in or about 2011 through the present, Corinthian knew that it would own all Genesis loans that were more than 90 days delinquent in repayment, including those 90 days delinquent on required in-school payments. 100. In or about 2013, Corinthian replaced the Genesis loan program with the EducationPlus loan program. The EducationPlus loan program is similar to the Genesis loan program in that, under the EducationPlus program, Corinthian markets the loan, a partner bank originates the loan, Company A services the loans, and Corinthian buys from Company B all of the loans that are more than 90 days delinquent. Corinthian management and staff often referred to the EducationPlus loan program as the Genesis loan program.
101.
In February 2014, after Company B withdrew from the program, Corinthian reinstated the first iteration of the Genesis loan program, under which Corinthian is obligated to purchase all loans originated. 102.
In or about July 2014, Corinthian ceased offering the Genesis loan program to it- students. In September 2014, Corinthian intends to resume offering Genesis loans to its students.
103.
From July 2011 through March 2014, Corinthian induced nearly 130,000 students to take private student loans through these programs, which are collectively referred to as “Genesis loans.” The total outstanding balance of these loans is in excess of $568.7 million.
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Corinthian’s Financial Aid Staff Promoted Genesis Loans. 104.
During the times relevant to this complaint, Corinthian gave its financial aid planners a training instructing them to make “students believe you are operating with their best interest at heard [sic].” In truth, however, Corinthian’s overriding goal was to enroll students. The same manual instructed staff to “build trust” with students so that they can “influence [students’] decisions and help them make the right choice for a better life by enrolling in our college.”
105.
At the Everest College’s Burr Ridge, Illinois campus, through the spring of 2012, it was “all about numbers.” Corinthian pressured staff to “close” the deal and enroll as many students as possible.
106.
Corinthian’s current and prospective students were encouraged to, and did, rely on Corinthian’s financial aid staff to act in their interests in connection with the financial aid they applied for and received.
107.
Beginning in approximately March 2008, Corinthian actively marketed, promoted, and offered Genesis loans to its prospective and current students to pay tuition and fees that were not covered by federal aid or other sources. Corinthian’s financial aid staff promoted the loan by introducing the loan to prospective and current students, and by encouraging them to apply for the loan to pay for tuition and fees that were not covered by federal financial aid.
108.
Corinthian staff was actively involved in the Genesis application process with its students. Once the student entered personal information in the electronic application, Corinthian’s financial aid staff filled out the remaining information Case: 1:14-cv-07194 Document #: 1 Filed: 09/16/14 Page 23 of 39 PageID #:23
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including the requested loan amount, verified the information entered by the student, and submitted an application for a credit check on behalf of the borrower. 109.
During the time period material to this complaint, Corinthian also promoted the Genesis loan program through its “Preferred Lender List,” which it published on each of its schools’ websites. In the case of Heald College, for example, this “Preferred Lender List ”advised Corinthian’s prospective and current students that “[a]s a result of current conditions in the credit market, many lenders have ceased making private education loans, or have tightened their credit criteria such that fewer borrowers are qualifying for such loans. The lender listed below [Genesis loan program’s originating bank] has expressed a willingness to make private education loans available to Heald students who meet its eligibility and credit criteria.” 110.
The “Preferred Lender List” for each Corinthian school also stated that “[w]hile we do not promote or endorse this lender, we expect this lender to provide satisfactory customer service and representatives who can assist borrowers to make informed decisions. The lender listed below will work within our processing system and disburse funds to the student’s account quickly using Electronic Funds Transfer.” 111.
During the time period material to this complaint, Corinthian’s “Preferred Lender List” did not inform consumers that Corinthian had an agreement to buy all of the Genesis loans and, consequently, that the student borrowers would shortly owe their debt to Corinthian.
112.
Moreover, Corinthian management misled even its own student finance planners to believe that Corinthian was not involved in funding the Genesis loan program. Management told planners that the Genesis loan was a private loan funded by Case: 1:14-cv-07194 Document #: 1 Filed: 09/16/14 Page 24 of 39 PageID #:24
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a third-party bank. Student finance planners in turn passed this information on to students.
113.
During the time material to this complaint, the Application/Enrollment Agreements provided to students at WyoTech, Heald College, Everest University Online, and Everest College Online did not include any mention of Corinthian’s involvement in the Genesis loan.
114.
Students attending Everest University, Everest College Phoenix, and Everest Institute schools, however, typically received a six-page Application/Enrollment Agreement, which stated:
Third parties who may make private loans to me to finance my education may subsequently sell such loans and related receivables to The School or to an affiliate of The School....[I]f I fail to comply with the terms of any financial assistance made available to me through The School or any other source or any cash payment plan offered to me, in addition to any other remedies available to The School by contract, or under law, the School may take action with respect to my continued enrollment, up to and including suspensions or termination of my enrollment.
115.
Corinthian staff did not review the terms of the Application/Enrollment Agreement with prospective students. Corinthian’s practice of failing to review the terms with the prospective students left the students unaware that their relationship with Corinthian would be not just student-educator, but also borrower-debt collector. 116.
Under the Genesis loan program, nearly all student borrowers were required to make monthly loan payments while attending school. The most common payment plan was called “Plan A,” which required a monthly loan payment while the student was attending school. The interest began accruing after the student left school. Case: 1:14-cv-07194 Document #: 1 Filed: 09/16/14 Page 25 of 39 PageID #:25
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A second plan, known as “Plan B,” did not allow in-school payments, and interest began accruing while the student was enrolled in school. The school’s campus president had to approve any Plan B payment plans.
117.
The interest rates for Genesis loans were typically substantially higher than the interest rate for federal loans. In or about July 2011, the Genesis loan interest rate was 14.9% with an origination fee of 6%. Meanwhile, the interest rate for federal student loans during this time period was 3.4% to 6.8% with an origination fee of 1%. 118.
When the Genesis loan program began using Company B in June 2011, Corinthian continued the practice of concealing from students and most of its financial aid planners that Corinthian had an obligation to buy Genesis loans, in this case, that were more than 90 days delinquent.
