The Apollo Group and its for-profit University of Phoenix is bilking teacher pension funds, taxpayers and students for hundreds of millions of dollars



“The paradox of education is precisely this— that as one begins to become conscious one begins to examine the society in which he is being educated.  The purpose of education, finally, is to create in a person the ability to look at the world for himself; to make his own decisions, to say to himself this is black or this is white, to decide for himself whether there is a God in heaven or not.  To ask questions of the universe, and even to learn to live with those questions, is the way he achieves his own identity.  But no society is really anxious to have that sort of person around.  What societies really, ideally, want is a citizenry which will simply obey the rules of society.  If a society succeeds in this, it is about to perish.  The obligation of anyone who thinks of himself as responsible is to examine society and try to change it and fight it— no matter at what risk.  This is the only hope society has.  This is the only way societies change”.

—- James Baldwin, “A Talk to Teachers,” reprinted in Rick Simonson

and Scott Walker,  The Graywolf Annual Five:  Multi-Cultural Literacy (St. Paul: Graywolf Press, 1988).

Join the Project Censored Newsletter Here!

“Of all the civil rights for which the world has struggled and fought for 5,000 years, the right to learn is undoubtedly the most fundamental…The freedom to learn…has been bought by bitter sacrifice. And whatever we may think of the curtailment of other civil rights, we should fight to the last ditch to keep open the right to learn.”

W.E.B. DuBois, “The Freedom to Learn.” (1949)

“Education is the property of no one. It belongs to the people as a whole. And if education is not given to the people, they will have to take it.”

Che Guevara

For-profit predatory University of Phoenix shows itself to be a serial criminal enterprise

What can one say about a so-called university and its owners where thirty-two state Attorneys General have worked together to investigate a ‘tax-subsidized university’ and many of them have continuously pursued allegations against it?  We are talking about the Apollo Group, owner of the University of Phoenix (UOP) one of the largest criminal enterprises in the world and a notorious serial violator of the law.

Become a Project Censored Supporting Member Today a Receive a Free Top 25 Censored Stories Book! Join Here.


The University of Phoenix is a serial criminal financial organization and in this article it will be important for the reader to see the multiple and egregious acts of the UOP and its mother company, the Apollo Group.  The Apollo Group and its subsidiary, UOP is little more than a financial investment bank posing as an educational organization and the bad news is that it receives the bulk of its revenue and investment funds from student loans, taxpayers and pension funds.

I have written on for-profit universities such as Phoenix for some years now.  In the case of UOP facts reveal that the company has committed multiple fraudulent activities; they have spent taxpayer monies on propagandized advertising and marketing on the Internet to the tune of hundreds of millions; they have offered useless educational products and operated as a diploma mill which has had the effect of leaving students in debt purgatory, many for life, with little or no education or hope of gainful employment as they offer up trifling learning instead of education; that they have bilked taxpayers out of millions in funds from Title IV as part of their ongoing and illegal enterprise; that they have paid their CEO’s bloated and inconceivable salaries with public funds, the majority of which have come from taxpayers; that they have repeatedly engaged in insider trading for the benefit of their founding members, again, with public funds; they have employed public monies for payment to corrupt, malleable politicians to further their syndicate and ongoing enterprise; they have fought against any sensible regulation by the government and paid high-level lawyers and coin-operated politicians countless millions of subsidized by taxpayers to thwart any regulations that would put a stop to their predatory active; they have closed their ‘campuses’ (which are little more than vending machine office buildings found in edifices that also rent to Title Companies, Real Estate Companies, mortgage companies and the like and thus hardly qualify as campuses — all of this at alarming rates as their profits tumble leaving employees in unemployment lines and students without campuses;  and finally and for this article most importantly, they have, like  the corporate plunderer they are , planted their taxpayer subsidized predatory fangs in public pension funds, notably those of teacher pensions throughout the US.

The Apollo Group and their University of Phoenix are not the only for-profit drive-by college that engage in such activities but they are the largest and as such, the swindling that they engage in must be the target of teachers and their union pension funds and pension managers for they have and continue to, raid public funds for the purposes of destroying public schools while feeding at the trough of taxpayers and advertising useless degrees and Continuing Education courses to a beguiled public thinking there is a ladder to climb.

