Sept. 25 (Bloomberg) -- Career Education Corp. founder John Larson stepped down today as president and chief executive officer as the company tries to recover from two years of legal investigations and sagging stock values.

``We are moving now into a new and even more positive stage for our company,'' Larson, 54, who will remain as chairman of the board, said in a statement.

Robert Dowdell, 61, Career Education's lead director, was named interim chief executive. The company operates more than 80 college campuses in the U.S. and overseas.

The company has lost about 70 percent of its share value since June 2004, hurt by government and private investigations of its recruiting practices. Its American InterContinental University division has been placed on probation by its independent accrediting agency.

American InterContinental founder Steve Bostic, whose bid to oust Career Education management was rejected by company shareholders at the May annual meeting, welcomed Larson's departure.

``That should help the price of the stock,'' said Bostic, who sold his $50 million holdings the month after his board nominees won about 34 million shares, compared with 46 million shares for the company's directors.

The company announced Larson's departure after the market closed. Shares of Career Education shares fell 47 cents, or 2.2 percent, to $21.15 in Nasdaq Stock Market composite trading.

Career Education last month reported a loss of $47.5 million, or 49 cents a share, for the June quarter, down from a year-ago profit of $52.8 million, or 50 cents a share.

Help With Regulators

The departure of Larson, which follows the resignation in September of Janice Block as general counsel, might help Career Education resolve some problems, said analyst Jeff Silber of BMO Capital Markets in New York.

Silber said he thinks ``having some sort of management change to show that the company is serious on rectifying some of its issues'' could help Career Education's dealing with regulators.

Career Education had previously decided to split the positions of chief executive officer and president. It also was searching for a new chief operating officer and will delay that task while working to fill the CEO position, Dowdell said.

Career Education, based in Hoffman Estates, Illinois, operates schools in the U.S., Canada, the U.K., France and the United Arab Emirates. In addition to American Intercontinental University, its schools include Harrington College of Design, Le Cordon Bleu Schools North America, the Brooks Institute of Photography, the Katharine Gibbs Schools and Colorado Technical University.

To contact the reporter on this story: Paul Basken in Washington at pbasken@bloomberg.net

Last Updated: September 25, 2006 17:53 EDT