Corinthian Used Unfair Harassing Tactics to Collect Past Due Loan Payments.
119.
Pursuant to the terms of the Genesis loans, a loan was delinquent immediately after a borrower was late on a payment for the first time. 120.
Because of its ownership interest in certain Genesis loans, and because of its obligation to purchase other Genesis loans in the event they became more than 90 days delinquent, Corinthian had a financial incentive to collect past-due Genesis loans. Corinthian harassed students to collect past-due loan payments. 121.
Corinthian made it a practice of identifying and tracking those students who were behind in their Genesis loan payments. 122.
At least since 2010 through part of 2013, Company A routinely provided Corinthian with monthly status reports concerning the status of the Genesis loan accounts, including the accounts that were past-due. Case: 1:14-cv-07194 Document #: 1 Filed: 09/16/14 Page 26 of 39 PageID #:26
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123.
Corinthian’s collection policy required school campuses to start the collection process as soon as a Genesis loan account became past-due. 124.
It was Corinthian’s practice to take action to collect loans that were less than 90 days delinquent. Corinthian took aggressive steps to collect these loans on Company B’s behalf so that it would not be required to buy the loans from Company B. 125.
Corinthian prevented student borrowers from attending classes they were currently enrolled in by informing instructors and other staff that these students were past-due on their Genesis loan accounts.
126.
For example, in June 2013, a financial aid assistant instructed staff at Heald College’s San Francisco campus not to allow a student who was over 38 days pastdue on a Genesis loan to “sit in class until she provides a written authorization (Admission Slip) from the Business Office indicating that her [Genesis] account is up to date …”
127.
Similarly, in June 2013, a Director of Student Accounts at Everest College’s Ontario, California campus informed instructors that those students with pastdue Genesis loan accounts were not allowed to attend class: “[B]elow are students with their Genesis accounts being in delinquent [sic]. Student in RED or 40+ days are BLOCKED from attending class until payment is made …” 128.
This collection practice also was also carried out at WyoTech. In an email dated January 10, 2013, the Director of Student Accounts at WyoTech’s Long Beach campus stated that the campus’s Genesis collection practice included a “Director [meeting] with students who are not compliant and have not made their payments as Case: 1:14-cv-07194 Document #: 1 Filed: 09/16/14 Page 27 of 39 PageID #:27
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promised. Give them a deadline and do not allow them back to class until they get current and we have confirmation by Genesis.”
129.
Corinthian also carried out its collection activities at inconvenient times or places for its students. Corinthian routinely pulled students out of class to address pastdue Genesis loan payments.
130.
For example, in an email dated March 11, 2013, the President of Heald College’s Stockton campus was informed of the number of students who were delinquent on their Genesis loan and notified that “All of the unpaid students will be pulled from class this week …”
131.
Similarly, in an email dated October 1, 2011, the President of Everest College’s San Bernardino, California campus instructed the Director of Student Accounts to “ensure that EVERY time a student is pulled…add value as to why this is occurring during class time.”
132.
Pulling students out of class for past-due Genesis loans was such a constant and routine practice at Everest College’s Decatur, Georgia campus during the Spring of 2011 that students and employees referred to one financial aid staff member as the “Grim Reaper.”
133.
Corinthian encouraged staff to continue these collection practices despite students’ concerns. For example, in an email dated November 27, 2012, the President of Heald College’s Modesto, California stated “I understand that instructors and other students do not like the interruptions. But until both departments come up with a better plan that works, we will support the plan we have known.” Case: 1:14-cv-07194 Document #: 1 Filed: 09/16/14 Page 28 of 39 PageID #:28
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134.
A federal work-study student at the Everest College’s City of Industry, California campus reported that she pulled one to five students per classroom per day out of class because they were behind on their Genesis loan payments. 135.
In January 2013, Corinthian employees at Everest College’s Gardena and Alhambra campuses in California both noted in an e-mail that that their best practices for Genesis collections included “pulling student from class.” 136.
Corinthian also prevented students who were past due on their Genesis loan payments from registering for any new classes at Corinthian. For example, Heald College’s Best Practice Manual-Genesis Private Loans, attached to an email dated March 23, 2013 from Heald College’s VP Controller, stated that, in the event of a past-due Genesis account, the staff must take the following action: 1. 31 Days Delinquent—Request to IT to turn off Student’s Computer Access
2. 61 Days Delinquent—The student must meet with Campus President to discuss seriousness of past due status and next steps.
3. 91 Days Delinquent—A letter stating student will not be allowed to register for classes for the next quarter until the account is made current. The student must reaffirm their commitment to pay in writing with a letter to the President.
137.
In addition, Corinthian students who fell behind on their Genesis inschool loan payments often were locked out of the school’s computer system and unable to log onto it.
138.
Corinthian also would prevent students who were overdue on their inschool payments for a certain period of time from receiving their books for the next class or module until they became current on their Genesis loans. Case: 1:14-cv-07194 Document #: 1 Filed: 09/16/14 Page 29 of 39 PageID #:29
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139.
Corinthian also informed students that they could not participate in the graduation ceremony or would have their certificate withheld if they were not current on their Genesis loan in-school payments.
140.
Corinthian pulled students out of class 20 days before graduation and financial aid staff threatened that if students did not become current on their Genesis loans, they could not graduate or start their externships. Some former students stated that Corinthian continues to withhold their certificates because they are unable to make payments on their Genesis loans.
141.
The collection of past-due Genesis in-school loan payments was so important to Corinthian management that Corinthian imposed Genesis collection goals for each school campus.
142.
In or about July 2010, Corinthian also launched an employee bonus plan tied to Genesis loan program collection efforts. 143.
Corinthian’s Senior Director for Credit Risk Management, in an e-mail dated April 5, 2011 to a Student Accounts Collector, explained Corinthian’s focus on collecting the in-school payments from students: “In FY11, the company has changed the focus of Genesis activities. In FY11, each campus is measured on Genesis Collection Metric of in-school activities. The collecting from the students should be a priority over offering forbearances.”
144.
