‘False’ Statements About A For-Profit

The 2005 bankruptcy of Decker College drew more than its share of national headlines, not least because one of its investors (and, for a time, its president) was William Weld, the former governor of Massachusetts and, at the time, a candidate for governor of New York.

The closure of the for-profit college in Kentucky was precipitated by the U.S. Education Department's September 2005 decision to terminate Decker's eligibility for federal student financial aid. The federal agency made its decision in large part based on statements by the college's accreditor, the Council on Occupational Education, that Decker had delivered three of its programs online without the agency's approval.

On Tuesday, a federal bankruptcy judge in Kentucky ruled that the accrediting agency's representations to the Education Department were false — saying that Decker officials had made clear to the council on numerous occasions that the college was using distance education to offer the programs, and that the agency had approved the programs nonetheless.

While the judge's ruling comes far too late to resuscitate Decker, it could have major implications for two court proceedings over the college's assets. It could also prove costly for the Council on Occupational Education, as lawyers for the college's estate could sue the agency over actions that they say led to the institution's demise.

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