Corinthian Colleges, one of the nation's largest vocational school chains, has agreed to pay $6.5 million to settle a lawsuit alleging that the chain engaged in unlawful business practices by exaggerating its record of placing students in well-paying jobs.
The company, based in Santa Ana and operating under the names Bryman College, Everest Colleges, Titan Schools Inc. and National Institute of Technology, had been under investigation by the California attorney general's office for at least 18 months.
In a filing with the federal Securities and Exchange Commission last year, the school acknowledged that some of its campuses might have to be shut down as a result of the probe, though none of its 18 California schools will be shuttered. Some of the California programs will be placed under significant restrictions, however.
The settlement was approved Tuesday by Los Angeles County Superior Court Judge Kenneth Freeman.
The company, which has 94 campuses nationwide, agreed to pay $5.8 million in restitution to students. Thousands of students are expected to benefit, though exact figures were not yet available, said Albert N. Shelden, senior assistant attorney general, who heads the office's consumer unit.
Corinthian also agreed to pay $500,000 in civil damages and $200,000 in costs
According to a lawsuit filed in Los Angeles County Superior Court, Corinthian campuses "engaged in a persistent pattern of unlawful conduct." School representatives persuaded people to enroll in classes at a cost between $7,000 and $27,000 by overstating the percentage of those who obtained employment from the courses, the suit said.
Corinthian also inflated information on starting salaries and made misleading or false statements about which programs it was authorized to offer and which were approved by the California Department of Education, the lawsuit added.
Corinthian's "own records show that a substantial percentage of students do not complete the programs and, of those who complete the program, a large majority do not successfully obtain employment within six months after completing the course," according to the suit prepared by deputy attorneys general Margaret Reiter, Robyn C. Smith and Benjamin G. Diehl.
"In addition, the percentages of former students whom Corinthian's documents claim successfully obtain employment are inflated," the suit said. In some instances, Corinthian's records listed nonexistent businesses as students' places of employments, authorities alleged.