Corinthian management pressured campus level staff to meet the Genesis Collection Metric. For example, the president of Everest College’s Reseda, California campus told the financial aid staff in an e-mail dated May 21, 2012, We all know that we are well off our normal Genesis cash collection for the month of May. This is the worst Case: 1:14-cv-07194 Document #: 1 Filed: 09/16/14 Page 30 of 39 PageID #:30
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month we have ever had. With that I need everyone to pull out the stops. This means that if you do not have a student in front of you I expect you to be getting ahold of students who have not made their payments… This will require you to use social media efforts...; running to classrooms to see if the student is in class; following up with the teacher directly; pulling emergency numbers from the FA files.
145.
Corinthian caused substantial consumer injury with its aggressive collection efforts, including disclosing students’ debt to peers and persons of authority, jeopardizing students’ academic experience, and coercing students into making payments they could not afford.
Corinthian Knew its Students Were Likely to Default on Genesis Loans.
146.
Despite Corinthian’s aggressive collection efforts, the default rate on Genesis loans was consistently extremely high. Corinthian charged off a Genesis loan when the student borrower was more than 270 days delinquent in making required loan payments. Using the period in which Corinthian would charge off a Genesis loan and calculating the default rate based upon the number of student loans, the default rate on Genesis loans was typically greater than 50% for all loans more than two years old, and above 60% for all loans more than three years old. 147.
Corinthian knew of the high default rates for its Genesis loans, and at all times during operation of the Genesis loan program, Corinthian anticipated that the default rates would remain at these high levels. 148.
Moreover, Corinthian knew the characteristics of students who were most likely to default. Corinthian required that “Schools should gather information to discern who is defaulting and why … Internal data includes key information such as high school Case: 1:14-cv-07194 Document #: 1 Filed: 09/16/14 Page 31 of 39 PageID #:31
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attended, program of study, demographics, grades, etc.” Corinthian used this information to identify its highest risk borrowers to target its debt collection efforts. 149.
Student borrowers who defaulted on Genesis loans suffered negative consequences including negative credit reporting, ineligibility for other forms of financing, or eligibility only on less favorable terms than would otherwise have been available.
COUNT I CORINTHIAN’S REPRESENTATIONS AND OMISSIONS REGARDING PROSPECTIVE STUDENTS’ CAREER OPPORTUNITIES VIOLATED THE CFPA’S PROHIBITION OF DECEPTIVE PRACTICES
150.
The allegations in paragraphs 1 through 149 are incorporated here by reference.
151.
Section 1036(a)(1)(B) of the CFPA, 12 U.S.C. § 5536(a)(1)(B), makes it unlawful for a covered person to engage “in any unfair deceptive, or abusive act or practice.” An act or practice is deceptive under the CFPA if (1) there is a misrepresentation or omission of information that is likely to mislead consumers acting reasonably under the circumstances, and (2) that information is material to consumers. 152.
The Genesis loans issued to Corinthian students were consumer financial products.
153.
Corinthian is a “covered person” under the CFPA, 12 U.S.C. § 5481(6). 154.
From at least July 21, 2011 to the present, Corinthian made material misrepresentations or omissions to consumers directly or indirectly, expressly or by implication, regarding its graduates’ career opportunities, including the assistance Case: 1:14-cv-07194 Document #: 1 Filed: 09/16/14 Page 32 of 39 PageID #:32
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Corinthian would provide students to help them find a job, the likelihood a student would receive a job, and the likelihood that job would last for more than one day. 155.
Corinthian made these misrepresentations to induce consumers to incur the private debt necessary to pay Corinthian’s tuition and fees. 156.
Corinthian’s misrepresentations or omissions misled, or were likely to mislead, consumers.
157.
Therefore, Corinthian violated the CFPA’s prohibition on deceptive practices, 12 U.S.C. § 5536(a)(1)(B).
COUNT II
CORINTHIAN’S DEBT COLLECTION PRACTICES VIOLATED THE CFPA’S PROHIBITION OF UNFAIR PRACTICES
158.
The allegations set forth in paragraphs 1 through 149 are incorporated here by reference.
159.
An act or practice is unfair under the CFPA where “(A) the act or practice causes or is likely to cause substantial injury to consumers which is not reasonably avoidable by consumers; and (B) such substantial injury is not outweighed by countervailing benefits to consumers or to competition.” 12 U.S.C. § 5531(c)(1). 160.
From at least July 21, 2011 through the present, Corinthian made misrepresentations or omissions to consumers, directly or indirectly, expressly or by implication, that the Genesis loan program was an independent third-party loan program in which Corinthian did not have a financial interest and upon which Corinthian could not collect.
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161.
From at least July 21, 2011 to the present, Corinthian prevented enrolled students from attending class, pulled students out of class, denied students access to computers, and otherwise prevented enrolled students from completing their course of study, in an effort to collect past-due in-school Genesis loan payments from students. 162.
These practices caused or were likely to cause substantial injury to students because, as a result of Corinthian’s unfair practices, students were denied access to aspects of educational programs for which they already had paid, through loans and other aid, incurring substantial debt in the process. 163.
These practices caused, or were likely to cause, substantial injury to students because Corinthian’s unfair practices, including publicly disclosing debts to fellow students and instructors, caused students to suffer reputational harm and emotional distress.
164.
Consumers could not reasonably avoid the injury caused by Corinthian’s unfair practices.
165.
Consumers’ injury was not outweighed by countervailing benefits to consumers or competition.
166.
Therefore, Corinthian violated the CFPA by engaging in unfair practices, 12 U.S.C. § 5536(a)(1)(B).
COUNT III CORINTHIAN’S DEBT COLLECTION PRACTICES VIOLATED SECTION 806 OF THE FDCPA
167.
The allegations set forth in paragraphs 1 through 149 are incorporated here by reference.
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168.
The Fair Debt Collection Practices Act (“FDCPA”), 15 U.S.C. §§ 1692a et seq., prohibits debt collectors from “engag[ing] in any conduct the natural consequence of which is to harass, oppress, or abuse any person in connection with the collection of a debt.” 15 U.S.C. § 1692d.
