By Matt Coker
By R. Scott Moxley
By Charles Lam
By Nick Schou
By Gustavo Arellano
By Gustavo Arellano
By Steve Lowery
By R. Scott Moxley
On Nov. 5, the management of Corinthian Colleges was giddy. A front-page business-section profile in that morning's Orange County Register had just rewarded the Santa Ana-based company with the journalistic equivalent of a pigskin hand-off by hailing the for-profit college's aggressive expansion. Reg reporter Andrew Galvin met with five Corinthian executives; allowed Corinthian CFO Dennis Beal to gloat, "We view ourselves as America's community college"; and accepted without question CEO David Moore's assertion that Corinthian's critics were "a small cadre of people who are best described as activists who believe for-profit education is the devil's work."
"Legal issues aside," Galvin wrote, "Moore is proud of the nearly 100,000 students who have graduated from Corinthian's schools during the past five years."
Legal issues aside? Legal issues have been the onlyreason anyone should care about Corinthian this past year. In fact, legal issues are why officials at the nation's second-largest owner of for-profit schools approached the Register in the first place—to tell their story, unvarnished by the pesky lawsuits, investigations and reality that have plagued Corinthian this year.
And so, Registerreaders got a puff piece filled with holes. Galvin didn't mention that in April a student at Florida Metropolitan University (FMU), a Corinthian subsidiary, sued for academic fraud (see my "Credit Goes to No One," April 2). Nor did he mention that just a couple of weeks after the Weekly broke the story, Corinthian president Tony DiGiovanni abruptly resigned without explanation. Since then, more students have filed suit against Corinthian, claiming FMU admission officials lied to them about the transferability of credits to legitimate universities. None of this appeared in Galvin's reportage.
That was just the beginning of a year of litigation for Corinthian officials, a year the Reg gladly glossed over. In June, the U.S. Department of Education investigated Corinthian's Bryman College (which keeps an Anaheim campus) for financial-aid fraud alleged to have occurred earlier, before they eventually cleared the corporation. And while the Regdid mention Corinthian is currently fending off probes by the federal Securities and Exchange Commission and the California attorney general's office, Galvin allowed Moore to demean the AG's efforts as "draconian."
The Reg also didn't mention that on Oct. 13, Corinthian filed a lawsuit in Tampa courts against two former FMU admissions representatives, Stephen Backhus and Sean Taylor, for "actions" that "threaten to completely destroy the school's efforts and reputation, which the school obtained through its considerable efforts and substantial expenditure of money."
Specifically, Corinthian is upset at Taylor and Backhus for obtaining FMU's student e-mail database in September and distributing an anonymous letter to said e-mails that lambasted FMU's practices—the same practices that led to all the lawsuits and government investigations.
"Most students, when they would call me up, were impressed to hear the word 'university' in FMU's name—they assume that such an institution has their best educational interest at heart," said Backhus, who worked 10 months at FMU before the college fired him and Taylor in September. "But Corinthian doesn't care. Students would ask me questions about the background of professors, and I couldn't tell them because my bosses wouldn't provide me with the information.
"If Corinthian does seek to sue me and Sean," Backus added, "my only defense is that I was looking out for the interests of the students. I couldn't sleep at night knowing I was enrolling students at FMU."
This was "America's community college," the business model lauded in the Register. And then the bottom fell out: Corinthian's stock plummeted from a spring high of $36.19 on the NASDAQ market to its current sub-$17 price. Shareholders at the country's second-largest for-profit college were desperate for someone, anyone to scapegoat—and they found them: Moore and Bell. On Nov. 18—just two weeks after Corinthian's triumphant Regwrite-up—Galvin reported Moore had quit and Bell had resigned in a "surprise announcement."
Surprising announcement? If Galvin had mentioned Corinthian's complete, sordid 2004 in his initial puff piece, it wouldn't have been shocking at all.