Career Education Corporation Reaches Significant Agreements to Resolve Multi-State Inquiry
January 03 2019 - 12:55PM
Business Wire
Career Education Corporation (NASDAQ: CECO) today announced that
it has reached agreements with attorneys general from 48 states and
the District of Columbia to bring closure to the multi-state
attorneys general inquiry on-going since January 2014. As part of
the agreements the Company expressly denied any allegations of
wrongdoing or liability. In addition, the attorneys general have
provided a release of potential claims that they may have
brought.
“The resolution of this open inquiry is an important milestone
for the Company that coincides with the completion last month of a
multi-year process of teaching out and closing our transitional
campuses.” said Todd Nelson, Chief Executive Officer. “We have
remained steadfast in our belief that we can work with the
attorneys general to demonstrate the quality of our institutions
and our commitment to students.”
In connection with these agreements, the Company expects to
record a total pre-tax charge of $6.3 million, consisting of (i) a
$5.0 million payment to the attorneys general to cover expenses
incurred during the course of their inquiry over the last five
years (which the attorneys general will distribute as they elect),
and (ii) the write-off of approximately $1.3 million of accounts
receivable. Although the Company agreed to forgo efforts to collect
on approximately $556 million of old accounts receivable that were
incurred during the last 30 years by students at more than 100
campuses who reside in participating states, all but approximately
$1.3 million of these old accounts receivable were written-off in
prior reporting periods in the ordinary course of the Company’s
operations. The agreement to forgo efforts to collect on previously
written-off receivables does not require additional write-off
expense to the Company’s financial statements.
The agreements build upon the significant compliance monitoring
processes the Company has adopted over the past several years with
commitments to a number of additional operational initiatives that
will benefit our students. Our future students will receive
additional informational resources on important policies, academic
program information and financial aid information during the
enrollment process and an enhanced refund policy all of which to
the extent not already implemented the Company plans to implement
over the next six months.
The Company will work with a third-party administrator over the
next three years who will provide ongoing oversight and review of
the Company’s implementation of the terms of the agreements. The
Company will reimburse the administrator a total of $2.0 million
for fees and expenses to be paid over the next three years.
The Company has entered into agreements with the attorneys
general of all states except for New York and California. The state
of California is expected, per its own procedures, to enter into a
stipulated judgment with the Company at a later date reflecting the
terms of the agreements and as a result the amounts above include
California. The Company had previously entered into an agreement
with the attorney general of New York.
For further information and additional detail the Company refers
you to the Form 8-K which was filed today with the U.S. Securities
and Exchange Commission regarding the agreements with the attorneys
general.
About Career Education Corporation
Career Education’s academic institutions offer a quality
education to a diverse student population in a variety of
disciplines through online, campus-based and blended learning
programs. Career Education institutions are committed to providing
a quality education that closes the gap between learners who seek
to advance their careers and employers needing a qualified
workforce.
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version on businesswire.com: https://www.businesswire.com/news/home/20190103005491/en/
Investors:Alpha IR GroupChris Hodges or Sam Gibbons(312)
445-2870CECO@alpha-ir.comorMedia:Career Education
Corporation(847) 585-2600media@careered.com
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