169.
The FDCPA’s definition of “debt collector” includes any person “who regularly collects or attempts to collect, directly or indirectly, debts owed or due or asserted to be owed or due another.” 15 U.S.C. § 1692a. 170.
Under the second iteration of the Genesis loan program, from in or about August 2011 through at least 2013, Company B purchased the loans from the originator and sold those loans that became more than 90 days past-due to Corinthian. 171.
Corinthian attempted to collect Company B’s debts even before Corinthian was obligated to, or did, purchase those loans from Company B. 172.
Because it collected debt of another creditor, Company B, or debt that it purchased in default, Corinthian is a “debt collector” within the meaning of the FDCPA. 173.
Corinthian’s collection practices included pulling students out of class, preventing students from attending class, preventing students from registering for class, blocking students’ computer access through school computers, and preventing students from obtaining course materials.
174.
The natural and intended consequence of these practices was to harass, oppress, and abuse students in connection with the collection of debts owed to Company B or to Corinthian.
175.
Therefore, Corinthian’s collection practices violated the FDCPA, 15 U.S.C. § 1692d.
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COUNT IV CORINTHIAN’S DEBT COLLECTION PRACTICES VIOLATED SECTION 805 OF THE FDCPA 176.
The allegations set forth in paragraphs 1 through 149 are incorporated here by reference.
177.
Section 805 of the FDCPA, 15 U.S.C. § 1692c, governs communications in connection with debt collection. Section 805(a) prohibits, without the prior consent of the consumer or the express permission of a court of competent jurisdiction, debt collectors from communicating with a consumer in connection with the collection of any debt at any unusual time or place or a time or place known or which should be known to be inconvenient to the consumer. 15 U.S.C. § 1692c(a)(1). 178.
In connection with the collection of debts, Corinthian communicated with student consumers during class time. Corinthian knew interrupting class could jeopardize the student’s academic performance and disrupt the learning environment, thus inconveniencing the student, and did so without the student consumer’s prior consent, in violation of Section 805(a)(1) of the FDCPA, 15 U.S.C. § 1692c(a)(1).
COUNT V
CORINTHIAN’S DEBT COLLECTION PRACTICES VIOLATED SECTION 805 OF THE FDCPA 179.
The allegations set forth in paragraphs 1 through 149 are incorporated here by reference.
180.
Section 805(b) of the FDCPA prohibits, without the prior consent of the consumer or the express permission of a court of competent jurisdiction, debt collectors from communicating with a consumer in connection with the collection of any debt, Case: 1:14-cv-07194 Document #: 1 Filed: 09/16/14 Page 36 of 39 PageID #:36
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with any person other than a consumer, his attorney, a consumer reporting agency if otherwise permitted by law, the creditor, the attorney of the creditor, or the attorney of the debt collector.
181.
Students and employees observed Corinthian’s aggressive collection efforts of preventing students from attending class, pulling students from class, and blocking their computer access, and were aware these efforts were used to collect other students’ past-due loan payments. Corinthian’s collections efforts disclosed the existence of debts to instructors, classmates and other third parties in violation of Section 805(b) of the FDCPA, 15 U.S.C. § 1692c(b). 182.
Therefore, Corinthian’s collection practices violated section 805 of the FDCPA, 15 U.S.C. § 1692c.
PRAYER FOR RELIEF
Wherefore, the Bureau, pursuant to Sections 1054 and 1055 of the CFPA, 12 U.S.C. §§ 5564 and 5565, and the Court’s power to grant legal or equitable relief, requests that the Court:
a. permanently enjoin Corinthian from committing future violations of the CFPA and the FDCPA;
b. declare that Corinthian engaged in deceptive conduct that induced its students to take out private student loans;
c. order Corinthian to pay restitution to consumers harmed by their unlawful conduct;
d. order Corinthian to pay damages to consumers harmed by their unlawful conduct;
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e. order Corinthian to disgorge all ill-gotten profits; f. order the rescission of all Genesis and EducationPlus loans originated since July 21, 2011;
g. impose civil money penalties against Corinthian; h. order Corinthian to pay the Bureau’s costs incurred in connection with bringing this action; and i. award such other and additional relief as the Court may determine to be just and proper.
Respectfully submitted, Dated: September 16, 2014
Anthony Alexis (DC Bar #384545) Acting Enforcement Director
Ori Lev (DC Bar #452565) Deputy Enforcement Director
Laurel Loomis Rimon (CA Bar #166148) Assistant Deputy Enforcement
Director
/s/ Rina Tucker Harris _________
Rina Tucker Harris (DC Bar #444550) Jonathan B. Engel (MA Bar #664518)
Chandana Kolavala (CA Bar #268355)
Enforcement Attorneys
Consumer Financial Protection Bureau
1700 G Street, NW
Washington, DC 20552
Telephone: (202) 435-9196
Facsimile: (202) 435-7329
E-mail: [email protected]
Thomas Ward (IL Bar # 6291011)
Consumer Financial Protection Bureau
230 South Dearborn Street
Chicago, IL 60604
Telephone: (312) 610-8966
Facsimile: (312) 610-8971 Case: 1:14-cv-07194 Document #: 1 Filed: 09/16/14 Page 38 of 39 PageID #:38
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E-mail: [email protected]
Attorneys for the Consumer Financial Protection Bureau
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Judgment ()
PDF of this document (17 pages)
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UNITED STATES DISTRICT COURT NORTHERN DISTRICT OF ILLINOIS EASTERN DIVISION
Consumer Financial Protection Bureau, Plaintiff, v.
Corinthian Colleges, Inc. d/b/a Everest College, Everest Institute, Everest University, Everest University Online, Everest College Phoenix, Everest College Online, WyoTech, and Heald College, Defendant.