It is time that teachers take action and organize to force the divestment of any and all stocks that are held by teacher pensions from the Apollo Group, and there are many as this article will particularize in detail; for if not, current and future teacher retirees will find that they are holding a bag of worthless stocks in a society devoid of education.

As you read this, ask yourself:  Why would teacher pension funds invest in stocks for their portfolios that are issued by racketeer organizations like the Apollo Group and their subsidiary, the University of Phoenix?  This article will answer this question but first, it is important to substantiate the allegations made above so that the reader can see that the University of Phoenix and their parent corporation, The Apollo Group, is indeed engaged in public theft at extraordinary and astonishing levels and speeds and they have been for decades.  They are ongoing violators of the law who are shielded by the same coin-operated government from which they receive the lion share of their funds.

It is hoped that this paper can serve as a working document for teachers, their unions and pension fund managers who invest hard fought teacher gains into this financial scheme. Only through divestiture of funds can teachers and the public hope to stop what has now become the norm: the destruction of all public spheres of endeavor involving one of the largest transfers of wealth from the public, in this case both taxpayers and teacher pension funds, into the coffers of a tightly held corporation whose raison d’etre is profit at all costs, even if this means the devastation of the public commons and the decimation of education.  If not divestment now — then when?


Some History of the for-profit University of Phoenix

Without going into great detail, the Apollo Group, Inc., the mother ship for the University of Phoenix, was founded in 1973.  This was during the time that public funds began to dry up for non-profit and public colleges as the Golden Age of Capitalism was coming to a halt.

The University of  Phoenix (UOP) was spun off by Apollo in 1976 by “Dr.” John G. Sperling, now the geriatric chairman and CEO of Apollo Group.  It was the first accredited for-profit university in the United States that stated it would serve the needs of working adults, and this is how they were able to get their hands on public funds.

It all began early in the 1970’s while working with police departments and other public officials that Apollo founder, John Sperling discovered that these agencies wanted educational programs which they said they needed would help them do their jobs better, improve their skills, and give them new opportunities for career advancement (climbing the so-called ‘salary ladder’).  “Skills for advancement” meant climbing the salary scale ladder by taking Continuing Education Units (CEU) which Human Resource departments all over the country, be they public or private, use to boost employee pay.  We will return to this later.

Sperling, after sparring with the Western Association of Schools and Colleges, the private accrediting agency responsible for policing universities, finally broke with the notion of being a public university and 1976 Sperling leased office space in downtown Phoenix, Arizona to start his own, ‘private university’. The North Central Association of Colleges and Schools, Arizona’s regional accrediting agency happily accredited the for-profit program.  It was then that UOP opened in 1976 with a class of eight students.

Twenty years later, in 1996, the for-profit celebrated its twenty year crime spree with an enrollment of more than 38,000 students. At this time they were boasting a net income estimated at $30 million on revenues of $282 million (revenues coming from student loans and Title IV monies provided by taxpayers).  At that time it was the second largest regionally accredited private institution of higher education in the United States and it said it had one of the nation’s largest business schools.

UOP offered bachelor’s and master’s degree programs in business, management, computer information systems, education, and health care; and in 1996 they had 51 campuses and ‘earning centers’ located in Arizona, California, Colorado, Florida, Hawaii, Louisiana, Michigan, Nevada, New Mexico, Utah, and Puerto Rico (

In 1989, the company began its foray into distance learning.  This would be a profitable move for it meant the company could shed brick and mortar along with real employees.  As late as 1993, less than 93 “cyber-schools” existed in the US.  However, by 1997, according to an Arizona-based company called InterEd, there were some 762 cyber-schools and approximately half of the over 2,000 four-year colleges and universities in the United States had online classes available — from Washington State University, Pullman; California State University, Dominguez Hills, and Duke University’s Fuqua School of Business’s Global Executive M.B.A. Program, and vocational schools such as National Technological University (Fort Collins, Colorado); New York Institute of Technology’s On-Line Campus (Central Islip, New York), and New School for Social Research (New York, New York). This was boom time for both the ‘dot com’ fraud and for the for-profit predatory colleges like UOP and the cost-cutting public universities that were cash strapped due to bad investments and lack of public funds.

