Washington, DC — February 2, 2011 — The Coalition for Educational Success filed a lawsuit against the U.S. Government for negligence and malpractice in connection with the U.S. Government Accountability Office’s investigation that resulted in an erroneous and completely biased August 2010 report that was highly critical of career colleges. The Coalition’s complaint cites the GAO’s biased and negligent conduct as harmful to the career college sector and is seeking relief in the form of damages to be proven at trial.
Members of Congress and the U.S. Department of Education used the report to bolster their case for greater regulatory oversight of the sector. In November 2010, the GAO took the rare step of significantly amending its report, correcting numerous errors and removing allegations. The result was an undermined report that casts serious doubt around the credibility and objectivity of the GAO’s analysis. Despite the report’s obvious lack of credibility, the GAO has to date not retracted the report, further damaging the Coalition and the sector.
“The GAO failed to adhere to applicable professional standards and protocols in preparing its findings. Because the investigation was not impartial but was preordained to reach conclusions against career colleges, the GAO produced findings that were riddled with errors and replete with biased and unsubstantiated conclusions,” the complaint alleges. The Coalition is represented by Paul M. Smith of Jenner & Block, LLP.
The Coalition’s complaint stems from a GAO investigation of the career college sector that was initiated when the Senate Health, Education, Labor & Pension (HELP) Committee began examining federal education spending at career colleges. In anticipation of oversight hearings, HELP Chairman Senator Tom Harkin requested that the GAO conduct an undercover investigation of career colleges.
From May 2010 through July 2010, the GAO sent individuals posing as prospective applicants to 15 career colleges located across the country, the GAO has never explained how these schools were selected. By the GAO’s own admission, these 15 schools constituted a “nonrepresentative” sample. The GAO investigators who visited the schools were not trained appropriately. They presented the college representatives with highly unusual, illogical and contrived scenarios that veteran financial aid or admissions representatives never encountered.
After its investigation, the GAO issued its original report in August 2010, which inaccurately claimed it had been produced in accordance with standards prescribed by the Council of the Inspectors General on Integrity and Efficiency.
According to the report, the GAO observed deceptive marketing practices at all 15 of the career colleges visited by its undercover investigators. Specifically, the report accused the schools of making false or misleading statements regarding, among other things, graduation rates, salaries of its graduates, and the expected length and cost of the program.
The August Report directly caused damaged to the Coalition. In the days following the report’s release, the market capitalization of the publicly traded organizations that own and operate career colleges dropped nearly $4.4 billion – or about 14%. In addition, to combat the factual inaccuracies and biased conclusions contained in the GAO’s report, the Coalition was forced to incur substantial additional costs and expenses to advocate for its numerous career college members and to set the record straight. The Coalition’s damages continue to accrue because the GAO refuses to withdraw its reports and conclusions.
On November 30, 2010, the GAO took the rare step of revising its original report. The revised report corrected errors in the prior version’s quotation or description of taped interviews conducted by undercover GAO agents posing as college applicants. Out of 28 "scenarios" reported, the revised report corrected 15. Every correction involved an error made in the same direction – erroneously suggesting fraud or exaggerating wrongdoing by career college representatives. For example, the August Report quoted a “college representative” offering what was at least legally questionable advice to the undercover applicant. The revised report substituted the “applicant” (i.e., the undercover GAO representative) as the one who offered the questionable advice.
Even more remarkably, the revised report contains a large number of errors and distortions evidently designed to support the original conclusion that the GAO investigators found substantial evidence of wrongdoing. Following the release of the revised report, Senator Harkin made available a portion of the GAO’s audiotapes. The Coalition commissioned Norton Norris, a leading marketing and consulting firm focused on the education sector, to compare the original tapes to the GAO’s revised report. The firm’s analysis found that the GAO did not correct most of the inaccuracies and defects in the revised report, and concluded that only 25% of the GAO’s findings were supported by audio recordings (when factoring out the missing recordings). The amended report is still replete with misleading, invalid, or unsupported conclusions.
“Taking into account both corrected and uncorrected errors, a large majority of the so-called ‘infractions’ reported in the August Report, which were the basis of the inflammatory claim that violations were found at 15 of the 15 schools investigated, were not in fact verifiable infractions,” the complaint states.
To date, the GAO has not publicly released the full, unabridged recordings from its investigation, or other documents that the agency claims support its findings.
View the full complaint here.
About the Coalition for Educational Success
The Coalition for Educational Success includes many of the nation’s leading career colleges, serving more than 350,000 students at 478 campuses in 41 states. Career colleges provide training for students in 17 of the 20 fastest growing fields. The Coalition advocates for policies that support wider access to higher education, particularly for non-traditional students including full-time workers, workforce returners, working parents, minorities and veterans.