Case No. 1:14-cv-07194
Hon. Gary Feinerman
DEFAULT JUDGMENT AND ORDER Plaintiff, the Consumer Financial Protection Bureau (the “Bureau”) commenced this civil action on September 16, 2014 under sections 1031(a), 1036(a), 1054, and 1055 of the Consumer Financial Protection Act of 2010 (“CFPA”), 12 U.S.C. §§ 5531(a), 5536(a), 5564, and 5565, for violations by Defendant Corinthian Colleges, Inc. (“Corinthian”) of sections 1031(a) and 1036(a)(1) of the CFPA, which prohibit unfair, deceptive, and abusive acts and practices, as well as for Corinthian’s violations of the Fair Debt Collection Practices Act (“FDCPA”), 15 U.S.C. § 1692d. On May 4, 2015, Corinthian filed a petition under chapter 11 of the United States Bankruptcy Code, 11 U.S.C. §§ 101 et seq., with the United States Bankruptcy Court for the District of Delaware. On August 28, 2015, the bankruptcy court entered an order confirming a liquidation plan for Corinthian, which would result, upon its Effective Date, in Corinthian’s dissolution.
On September 11, 2015, Corinthian filed an Answer to the Complaint, and that same day, Corinthian’s counsel filed a motion to withdraw. In their motion to withdraw, Corinthian’s counsel quoted its September 9, 2015 Status Report on Bankruptcy: “As a Case: 1:14-cv-07194 Document #: 58 Filed: 10/27/15 Page 1 of 17 PageID #:1901
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result of the [liquidation plan] and anticipated dissolution of each of the Debtors, Corinthian will not be able to continue its defense of this action beyond filing an Answer” to the Bureau’s Complaint. On September 17, 2015, this Court granted Corinthian’s counsel’s motion to withdraw.
Due to Corinthian’s counsel’s withdrawal and its statement that it would not be able to continue its defense of the action, the Bureau filed pursuant to Fed. R. Civ. P. 55(a) for an entry of default against Corinthian on October 6, 2015. On October 14, 2015, due to Corinthian’s failure to appear or otherwise defend the action, the clerk entered Corinthian’s default.
Granting a default judgment is within the court’s discretion. Domanus v. Lewicki, 742 F.3d 290, 301 (7th Cir.2014). In granting such a default, the “well-pled allegations of the complaint relating to liability are taken as true,” Wehrs v. Wells, 688 F.3d 886, 892 (7th Cir. 2012). “As a general rule, a ‘default judgment establishe[s], as a matter of law, that defendants [are] liable to plaintiff as to each cause of action alleged in the complaint.’” Dundee Cement Co. v. Howard Pipe & Concrete Products, Inc., 722 F.2d 1319, 1323 (7th Cir. 1983) (quoting Breuer Electric Mfg. Co. v. Toronado Systems of America, Inc., 687 F.2d 182, 186 (7th Cir.1982)). The causes of action are well-pled in the complaint, and Defendant Corinthian has made clear that it does not intend to further appear or defend the action. Pursuant to Fed. R. Civ. P. 55(b)(2), upon application by the Plaintiff, the Court now enters a default judgment against Corinthian for violations of the CFPA and the FDCPA. It is therefore ORDERED, ADJUDGED, AND DECREED as follows: I.
Findings 1.
This Court has jurisdiction over the subject matter of this case and over the Defendant Corinthian pursuant to 12 U.S.C. § 5565(a)(1) and 28 U.S.C. §§ 1331, 1345.
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2.
Venue is proper in this district pursuant to 28 U.S.C. § 1391(b) and 12 U.S.C. § 5564(f).
3.
Defendant Corinthian was properly served and submitted an Answer in this action on September 11, 2015; simultaneously with the filing of that answer, however, Defendant’s counsel submitted a motion to withdraw and represented to this court that the Defendant did not intend to further appear in or defend this action, due to the bankruptcy case it initiated and its impending dissolution, which took effect on September 21, 2015 under the terms of the liquidation plan for Corinthian, which was approved by the United States Bankruptcy Court for the District of Delaware on August 28, 2015.
4.
On September 17, 2015, this Court granted Corinthian’s counsel’s motion to withdraw, and acknowledged Corinthian’s intention to no longer appear in or defend this action.
5.
In response to a motion by the Bureau on October 6, 2015, the clerk entered a default against Corinthian pursuant to Fed. R. Civ. P. 55(a) on October 14, 2015. 6.
The Complaint states a claim upon which relief can be granted. 7.
Because of Corinthian’s default, Corinthian is deemed to have admitted the wellpled facts of the complaint; thus, the allegations are taken as true. Wehrs v. Wells, 688 F.3d 886, 892 (7th Cir. 2012).
8.
Section 1055 of the CFPA, 12 U.S.C. § 5565, empowers which Court to order a broad spectrum of relief, including injunctive relief, declaratory relief, restitution to the affected parties, and disgorgement of ill-gotten gains. 9.
Plaintiff is entitled to an Order imposing permanent injunctive relief and declaratory relief, and requiring Corinthian to make restitution of $531,224,267 to the borrowers of the private loans that are the subject of this action.
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10.
This action and the relief awarded are in addition to, and not in lieu of, other remedies that may be provided by law, including both civil and criminal remedies. 11.
Entry of this Order is in the public interest.
Corinthian Engaged in Deceptive Practices in Violation of the CFPA (Count I) 12.
The Complaint contains well-pled allegations that Corinthian violated the CFPA’s prohibition on deceptive acts and practices by its misrepresentations and omissions regarding prospective students’ career opportunities. 13.
Section 1036(a)(1(B) of the CFPA, makes it unlawful for a covered person to engage in any deceptive act or practice. 12 U.S.C. § 5536(a)(1)(B). To interpret the standard for deception under the CFPA, courts have looked to the well-understood prohibition on deception under the Federal Trade Commission Act (“FTCA”). See 12 U.S.C. § 5536(a)(1)(B); 15 U.S.C. § 45(a)(1); Illinois v. Alta Colleges, Inc., No. 14 C 3786, 2014 WL 4377579, at *4 (N.D. Ill. Sept. 4, 2014) (holding that the prohibitions against deceptive practices in the CFPA and FTCA are “virtually identical”). An act or practice is deceptive under the CFPA, as under the FTCA, if: (1) there is a representation or omission is likely to mislead consumers acting reasonably under the circumstances; and (2) the representation or omission is material.