Also in 1997, cyber-education spiraled and it was estimated that over one million students took classes online, compared to 13 million who attended on-campus classes; this number would triple in the next few years.

From September 1991 through August 1996, UOP continued to expand and metastasize, using of course taxpayer monies.  They opened 26 campuses and ‘earning centers’, establishing 13 campuses within five years off the public dime.


In September 1995, Apollo Group began to engage in mergers and acquisitions, again using public subsidies, acquiring certain assets of Western International University. Western International University was created as a private non-profit educational institution and was accredited by The North Central Association of Colleges and Schools.  It was also incorporated in 1978. The acquisition meant that Apollo Group created a new wholly owned subsidiary called Western International University (WIU) and kept the accreditation which it needed to offer classes.

Sperling,owner and operator of University of Phoenix

By 1996, WIU had 1,200 working adult students at campuses and ‘earning’ centers in Arizona and London; a large portion of their students came from more than 40 different countries to learn English as a Second Language and continue on to pursue a degree in higher education. WIU offered undergraduate and graduate degree programs at four campuses and ‘earning centers’ in Phoenix, Fort Huachuca, and Douglas, Arizona; and London, England.  Things looked very good for the for-profit college and their new cyber master.

Starting with 68 campuses and ‘earning centers’ in August 1995, Apollo Group grew to 85 one year later and enrollment more than doubled from 21,163 to 46,935, with campuses littered al over, from San Diego to New Orleans and from Honolulu to Guaynabo, Puerto Rico.

Starting in 1997 the University of Phoenix then opened nine new ‘earning centers’ in Los Alamos, New Mexico; Phoenix; the 32nd Street Naval Base in San Diego; Rancho Bernardo, Stockton, Ontario, Pleasanton, and Pasadena, California; and Las Vegas.

In April 1998 the  Apollo Group went on to authorize a three-for-two split of its common stock. Two months later, Apollo announced that it would open — through its University of Phoenix subsidiary — two new campuses in Oklahoma as well as one in Vancouver, British Columbia. In addition, the company gained state licensure in Maryland and was pursuing approval from the North Central Association of Colleges and Schools prior to opening a location in that state. Such expansion augured well for Apollo, which by then was serving some 66,000 degree-seeking students and continually positioning itself as a leading provider of higher education for working adults while sucking up taxpayer funds faster than a kid in a soda shop (ibid).

A history of the Fraudulent Practices of the Apollo Group and their subsidiary, the University of Phoenix (UOP)

In 2003, two former employees sued the Apollo Group under the federal False Claims Act, alleging that the company had defrauded the U.S. Department of Education by obtaining federal student aid based on false statements of compliance with federal rules that prohibit schools from paying recruiters based on the number of students they recruit. Apollo settled that case in 2009 by paying out $78.5 million (

In 2004, the Department of Education brought a separate suit for these violations, resulting in Apollo paying another $9.8 million (  In October 2009, the feds stated that the school has defrauded the government of billions of dollars of financial aid since 1997 because it pays recruiters based on the number of students they sign up. The whistle-blowers said their pay and perks swelled when they enrolled a lot of students (

On May 27, 2011 two former admissions recruiters at the University of Phoenix filed another federal whistle-blower lawsuit that accused the giant for-profit university of continuing to violate a ban on paying recruiters based on the number of students they enroll (  Apollo and its University of Phoenix are obviously serial violators but they continue unabated.

In 2008, after a two-month trial on a suit filed by Apollo Group shareholders, a jury today ordered Apollo to pay shareholders about $280 million or $5.55 a share.  Shareholders claimed Apollo misled investors four years ago when it kept secret a Department of Education report that criticized the University of Phoenix’s recruitment policies. The report concluded that the University of Phoenix paid enrollment counselors “solely based on [the] recruiters” success in securing enrollments,” which violated federal regulations (

Of course the pay-out for shareholders was subsidized by Federal Title IV funds, Pell grants, and defense department funds, such as the GI Bill.  In other words, the $280 million paid to discouraged shareholders was taxpayer monies so Wall Street got subsidized and Apollo got the fines paid by you, the taxpayer.  So did all the lawyers in the cases.  For their fees are paid by taxpayer subsidies as well, making suing for-profit colleges a big business for big law firms.

