This is a shareholder derivative action brought against certain officers and directors of Corinthian Colleges (COCO). The Attorney General for California (AG) has filed an action against Corinthian alleging that the company systematically misrepresented to potential students and investors important metrics associated with its college programs. Remarkably, Corinthian settled a similar case brought against it in 2007. It therefore had notice about steps needed to stay in compliance with state and federal laws. This shareholder derivative action then seeks damages from certain officers and directors for violating their respective duties to shareholders.
California Atty. Gen. Harris (AG) filed a lawsuit against Corinthian Colleges and its subsidiaries, accusing Corinthian of false and predatory advertising, securities fraud and intentional misrepresentations to students. Corinthian is one of the world's largest for-profit college businesses. The AG asserts that the company targeted low-income Californians through "aggressive marketing campaigns" that inaccurately represented job placement rates and school programs, the complaint said. The complaint also accused Corinthian Colleges of unlawfully using military seals in its mailers and on its website in violation of California law. The company, which also offers job training programs under the names Everest, Heald and WyoTech, is also accused of reporting false work placement rates to investors and accrediting agencies. The AG was harsh in her assessment, stating Corinthian executives devised a "predatory scheme" that is "unconscionable," and was "[d]esigned to rake in profits and mislead investors, they targeted some of our state's most vulnerable people -- including low income, single mothers and veterans returning from combat."
The company has a history of issuing questionable statements about its college programs. For example, in 2004, following an extensive investigation, the AG brought a civil action against Corinthian alleging systemic misrepresentations of job placement rates. In July 2007, the Superior Court of the State of California for the County of Los Angeles entered a final judgment in this action. Among other things, the court permanently enjoined Cointhian from making or causing to be made: (i) any untrue or misleading statement about the employment or salaries that students will or may obtain after enrolling in or completing any of Corinthian's programs; (ii) any statement related to Corinthian's own student's employment or salaries that is not substantiated by the Company's records; or (iii) any statement based on information in Corinthian's records that the Company knew or should know is inaccurate. Further, Corinthian was required to pay $4.3 million to the Attorney General for distribution to students, and cancel $1.5 million of outstanding credit contract obligations owed to the Company and incurred by students on or after January 1, 2003.
Board of Directors have specific duties to shareholders. This derivative action asserts that certain officers and directors breached those duties for personal gain. If you are a Corinthian College shareholder, please complete the web form to join our continuing investigation.