14.
Corinthian is a covered person and therefore falls under the aegis of the CFPA because:
a. It engaged in promoting, marketing, offering and providing “consumer financial products or services” within the meaning of the CFPA, 12 U.S.C. 5481(5) in connection with private loans offered to Corinthian students to pay for a portion of their tuition known as “Genesis” loans. Compl. ¶ 27.
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b. It brokered the Genesis loans to its students by arranging for such loans and serving as the single point of contact in doing so. Compl ¶ 28. c. It provided financial advisory services to students and prospective students regarding the use of credit in the payment of tuition for its schools, and in particular, with respect to the Genesis loans. Compl ¶ 29. 15.
From approximately March 2008 through July 2014, Corinthian created and marketed the Genesis loan program to students so that Corinthian could charge its students more in tuition than would be covered by Title IV funding from the United States Department of Education (“ED”). Corinthian did this because ED required schools like Corinthian to obtain at least 10% of their revenues from sources other than Title IV funds. Thus in order to continue receiving those funds, which was the main source of Corinthian’s revenue, Corinthian burdened its students with this additional cost. Compl. ¶¶ 39-41, 106-110.
16.
Corinthian’s investment in the Genesis loan program changed over time. Until about August 2011, and from February 2014 through July 2014, Corinthian purchased all Genesis loans from the originating lender approximately two weeks after they were disbursed. Compl. ¶¶ 92-94. From August 2011 until January 2014, another entity purchased the loans from the originating bank soon after disbursal, with Corinthian agreeing to 1) pay that entity a so-called “discount fee” of 50% of the face value of each of the loans, and 2) buy back any loans that became more than 90 days delinquent. Compl. ¶¶ 97-99.
17.
More than 60% of Genesis borrowers have defaulted within three years on these unaffordable loans. Compl. ¶ 10.
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18.
From at least July 2011 to July 2014, Corinthian induced students to take out these Genesis loans through a series of misrepresentations about the likely employment outcomes for Corinthian students. Compl. ¶ 42. 19.
Corinthian’s job placement rates were misleading to consumers: a. Corinthian represented to prospective and current students that its education would offer a “career,” not “just another job,” but in calculating and presenting job placement rates for graduates, it included temporary jobs that lasted for just one day. Compl. ¶¶ 49-57. b. Corinthian presented falsified and overstated job placement rates. It did so by, among other things:
i. “Fudging the numbers,” or simply misreporting the correct numbers; Compl. ¶¶ 58-71.
ii. Undercounting the pool of “employable” graduates, thereby increasing the percentage of employed graduates out of all the “employable” graduates; Compl. ¶¶ 72-75.
iii. Engaging in a practice of paying employers to hire its graduates temporarily in order to inflate its favorable job placement statistics. Compl. ¶¶76-83.
20.
Corinthian misrepresented the availability and the utility of its career services, which it told prospective and current students would provide career assistance for life, helping them find a job, or improving their resume and interviewing skills. The actual services provided were limited, such as providing postings already publicly available from services like Craigslist, and after graduates obtained initial placements, Corinthian refused to provide any further assistance to them. Compl. ¶¶ 84-89.
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21.
Corinthian made these misrepresentations to borrowers and prospective borrowers of Genesis loans in order to induce them to take out the loans, and those misrepresentations misled, or were likely to mislead, consumers. Compl. ¶¶ 57, 155-156. 22.
Corinthian’s representations about the likelihood of a career for its graduates were material to borrowers and prospective borrowers of Genesis loans. Compl. ¶ 57. Corinthian Engaged in Unfair Practices in Violation of the CFPA (Count II) 23.
The Complaint contains well-pled allegations that Corinthian violated the CFPA’s prohibition on unfair acts and practices.
24.
Section 1036(a)(1)(B) of the CFPA makes it unlawful for a covered person to engage in any unfair practice. An act or practice is unfair where “(A) the act or practice causes or is likely to cause substantial injury to consumers which is not reasonably avoidable by consumers; and (B) such substantial injury is not outweighed by countervailing benefits to consumers or competition.” 12 U.S.C. § 5531(c)(1). 25.
Corinthian did not only help to extend the Genesis loans to students, but it also served as a debt collector for those loans. Compl. ¶ 123. 26.
Corinthian was particularly incentivized to collect payment in order to prevent loans from becoming delinquent because it was obligated to purchase such loans after they were 90 days past due; Corinthian tracked the Genesis loan payments of its students for this purpose. Compl. ¶ 120-122.
27.
Nearly all Genesis loans were made under a payment plan that required monthly payments from the borrower while in school; Compl. ¶ 116. 28.
Borrowers were not aware that Corinthian maintained an interest in the Genesis loans nor that Corinthian would serve as a debt collector for the Genesis loans. Compl. ¶¶115, 118.
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29.
In order to extract payment from its students on the Genesis loans, Corinthian engaged in acts or practices that were likely to cause or did cause substantial injury to Genesis borrowers, from at least July 2011 to September 2014, by denying them access to educational resources for which they had paid, including the following: a. Corinthian prevented enrolled students from attending class; b. Corinthian pulled students out of class in front of their classmates; c. Corinthian denied students access to computers and other educational materials; and d. Corinthian otherwise prevented enrolled students from completing their course of study. Compl. ¶¶ 119-145.
30.
By such acts and practices, Corinthian further caused or was likely to cause substantial injury to Genesis borrowers by publicly disclosing their debts to their fellow students or to their instructors, thereby causing the Genesis borrowers to suffer emotional distress and reputational harm. Compl. ¶ 163. 31.
Genesis borrowers could not reasonably avoid this injury because they could not anticipate it; they were unaware that Corinthian maintained an interest in the Genesis loans or that Corinthian would serve as a debt collector for these loans, and therefore could not use this information to avoid the loans. Compl. ¶¶ 115, 118,164. 32.
The injury suffered by the Genesis borrowers was not outweighed by countervailing benefits to consumers or competition. Compl. ¶ 165. Corinthian Violated the FDCPA (Counts III-V) 33.
