WASHINGTON — Federal consumer regulators Wednesday won a major court battle against Corinthian Colleges Inc., the former national for-profit chain that entered bankruptcy this year amid claims of defrauding students.
A federal judge in Illinois ruled that Corinthian “engaged in deceptive practices” by misleading students about their career prospects, according to documents obtained by The Wall Street Journal.
The federal Consumer Financial Protection Bureau had filed the lawsuit. Corinthian had declined to contest the charges, and the ruling Wednesday was a default judgment.
The judge ordered Corinthian to pay $531 million in damages to former students. Corinthian operated three Everest College campuses in Aurora, Thornton and Colorado Springs. It also operated Heald College and WyoTech.
Judge Gary Feinerman of the U.S. District Court for the Northern District of Illinois, in his ruling, said: Corinthian violated a federal “prohibition on deceptive acts and practices by its misrepresentations and omissions regarding prospective students’ career opportunities.”
Students have alleged they were misled by Corinthian and deceived into paying for a worthless education. Corinthian has consistently denied any allegations of wrongdoing and stood by the education it provided.
The damages ordered by the judge are unlikely to be paid because Corinthian was dissolved in bankruptcy and its assets have been distributed according to a liquidation plan, a U.S. government official said.
Mark D. Collins, a lawyer who represented Corinthian in its bankruptcy case, couldn’t be reached for comment.
