|  | | 2008 News and Press Releases | | |
SETTLEMENT NEWS:
Univ. Of Phoenix Parent Receives A Costly Lesson
Anne Urda
Securities Law360. January 16, 2008
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EXCERPT: An Arizona jury has ruled that the for-profit company that runs the University of Phoenix must fork over a whopping $280 million for allegedly hoodwinking investors about its recruitment policies. On Wednesday, the jury handed Apollo Group Inc. a major defeat, ruling that UOP's parent company should be on the hook for $5.55 a share for allegedly issuing false and misleading public statements. “The jury finds in favor of the plaintiff and against the defendant on all matters,” the verdict stated. The decision caps off a two-month trial held in the U.S. District Court of the District of Arizona, first initiated after shareholders caught wind of a 2004 Department of Education report that blasted the university's recruitment policies. The University of Phoenix stood accused of deliberately violating the incentive compensation ban in the federal Higher Education Act by paying counselors based on the number of students they enrolled, thus fraudulently obtaining billions of dollars in federal education funds. That compensation system purportedly encouraged counselors to sign up students whose prospects for achieving a degree were tenuous at best, leaving them saddled with a mountain of debt and no real earning power. While the university and the DOE reached a settlement over the unfavorable program review, the $9.8 million deal did little to stop investors from taking to the courts to pursue their own claims against Apollo. Led by the Policemen's Annuity and Benefit Fund of Chicago, the shareholders maintained that the fund had issued false and misleading statements by failing to disclose the contents of the DOE report earlier, causing undue harm to shareholders. … The case is In Re: Apollo Securities Litigation, case number 2:04-cv-02147, in the U.S. District Court for the District of Arizona. |
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