The Complaint contains well-pled allegations that Corinthian violated the FDCPA.
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34.
The FDCPA regulates the conduct of debt collectors. A “debt collector,” under the FDCPA, can be any person “who regularly collects or attempts to collect, directly or indirectly, debts owed or due or asserted to be owed or due another.” 15 U.S.C. § 1692d. 35.
From approximately August 2011 through at least September 2014, Corinthian took actions to collect the amounts due on the Genesis loans from its students who were borrowers in that program. Compl. ¶¶ 119-145.
36.
The borrowers whose loans were not yet 90 past due had loans owned by an entity other than Corinthian; it was only after such loans became delinquent more than 90 days that Corinthian was obligated to purchase them. Compl. ¶¶ 98-100. 37.
Therefore, Corinthian was a debt collector within the meaning of the FDCPA for those borrowers who had loans originated from August 2011 until January 2014 and whose accounts were less than 90 days delinquent. 38.
Section 806 of the FDCPA prohibits debt collectors from “engag[ing] in any conduct the natural consequence of which is to harass, oppress, or abuse any person in connection with the collection of a debt.” 15 U.S.C. § 1692d. 39.
As described above, Corinthian engaged in harassing, oppressive, or abusive conduct in connection with the collection of debts flowing from the Genesis loans, from at least August 2011 through September 2014, in several ways, including the following: a. Corinthian prevented enrolled students from attending class; b. Corinthian pulled students out of class in front of their classmates; c. Corinthian denied students access to computers; and d. Corinthian otherwise prevented enrolled students from completing their course of study. Compl. ¶¶ 119-145.
40.
Section 805(a) of the FDCPA governs the context of collection by a debt collector. The FDCPA prohibits a debt collector, without prior consent of the consumer or express
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permission from a court of competent jurisdiction, from communicating with a consumer in connection with the collection of any debt at a place or time known to be inconvenient to the consumer. 15 U.S.C. § 1692c(a)(1). 41.
Without prior consent or the express permission of court of competent jurisdiction, from at least August 2011 through September 2014, Corinthian communicated with Genesis borrowers about collection of their Genesis loans during class time, which Corinthian knew would be inconvenient to those borrowers because it jeopardized their academic performance and disrupted the learning environment. Compl. ¶¶ 119-145, 178.
42.
Section 805(b) of the FDCPA restricts communication by a debt collector about a consumer’s debt with most third parties in most circumstances. The FDCPA prohibits, without the prior consent of the consumer or the express permission of a court of competent jurisdiction, debt collectors from communicating, in connection with the collection of any debt, with any person other than the consumer, his attorney, a consumer reporting agency if otherwise permitted by law, the creditor, the attorney of the creditor, or the attorney of the debt collector. 15 U.S.C. § 1692c(b). 43.
Without prior consent of the Genesis borrowers or the express permission of a court of competent jurisdiction, from at least August 2011 to approximately the date of the closing of its schools, Corinthian’s collection efforts were public and disclosed the existence of those debts to instructors, classmates and other third parties. Compl. ¶¶ 119-145, 181.
44.
Therefore, Corinthian violated Sections 805(a), 805(b), and 806 of the FDCPA. Damages 45.
The Bureau seeks both legal and equitable relief against Corinthian from the Court for the above-referenced violations of law.
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46.
In particular, the Bureau seeks restitution for affected consumers harmed by Corinthian’s illegal conduct.
47.
Restitution should provide “the full amount lost by consumers.” F.T.C. v. Febre, 128 F.3d 530, 536 (7th Cir. 1997) (holding that restitution should be comprised of “consumer redress in the amount of the purchase price of the relevant product or business”). Any such calculation of restitution, however, should take into account “any amounts previously returned to the victims.” FTC v. Think Achievement Corp., 144 F. Supp. 2d 1013, 1019 (N.D. Ind. 2000) aff'd, 312 F.3d 259 (7th Cir. 2002). 48.
Moreover, the Bureau seeks disgorgement of all of Corinthian’s ill-gotten gains. “As an equitable remedy, disgorgement is meant to place the deceived consumer in the same position he would have occupied had the seller not induced him to enter into the transaction. Disgorgement also prevents the defendant from being unjustly enriched by his fraud.” Febre, 128 F.3d at 537.
49.
“To ensure that defendants are not unjustly enriched by retaining some of their unlawful proceeds by virtue of the fact that they cannot identify all the consumers entitled to restitution and cannot distribute all the equitable relief ordered to be paid,” courts in such situations grant “orders directing equitable disgorgement of the excess money to the United States Treasury.” Id. at 537.
50.
In this case, Corinthian is liable for the entire amount of debt incurred and/or by consumers in connection with the Genesis loans, including origination fees and interest, excluding any amounts previously forgiven.
51.
The Bureau bears the burden of proving damages and may do so through affidavits and other documentary evidence showing the amount and calculation of damages. See, e.g., United States v. Di Mucci, 879 F.2d 1488, 1497 (7th Cir. 1989) (“[a]lthough upon default, the well-pleaded allegations of a complaint relating to
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liability are taken as true, allegations in a complaint relating to the amount of damages suffered ordinarily are not”).
52.
The Bureau has established, though competent evidence, that 115,111 affected consumers were harmed by being deceived into taking out the Genesis loans. 53.
The Bureau has established, through competent evidence, that the entire principal balance of such wrongfully originated loans, minus amounts forgiven, is $425,408,640.
54.
The Bureau has established, through competent evidence, that the entire amount of fees charged for such wrongfully originated loans, is $40,438,346. 55.
The Bureau has established, through competent evidence, that affected consumers paid or owed $65,377,281 in interest toward those loans, as of June 2015. 56.
Therefore, in total, the amount owed by Corinthian to pay redress to affected consumers is $531,224,267.
57.
As explained in the Declaration of Ryan Thomas, attached to the Bureau’s Motion, this figure is derived from information provided by the servicer of the Genesis loan program, as well as the current holders of those loans. II.
Definitions 58.