The Florida Attorney General is just one of the AG’s that has subpoenaed the Apollo Group’s drive by predatory university, the University of Phoenix, as to “misrepresentations regarding financial aid” and “unfair or deceptive practices regarding recruiting, enrollment, placement”, and the list of allegations goes on.  Delaware’s attorney general has subpoenaed Phoenix regarding its business practices as well. The Massachusetts AG has pursued allegations that the schools engaged in deceptive actions with respect to recruit and financial aid.  Law makers, when they are even interested, have a hard time keeping up with the staggering amounts of theft by UOP.


Apollo Group and Phoenix University have settled False Claims suits for millions and millions of dollars

Even though Apollo Group has settled with some whistleblowers and the federal and state governments for millions in fines for illegal business practices (False Claim suits), the company looks at all this as the ‘cost of doing business’.  Why?  Simple:

Apollo Group, the owner of University of Phoenix, gets about 89 percent of its revenues from federal financial aid programs – that means they are subsidized by you, the taxpayer who pumps your money into their grimy coffers.

Since much of this is in the form of student loans, and because of Phoenix’s high prices, many students must take out additional high-interest rate private loans to cover all the costs which thrust them into debt purgatory for life.

According to the US Department of Education’s College Scorecard, the University of Phoenix has a 17% graduation rate and a 26% default rate. The average UOP graduate will have about $64,000 in student loan debt, with an unknown possibility of finding a job in their major. Credits are unlikely to transfer to more legitimate schools ( ).  This is hardly a university, but more like a parking lot for disposable students.

Look at the facts: tuition for an Associate’s degree in Business at the University of Phoenix Online is $24,500. The same degree costs $4,087 at Phoenix College in the Maricopa Community College system in Arizona. A Bachelor’s in Business at the University of Phoenix costs $74,575, while the University of Arizona charges $44,200 for the same degree. So students who attend the University of Phoenix usually end up borrowing, and owing, a lot of money and they, along with taxpayers pay the large fines and will eventually be on the hook to pay the defaulted student loans that Phoenix has wolfed down.

While for-profit colleges like UOP spend less than one third of what public colleges and universities spend on instruction and the students, they also spend less than one fifth of what private colleges and universities spend.  Furthermore in 2012, US News reported that the latest figures from the Department of Education indicate that the default rate on federal loans to the for-profits is twice what it is for public colleges and universities, and about three times for the privates. Sadly, according to the Senate report, of students enrolling in the largest for-profits, 2 million withdrew and of those who came in 2008-2009, 54 percent had left by 2010 (

But there is more, for the company’s ‘educational product’, the coveted diploma from the university that is marketed and sold as a commodity, is by and large useless.   In 2012, in a report titled “The For-Profit Postsecondary School Sector: Nimble Critters or Agile Predators” the authors note that alumni of for-profit colleges tend to get lower salaries and are less enthusiastic about their degrees six months after enrolling than are their peers at nonprofit schools.  The huckster for-profits don’t care, they continue to pay their CEO’s millions to run their financial rackets — students be damned.

When it comes to receiving and education, the university is hardly a “learning center” but is rather an “earning center”.

UOP targets veterans and low income minorities for predation using military style recruiters

Senators Tom Harkin (D-IA) and Kay Hagan (D-NC) have been at the forefront of trying to reel in the for-profit behemoth but to no avail.  The Senators indicated that last year, 2012, Apollo was employing more than 8,000 recruiters in 2010 alone to corral poor, working class and mostly minority students into their for-profit slaughter house or ‘earning centers’.

The largest target-group for the UOP are veterans, minority students and the working class.  They know that in the case of veterans, they can get their hands on the coveted GI Bill monies which are also taxpayer funds.  They also know that returning veterans have no civil life due to large employment figures and that they are buried in desperation as they come home from illegal wars and find no work, face rising suicide rates and see little in the way of creating meaningful lives.

The Senate Committee investigating the University of Phoenix and their parent ship, the Apollo Group, quoted veterans in 2010.

