The state of Oregon is looking to become the lead plaintiff in a class action lawsuit against the Apollo Group, the company that owns the for-profit University of Phoenix. According to an article by Bill Graves in The Oregonian:
Oregon officials are suing Apollo Group Inc. of Arizona, parent company of the University of Phoenix, arguing the company engaged in securities fraud that cost the Oregon Public Employee Retirement Fund $10 million.
Oregon Treasurer Ted Wheeler and Attorney General John Kroger also allege the for-profit college improperly canceled federal loans to students, sticking them with the bill for classes they didn’t take.
The essence of the lawsuit, from Oregon’s perspective, is that Apollo was misleading investors by not being up front about students’ withdrawal from Phoenix classes. When an investigation by the U.S. Securities and Exchange Commission exposed the withdrawals, the company’s stock plummeted. This caused Oregon’s state retirement system to lose $10 million.
Interesting. While no doubt Apollo was sneaky about some of the details, the allegations of the lawsuit seem a little farfetched. As if the world didn’t know there were a lot of student withdrawals from the University of Phoenix. All you need to do is Google it.
In fact, back in 2004 one college admissions officer, citing low quality and graduation rates, told the Chronicle of Higher Education that Apollo was “an affront to the principles that have been developing in college admissions over the last three decades.”
Also, Oregon invested $10 million in state pension funds in the University of Phoenix. Wow.