The following definitions apply to this Order. a. “Affected Consumer” means any consumer who took out a Genesis loan to pay tuition and/or fees to Corinthian from July 2011 through July 2014. b. “Bankruptcy Trustee” means any person named or appointed by the judge in connection with the action filed in the United States Bankruptcy Court for the District of Delaware (Case No. 15-10952-KJC) to represent the interests of Corinthian, or its estate.
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c. “Genesis Loan” means any private loan, including any loan referred to as an “EducationPlus loan” made to a borrower who was a Corinthian student pursuant to a loan program arranged by Corinthian with third parties from July 21, 2011 through July 2014, where Corinthian agreed to pay a “discount fee” to some of those third parties for purchasing such loans from the originating bank and where Corinthian agreed, at times, to purchase all or some of the outstanding loans.
ORDER III.
Declaratory and Injunctive Relief IT IS HEREBY ORDERED that:
59.
Based on the well-pled allegations of the Complaint, which are taken as true, Defendant Corinthian has violated the CFPA’s prohibition on deceptive practices, 12 U.S.C. § 5536(a)(1)(B), by misrepresenting career prospects and career services available to Corinthian students and prospective students in order to induce them to enter into Genesis Loans.
60.
Based on the well-pled allegations of the Complaint, which are taken as true, Defendant Corinthian has violated the CFPA’s prohibition on unfair practices, 12 U.S.C. § 5536(a)(1)(B), 12 U.S.C. § 5531(c)(1), by causing substantial injury to Genesis Loan borrowers by barring or pulling them from class, withholding educational resources, and otherwise preventing them from gaining access to educational courses or materials for which they had already paid, in order to pressure them to pay their Genesis Loans. 61.
Based on the well-pled allegations of the Complaint, which are taken as true, Defendant Corinthian has violated the FDCPA, 15 U.S.C. § 1692d, by engaging in harassing, oppressive, or abusive conduct against Genesis Loan borrowers in connection with the collection of debts from the Genesis Loans.
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62.
Based on the well-pled allegations of the Complaint, which are taken as true, Defendant Corinthian has violated the FDCPA, 15 U.S.C. § 1692c(a)(1), because without prior consent of the consumer or express permission from a court of competent jurisdiction, Corinthian communicated with Genesis Loan borrowers in connection with the collection of Genesis Loans at a place or time known to be inconvenient to the consumer, to wit, while those borrowers were attending classes at Corinthian. 63.
Based on the well-pled allegations of the Complaint, which are taken as true, Defendant Corinthian has violated the FDCPA, 15 U.S.C. § 1692c(b), because without the prior consent of the consumer or the express permission of a court of competent jurisdiction, Corinthian communicated with prohibited third parties regarding the collection of Genesis Loans by making collection efforts while the borrowers were attending classes at Corinthian, which disclosed the existence of those debts to instructors, classmates, and other third parties.
64.
Fencing-in provisions are appropriate to prevent future illegal acts. FTC v. Colgate–Palmolive Co., 380 U.S. 374, 395 (1965). This is case even where the corporate defendant may be defunct. Think Achievement Corp., 144 F. Supp. 2d at 1018. 65.
Defendant Corinthian is hereby permanently enjoined from committing any future violations of the CFPA’s prohibition on unfair, deceptive, and abusive acts and practices.
66.
Defendant Corinthian is hereby permanently enjoined from committing any future violations of the FDCPA’s prohibition against debt collectors engaging in harassing, oppressive, or abusive conduct in connection with the collection of debts. 67.
Defendant Corinthian is hereby permanently enjoined from committing any future violations of the FDCPA’s prohibition against communications with certain third
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parties in connection with the collection of debts, without the prior consent of the consumer or the express permission of a court of competent jurisdiction. 68.
Defendant Corinthian is hereby permanently enjoined from committing any future violations of the FDCPA’s prohibition against communicating with a consumer in connection with the collection of any debt at a place or time known to be inconvenient to the consumer, without prior consent of the consumer or express permission from a court of competent jurisdiction.
IV.
Order for Redress IT IS FURTHER ORDERED that:
69.
A judgment for equitable monetary relief is entered in favor of the Plaintiff Bureau and against Defendant Corinthian in the amount of $531,224,267, which represents the amount of damages owed to Affected Consumers proven through competent evidence.
70.
Any funds received by the Bureau in satisfaction of this judgment will be deposited into a fund or funds administered by the Bureau or the Bureau’s agent according to the applicable statutes and regulations to be used for redress for injured consumers, including but not limited to, refund of moneys, restitution, damages or other monetary relief for Affected Consumers and for any attendant expenses for the administration of such redress.
71.
If the Bureau determines, in its sole discretion, that providing redress to Affected Consumers is wholly or partially impracticable, or if funds remain after the administration of redress is completed, such funds will be deposited in the U.S. Treasury as disgorgement. Defendant Corinthian will have no right to challenge the choice of remedies under this section and will have no right to contest the manner of distribution chosen.
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72.
Payment of redress to any Affected Consumer under this Order may not be conditioned on that Affected Consumer waiving any right. V.
Additional Monetary Provisions IT IS FURTHER ORDERED that:
73.
In the event of any default on Corinthian’s obligations to make payment under this Order, interest, computed under 28 U.S.C. § 1961, as amended, will accrue on any outstanding amounts not paid from the date of default to the date of payment, and will immediately become due and payable.
74.
Corinthian must relinquish all dominion, control, and title to the funds paid to the fullest extent permitted by law and no part of the funds may be returned to Corinthian.
VI.
Retention of Jurisdiction IT IS FURTHER ORDERED that:
75.
This Court will retain jurisdiction of this matter for the purposes of construction, modification, and enforcement of this Order.
VII. Service IT IS FURTHER ORDERED that:
76.
This Order may be served upon Corinthian through the Bankruptcy Trustee by certified mail or United Parcel Service, either by the United States Marshal, the Clerk of the Court, or by any representative or agent of the Bureau.
IT IS SO ORDERED, on 10/27/2015
________________________________
The Honorable Gary Feinerman
United States District Judge
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