As one service member said in his complaint to the committee:

I believe that the University of Phoenix is using deceptive practices in order to lure students into the school, the enrollment counselors tell students that they should be complete with their course of studies in a short period of time fully knowing how long it is going to take. . . . I have talked with other students at the University of Phoenix and this appears to be a common tactic used by University of Phoenix enrollment counselors

Another military student who was billed for a class that he never took wrote:

As a marine of 19 years, I’ve served in Desert Storm, Somalia, and Operation Iraqi Freedom x2. You cannot imagine the emotional battle this has taken on me after dealing with this for nearly TWO years!! An education institution such as yours earns millions of dollars each year, and yet you punish those who are willing to risk their lives and fight for your freedoms, you should be ashamed! I am very disappointed as an American that an institution such as your calls itself a place of ‘higher’ learning.’ It was because of the selfless sacrifice of our WWII Veterans and the implementation of the GI Bill that paved the way for hundreds Colleges to open across our country. I am going to retire from the Marines after 20 years of service, I hope you will take a good look at how you treat Veteran’s in the future.

The son of one Apollo student, disputing a bill, wrote, “My father did not make any loans [sic]. The school Phoenix University never told him upfront that he was applying for a loan he thought he was applying for some type of Pell Grant from the government which he would not have to repay. They told him they he was approved for a loan with your institution after the period that classes would start … My father does not speak English and is not computer savvy.

Another former student was told by an Apollo admissions counselor that her felony conviction would not hinder a career as a pharmacy technician.1133 The student graduated with a 3.61 GPA, and $27,000 in debt, only to discover that the required licensing board placed a lifetime bar on individuals with certain felony convictions sitting for the exam ((

And the commodified degrees sold like hot cakes to an unsuspecting public are themselves little more than useless diplomas that stand for little other than profit for the corporations, like Apollo and UOP that issue them.

The New York Times reported in 2011:

“Many students find that prospective employers and graduate schools won’t take their coursework seriously since most for-profits lack accreditation from legitimate academic bodies.  “I researched the accreditation and it seemed legit. I had no idea…none of my schooling would transfer,” an Army vet and University of Phoenix alum from St. Petersburg, Florida, wrote on the VA’s GI Bill Facebook page. “A lot of places see the guaranteed GI Bill as cash in hand and it’s a shame they take advantage of us.”

“At some schools, more than 60 percent of military students ultimately default on their loans. A 2010 VA audit found serious bookkeeping errors at nearly every school it reviewed: An Arizona school didn’t give a veteran promised tuition discounts and pocketed $20,000; a New Jersey school collected nearly $5,000 in tuition from a student after he’d been recalled to active duty” (

The response by the University of Phoenix has not been to give the money back they stole from the US Treasury or bandage the wounds left by their rapacious business plans aimed at vets.  No, the response has been what one would expect from a sociopathic organization — mendacious philanthropy used to cover up nefarious business activities and predatory practices.

On May 15, 2013 the New York Times reported that:

“University of Phoenix® and AMVETS, a vocal advocate for veterans’ education, are awarding $350,000 through 50 scholarships worth $7,000 each to active-duty service members, eligible family members and veterans to pursue a degree from University of Phoenix. AMVETS has teamed with University of Phoenix since 2007, offering more than 264 scholarships to demonstrate the appreciation of the sacrifice active-duty servicemembers, their families and veterans make for the country and to help them transition from the military to the civilian sector” (

But there is more.  To staunch criticism that Apollo and UOP are really criminal financial enterprises more interested in turning a buck than educating students, the New York Times reported that Apollo recently announced:

University of Phoenix® announced the 2013 Park Stewards program  grant recipients.  Now in their second year of program sponsorship, the University provided $187,000 in program funding to the National Park Foundation to help high school teachers and their students across the country build a deeper connection and sense of stewardship for their national parks through curriculum and service learning projects” (

These fraudulent bits of charitable altruism and scurrilous subterfuge are of course paid for by public subsidies – you, the taxpayer.  No CEO has given up their exorbitant salaries or perks; nor has John Sperling, founder of Apollo and UOP let go of any of their family profits.  They continue to feed at the trough of public largess while playing maximizing greater and greater profits for themselves and casting themselves as philanthropists; the insidiousness of it all.


