ITT Educational Services Inc., its chief executive, and its chief financial officer have been charged with fraud by the Securities and Exchange Commission for allegedly hiding from investors "the poor performance and looming financial impact of two student-loan programs that ITT financially guaranteed," according to a news release from the commission.
The commission’s complaint, filed in the U.S. District Court in Indianapolis, says ITT attempted to hide the fact that the loan pools underlying two of its programs had performed so badly that the company would be on the hook for losses that came from those financing the loans.
It also states that ITT made payments on delinquent borrowers’ accounts to keep their loans from defaulting, which would have triggered “tens of millions of dollars of guarantee payments.”
"Our complaint alleges that ITT’s senior-most executives made numerous material misstatements and omissions in its disclosures to cover up the subpar performance of student-loans programs that ITT created and guaranteed," said Andrew J. Ceresney, director of the commission’s Division of Enforcement, in the release.
Read more at The Chronicle of Higher Education: http://chronicle.com/blogs/ticker/giant-for-profit-and-executives-hit-with-fraud-charges-for-lying-to-investors/98683