Posted on 02/26/2004 9:13:48 AM PST by nuconvert
A Day After Searches, Classes Resume at ITT Technical Institute Campuses
Feb. 26, '04
By Mark Jewell / The Associated Press
INDIANAPOLIS (AP) - Classes resumed Thursday at 10 campuses of ITT Technical Institute in eight states where authorities a day earlier served warrants and searched records in an investigation that spooked investors in the chain of technical schools. After shares of the parent company lost a third of their value Wednesday, ITT Educational Services Inc. issued a statement that offered no details of the focus of the federal investigation.
The statement, issued before markets opened Thursday, said ITT "holds itself and its people to the highest ethical, legal and regulatory standards" and continued to cooperate with investigators.
Authorities also would not say why they conducted Wednesday's searches, which caused classes to be canceled at campuses where students were turned away and faculty and staff questioned.
ITT spokesman David Treier said operations were back to normal Thursday morning.
"To our knowledge, all the buildings are open to employees and students," Treier said.
After falling 33 percent on Wednesday, shares of ITT Educational Services were down 85 cents, or 2.2 percent, to $37.65 in morning trading Thursday on the New York Stock Exchange.
ITT said the investigation involved grand jury subpoenas of records concerning student placement, retention, graduation, attendance, recruitment, grades, graduates' salaries and transfers of students' credits to other colleges.
Law enforcement officers on Wednesday did not allow students, staff and faculty to enter about 10 of ITT's 77 campuses in 30 states, ITT spokeswoman Nancy Brown said. Classes elsewhere were unaffected. ITT's 150-employee headquarters in suburban Indianapolis also were shut down.
"They've given us no idea specifically what they're looking for," said Brown, who was shut out of the headquarters in Carmel.
About 68 percent of the company's 2003 revenue of nearly $523 million came from federal education aid programs, according to a company regulatory filing. And most ITT students pay a substantial portion of their tuition and other expenses with money received under federal programs.
Brown said she did not know whether federal aid was the focus of the probe.
The company's statement Thursday said ITT "is heavily regulated" and "undergoes frequent reviews by numerous state and federal agencies and its accrediting commission."
Rene R. Champagne, the company's chairman and chief executive, said Wednesday the company was cooperating with investigators and had "not been informed of any specific allegations or charges at this time."
The U.S. Attorney's Office in Houston, which was leading the investigation, issued a statement Wednesday by U.S. Attorney Michael Shelby saying "no conclusions should be drawn from today's activity."
Shelby said law enforcement officers were investigating at ITT's headquarters and at campuses in Indiana, Texas, Virginia, Florida, Louisiana, Nevada, California and Oregon.
ITT's Brown and federal authorities declined to say which specific campuses in those states were searched. Brown said investigators did not tell the company why the search involved only some ITT schools.
ITT provides postsecondary, year-round courses to about 37,000 students, according to the company's annual regulatory filing. The company, which employs about 3,000, began operations in 1969, and offers courses primarily leading to associate's and bachelor's degrees with an emphasis on technical fields. Study programs vary from campus to campus. ITT began offering online education in 2001.
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