Yet all of this is not new and in fact has its roots in more than sixty years of history.  As I wrote for Truthout back in 2012:

“Under the original GI Bill federal monies had been sent directly to the institutions of higher education. Now, with the new Veterans Adjustment Act of 1952, federal monies would no longer be paid directly to the various institutions of higher education, but instead, veterans would directly receive a fixed monthly stipend. They would then use this to pay for their individual tuition, fees, books and living expenses. The decision to end direct tuition payments or to stop the direct distribution of federal funds to the myriad institutions of higher education came after a 1950 House select committee hearing that uncovered incidents of fraud by many educational institutions through overcharging of tuition rates. Some 258 unnamed educational institutions were mentioned in Appendix D of a 1950 Veterans Administration report to the Senate Committee on Labor and Public Welfare in what would be the first such incident of for-profit higher institutional fraud to plague the government, which would then set the stage for the present subsidized profit-extraction schemes by Wall Street. More investigations of the for-profit educational enterprise would occur in 1973, in the 1990s and now, once again, under the Obama administration and senate subcommittees” (

History certainly has a way of repeating itself but the same old racket is still in effect and UOP is one of the prime players in the PT Barnum circus of for profit education – all to the detriment of veterans, minorities, working people and taxpayers.


Publicly subsidized advertising and marketing for the Apollo Group, for-profit syndicate is staggering

Meanwhile, Apollo in 2009 devoted $2,225 per student — 23.7 percent, or $935 million — to marketing and recruiting (  Remember, the corporation feeds at the trough of public funds and thus 89% of the money spent on advertising was taxpayer funds.  This hefty spending might be one reason the for-profit controlled media refuse to critique Apollo or UOP.

Last year when Senators Tom Harkin (D-IA) and Kay Hagan (D-NC) introduced a bill to bar for-profit colleges from spending taxpayer money on marketing and deceptive advertising, Apollo attacked them for offering “misleading rhetoric.” Advertising Age recognized Apollo as one of the top 100 spenders on U.S. advertising in 2009  – $377 million, more than Apple (   The Huffington Post reported that The University of Phoenix spent the most money on Google Adwordsroughly $170,000 per day — in the third quarter of 2012, according to a recent report by Wordstream, an online advertising consulting firm, cited by the Daily Mail.,, and came in second, third, fourth and fifth, respectively (  Eight-nine percent (89%) of all of these expenditures were and are paid for by taxpayer subsidies.

In 2013 alone, Apollo still has the biggest advertising budget for search.  The sordid University of Phoenix acts more like a marketing company than a provider of education.  On January 14, 2013 the University of Phoenix spent a whopping $494,600 per day for ads on the Internet ( in an attempt to corral more and more desperate students who are continuously told they need a college degree to be “successful in the market”, even though unemployment is a massive .

The little shop of horrors has used taxpayer and student loans to subsidize sponsorships of everything from New Yorker magazine education panels to Good magazine’s education website.  Moreover, in 2006 it signed a $154 million contract for 20-year naming rights for the NFL stadium near its Phoenix headquarters — even though it has no sports team (

Falling Stock Prices plague Apollo and UOP

In October of 2012 Yahoo Finance News reported that Apollo Group Inc.’s shares had plunged 60% after the for-profit education company reported a disastrous fourth-quarter and announced plans to close some of its University of Phoenix schools. The company sighted higher costs and declining enrollment. Apollo also issued a full-year revenue forecast that was below the market’s expectations (

GMI Ratings which maintains broad coverage of the environmental, social, governance (ESG) and accounting-related risks affecting the performance of public companies reported that they had been rating Apollo Group Inc (NASD: APOL) poorly for so long — having fallen to a “D” in August 2010 and then an “F” in February 2012—that it seemed that Apollo was “running out of road to drive on. As of our latest assessment, Apollo Group is signaling significant risks” (

Reuters reported on January 8, 2013 that Apollo Group, Incorporated results for the three months which ended November 30, 2012, has shown revenues of $1.1 billion and diluted earnings per share of $1.18 per share, or $1.22 per share excluding special items. Apollo Group Chief Executive Officer Greg Cappelli bumbled along and tried to calm investors by stating that:
"We are rolling out new career-oriented tools for students, as well as working with leading companies to help them meet their needs to develop an educated workforce. We are committed to become the educator of choice to connect education to careers and believe this approach will position us for long-term success" (
 Yet in light of all the fancy, sophistic rhetoric of the publicly financed CEO the first Quarter 2013 results of operations for the company showed that the Net revenue for the first quarter 2013 was $1.1 billion compared to $1.2 billion in the first quarter 2012. Further, the University of Phoenix Degreed Enrollment was 319,700, a 14.3% decrease from the prior year first quarter, and New Degreed Enrollment was 54,100, a 15.1% decrease from the prior year first quarter.

