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Massage Today
August, 2014, Vol. 14, Issue 08

Investigations Force Corinthian to Sell, Close Campuses

By Kathryn Feather, Senior Associate Editor

It all started to unravel quickly last fall when California Attorney General Kamala Harris sued Corinthian Colleges Inc. accusing the company of using false advertising and predatory tactics to convince potential students to enroll in its for-profit schools.

In her suit, Harris claimed Corinthian was targeting low-income people with promotional campaigns that actually misrepresented how many of its students obtained jobs. Corinthian is the parent company of Everest Institute and Everest College among other brands. Corinthian has approximately 75,000 students spread out across more than 100 campuses across the U.S. and according to federal officials, receives about $1.4 billion annually in federal student aid.

Corinthian is one of the largest post-secondary education companies in North America and their program areas include health care, business, criminal justice, transportation technology and maintenance, construction trades and information technology. Complaints against Corinthian go back as far as 2007 when the California attorney general filed a civil compaint with similar allegations of false advertising. Corinthian settled those charges by paying a $6.5 million fine but admitted no wrong doing. The current suit claims Corinthian repeatedly falsified job placement rates, publishing rates as high as 100 percent when in some cases, not a single student in the program obtained employment.

Last year, U.S. Senate investigators found that half the students enrolled at 30 of the largest for-profit schools in Corinthian's portfolio left without a degree or diploma within four months. The Senate investigation also uncovered the fact that Corinthian students have defaulted on their loans 64% more than the industry average. Harris' suit also claims that Corinthian committed securities fraud by misleading investors and telling them the overall placement rate was 68% in 2011, even though they knew it was much lower than that. Several states attorneys general, the Justice Department and the Consumer Financial Protection Bureau were investigating Corinthian due to its marketing and recruiting practices.

for sale - Copyright – Stock Photo / Register Mark Current Turmoil

In June, the government decided to limit access to the federal funds Corinthian was receiving. Corinthian claimed its cash balances would be insufficient after federal authorities forced it to wait 21 days between submitting student enrollment data to regulators and drawing down money for federal student aid. A normal delay would be one to three days. An agreement was then struck with the U.S. Department of Education to give Corinthian access to $16 million in student aid funds as it sought buyers for the majority of its 107 campuses. This agreement allowed Corinthian's students to continue their studies during the transition.

Finally, on June 22nd, Corinthian entered into memorandum of understanding with the U.S. Department of Education to maintain uninterrupted daily operations at its schools until a more detailed transition plan can be finalized. Corinthian and the Department of Education will enter into an operating agreement that will allow Corinthian to proceed with its plan to put some of its campuses up for sale and teach-out of schools in a manner that protects students, factulty and staff.

Under this agreement with the Department of Education, Corinthian is responsible for determining which schools will be for sale and which will be "teach-out" schools. Also according to the agreement, "Corinthian will begin a sales process for the sales schools with the intent to execute definitive sales agreements with one or more third parties within approxiately six months. Corinthian will discontinue enrollments of new studentsin the schools identified as teach-out schools and will also provide prompt notice to all students attending teach-out schools of the intent to teach out those schools. Corinthian will also identify and appoint an independent third party compliance and business monitor acceptable to the Department of Education who will have full and complete access to Corinthian personnel and budgets, including financial forcasts, results of operations and cash receipts and disbursements and any and all documents Corinthian is providing to potential buyers, accreditors and the Department of Education."

The Massage Community

The closure of 80 massage programs around the country will have a ripple effect in the educational world as well as in the consumer market. "The closure of education giant Corinthian Colleges will affect many industries and professions. Massage therapy supply houses, textbook publishers and CE providers will have 80 fewer locations to serve. While this many have an initial negative effect for vendors, this could be the turning point in a field that has been over run with low quality massage programs staffed by poorly qualified instructors," said Pete Whitridge, President of the Alliance for Massage Therapy Education.

While market forces could be corrected with this restructuring of Corinthian, there is a human toll on faculty, staff and students who commited no wrong. There are Everest campuses that turned out many massage therapists who have gone on to successsful careers.

"My experience with Everest Schools across the nation has been mostly positive. I have had the pleasure of visiting dozens of Everest campuses through my eight plus years with Massage Envy Spa. From the campus directors, to the faculty to the students, I have witnessed so much dedication to the craft and profession. Many of these schools have done an incredible job educating and graduating qualified massage therapists," said CG Funk, Vice President of Industry Relations for Massage Envy. "Today, there are thousands of working Everest graduates who are successfully making a difference through healing touch."

Massage Today will continue to monitor how Corinthian adhears to the agreement in the months ahead. For the latest information, visit


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