COURTHOUSE NEWS SERVICE: For-Profit Education Giant Wins in 9th Circuit

Career College Central Summary:

  • Claims that the for-profit education company Apollo Group inflated its worth with lies and sketchy recruitment tactics failed to impress the 9th Circuit on Tuesday.
  •  The ruling comes more than four years after the U.S. General Accountability Office embarrassed 15 for-profit colleges with a report detailing how they encouraged undercover investigators posing as potential students to falsify financial aid information, or supplied inaccurate information about tuition costs and accreditation.
  •  Investors in Arizona-based Apollo, which owns the ubiquitous University of Phoenix, brought a deluge of class actions that false financial reports and inflated student-recruitment numbers were to blame for the $46 million in stock sold between May 2007 and October 2010.
  •  U.S. District Judge James Teilborg consolidated the actions in Phoenix but ultimately dismissed them after finding that the investors had failed state a valid claim for securities fraud.
  •  In affirming Tuesday, the 9th Circuit found that the statements and misrepresentations in question were mere "business puffing."
  •  The investors' complaint lacked sufficient detail to meet the relatively high bar for pleadings in such securities actions, the court found, also citing the failure to show that Apollo acted with an evil mind, misstated financial numbers, or used deceptive recruiting tactics as a general, companywide rule.

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COURTHOUSE NEWS SERVICE

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