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UCLA among schools in loan inquiry

The New York attorney general is investigating if athletic departments steered student loan applicants to a firm in exchange for kickbacks.

August 02, 2007|Richard C. Paddock | Times Staff Writer

New York Atty. Gen. Andrew M. Cuomo, broadening his investigation of the student loan industry, requested or subpoenaed documents Wednesday from 40 university athletic departments, including UCLA, Georgetown University and Auburn University.

Cuomo's office said he was seeking to determine whether athletic departments improperly steered student loan applicants to a private company, University Financial Services, in exchange for kickbacks.

The attorney general also is investigating whether universities used their team names, mascots, colors or logos to imply that the company was the school's official lender.

All but two of the 40 universities named by Cuomo have Division I sports teams, the attorney general's office said.

The company also was subpoenaed.

UCLA said it had no connection to the lender.

Cuomo, in a statement, said: "Students trust their university's athletic departments because so much of campus life at Division I schools centers around supporting the home team. To betray this trust by promoting loans in exchange for money is a serious issue, especially when Division I schools already generate tremendous revenue from their student athletes."

Since early this year, Cuomo has conducted a wide-ranging investigation of fraudulent practices by the $85-billion student loan industry and has received $13.7 million in settlements from a dozen student loan companies.

In the course of the inquiry, the attorney general's office found that the athletic director of Dowling College in New York had entered into a "revenue sharing" agreement with University Financial Services.

Under that agreement, the lender gave Dowling $75 for each loan applicant referred by the athletic department.

In addition, Dowling's athletic department agreed to put links to the company on its website and to hand out the lender's promotional materials at school events.

Further investigation indicated that University Financial Services had made similar arrangements with the 40 schools identified Wednesday. Among the schools named were Cal State Sacramento, Tulane University, Georgia Tech, Oregon State University, the University of Oregon, Rutgers University and the University of Kansas.

The public universities on the list received document requests; the private schools were issued subpoenas, said Lee Park, a spokesman for Cuomo.

Park said it was too early in the investigation to discuss what actions by UCLA or other schools might have violated ethical standards or the law, but the documents requested by Cuomo should shed light on dealings between the schools and University Financial Services.

Claudia Luther, a spokeswoman for UCLA, said the university has never had any kind of arrangement with the student loan company.

"University Financial Services is not and has never been a UCLA-recommended or preferred lender," she said.

Frank Whitlatch, a spokesman for Cal State Sacramento, said the university had a one-year agreement with University Financial Services that expired in May.

But for reasons that were unclear Wednesday, he said, the school did not receive any funds from the deal.

"As far as we can tell, we didn't collect any money from UFS," Whitlatch said.

"I don't know why we didn't get any money. It doesn't look like there was much participation."

--

richard.paddock@latimes.com

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