Company operating income for the first quarter 2013 was $230.9 million, down 11.7%, compared to $261.7 million from the prior year first quarter. And when it came to income from continuing operations attributable to Apollo Group for the first quarter 2013, it was $133.5 million, or $1.18 per share, compared to $147.5 million,or $1.13 per share in the first quarter 2012.

Results for the first quarter 2013 include restructuring and other charges of $24.1 million attributable to the Company`s optimization efforts and a $16.9 million credit for the reversal of charges associated with a securities class action lawsuit.

All in all, excluding the special items noted above, income from continuing operations for  the first quarter 2013 was $137.9 million, or $1.22 per share, compared to income from continuing operations of $165.3 million, or $1.26 per share, for the first quarter 2012 (

Operating expenses are down; account receivables have plunged due to bad debt the company is notorious for.  There has been decline after decline in admissions, enrollment, operating expenses, bad debt collections, account receiveables, and the cash flow of the company plunged in November 30, 2012 from 1.3 billion dollars in August 31, 2012 to $776 million.  Debt and the company`s $42.5 million cash payment for its purchase of a non-controlling interest in Apollo Global, another beneficiary of taxpayer largess see the company as severely hemorrhaging (ibid).

Unbeknownst to many, the Apollo Group formed a joint venture with The Carlyle Group (Carlyle), called Apollo Global, Inc. (Apollo Global), to pursue investments primarily in the international education services industry. As of August 31, 2011, Apollo Group owned 85.6% of Apollo Global, with Carlyle owning the remaining 14.4%. During the year ended December 31, 2011, the Other Schools segment includes IPD and CFFP, as well as Meritus University, Inc. (Meritus), which ceased operations (

The Apollo Group states at its website:

Apollo Global was formed to address the needs of the global marketplace by bridging the gap between supply and demand for quality education, and by preparing the workforce for the jobs the economy requires. Apollo Global leverages its size and influence to challenge the educational status quo in order to help students transform both their personal future and that of their communities through education” (

Sure, and don’t forget those loveable Hostess Brands, those cream-filled confections America was so well-known for; the bankrupt company that owned them agreed in March of this year to sell the insolvent snacks — along with Ho Hos, Sno Balls and Dolly Madison Zingers — to two investment firms.  Guess who the new owners will be?  Yep, the Apollo Global Management and Metropoulos & Company, which owns Pabst Blue Ribbon and Vlasic pickles.  Federal funds, in the form of student loans, are once again being used to bail out flailing and failing companies as taxpayers continue to be fleeced (  All of these financialized shenanigans give more credence to the fact that the Apollo Group has little interest in education and holds more fascination with large investment banking interests.


But it gets worse for in April of this year, 2013, The Utah State Board of Education approved Carnegie Learning Integrated Math I: A Common Core Program for purchase with state education funds designated for instructional materials. The curriculum was reviewed through Utah’s annual Recommended Primary Instructional Materials process and is approved through December 31, 2016.  Who owns Carnegie Learning Integrated Math and who will profit from the state education funds puring into their coffers?  Carnegie Learning, located in Pittsburgh, is a wholly owned subsidiary of Apollo Group, Inc. (NASDAQ:APOL) and is the sole source provider of Cognitive Tutor® and MATHia® software for students in grades 6-12 ( You can preview even more of the Apollo Groups investment banking strategies at (

With all of this in mind on March 25, 2013 the Apollo Group reported its second quarter earnings, with financial results for the three and six months ended February 28, 2013, with second quarter revenue of $834.4 million and diluted earnings per share of $0.12 per share, or $0.34 per share excluding special items. The second quarter 2013 results for operations were even more discouraging than just months prior.  Why?

