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Corinthian Subpoenaed for Records on Student Outcomes, Debt

Aug. 13 (Bloomberg) -- Corinthian Colleges Inc., the for-profit chain in the process of selling or shutting its campuses, received a grand jury subpoena for records including student-loan defaults and job placement.

The Aug. 8 subpoena from the U.S. Attorney’s Office in the Central District of California also seeks information on graduation rates, the transferability of student credits and marketing materials, according to a regulatory filing.

Corinthian, which served about 72,000 students as of last month when it agreed to a government plan to shut down or sell its 107 campuses, is facing allegations in multiple states of falsifying job placement and marketing data. The Santa Ana, California-based company is evaluating the subpoena and intends to cooperate fully with the request, according to the filing.

The company also said it will seek additional sources of liquidity through new financing, cost reductions and accelerated asset sales, according to the filing. The for-profit industry is facing stricter terms from lenders.

Corinthian’s downfall accelerated in June when the U.S. Education Department imposed a 21-day waiting period for it to draw on the federal student aid that accounts for almost all its revenue.

“There can be no assurance that the company will be able to obtain any such additional needed liquidity on a timely basis, on terms acceptable to it, or at all,” Corinthian said in the filing. Any withholding of federal financial-aid funds, on funding or operations by accrediting agencies, state agencies, or other funding sources, “would only exacerbate” its existing liquidity constraints, it said.

To contact the reporter on this story: Janet Lorin in New York at jlorin@bloomberg.net

To contact the editors responsible for this story: Lisa Wolfson at lwolfson@bloomberg.net David Glovin

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