  • Net revenue for the second quarter 2013 was $834.4 million, compared to $962.7 million in the second quarter 2012.
  • University of Phoenix Degree Enrollment was 300,800, a 15.5% decrease from the prior year second quarter, and New Degreed Enrollment was 38,900, down 20.1% from second quarter 2012.
  • Operating income was $29.8 million, compared to $103.7 million from the prior year second quarter.
  • Income from continuing operations attributable to Apollo Group was $13.5 million, or $0.12 per share, compared to $62.2 million, or $0.49 per share in the second quarter 2012 (

CEO Group Chief Executive Officer Greg Capelli tried to dance around the dismal showings by stating:

“Higher education is rapidly evolving as workforce demands and technological innovations drive change in our global economy. We are further positioning our organization and brand with our continued commitment to help students acquire real workplace skills, achieve their academic goals, and – through the power of education – realize their career aspirations” (Ibid).

Capelli was not alone in his attempt to assure investors. He was joined by ‘Ghuru Focus’, another financial rating group with little or no legs to stand on other than those bought and paid for.  They reported on May 9, 2013 in n article entitled: “Apollo Group: This Unloved Company Is Significantly Undervalued”, that Apollo was a good buy:

“In addition to this the company is focusing not only on degree granting programs, but also on vocational and certificate granting programs. This plays to the company’s core strengths in attracting working adults who want to acquire tangible skills for their jobs but don’t necessarily need a four-year degree. Eighty million adults in the U.S. don’t have a bachelor’s degree, and of those 50 million never tried to get one, so there is ample room for growth in this market.

In summary I see that the long term prospects of the higher education industry will remain positive, and the University of Phoenix is poised to be part of this” (

Of course they too know that the company, just like Capelli does, is held afloat by taxpayer funds and thus they expect this to continue, even in light of the sinking financial investment ship that Apollo has become.

School closures and lay-offs plague the UOP for-profit syndicate as students are thrown under the bus with millions in student loans


Given the Apollo Groups penchant for financial wheeling and dealing and their disdain for education, in October of 2012, the University of Phoenix closed 115 of its brick-and-mortar locations, including 25 main campuses and 90 smaller satellite ‘earning centers’. The closings affected some 13,000 students, about 4 percent of UOP’s student body of 328,000.   The for-profit drive-by university also layed off about 800 employees out of a staff of 17,000 (

Why?  Simple: it is more profitable to dump students, fire employees and close brick and mortar buildings than it is to offer any meaningful education.  The company’s business plan is all about profits and has nothing to do with education.  It never did and it never will.

Credit bureau TransUnion recently reported that in the past five years, the average student loan debt each borrower carries has risen 30% to $23,829. More than half of student loan accounts, which add up to more than 40% of the total dollars owed, are currently in deferral status. This is just a temporary reprieve, a holding tank for future crisis; students can defer for only a few years before they have to repay and then the chickens come home to roost.

But student loan repayment is lacking.  FICO Labs found that loan delinquencies rose by 22% in five years. For the newest group of loans it studied, delinquency rates are 15.1% — higher than the 11% cited by the Federal Reserve in a November report. Like the Fed’s study, the FICO analysis doesn’t include loans that are in a deferred status (an accounting trick to say the least) — which means the number of people who can’t afford to pay back that money may be almost twice as high as what the official delinquency rates reflect.

This situation obviously can’t be sustained for much longer.  Barry Bosworth, an economist at the Brookings Institution recently commented for Time Magazine:

“I think a few more years and it’s going to be a general crisis,” says. Interest rates are unusually low right now; when they rise, more borrowers who were just keeping their heads above water are liable to become delinquent (

Seniors alone, face $36 billion dollars in college loans ( Also, unlike most other consumer debts, student loans are almost impossible to discharge in bankruptcy. Most student loans are federal loans, and the government can garnish paychecks, withhold tax refunds, even garnish Social Security payments to co-signers, such as parents or loved ones and pursue other means rigorous and shylocking debt collection means for getting their money back.

The real tragedy is that about 3 million students attend for profit colleges, schools run like businesses and backed by Wall Street.  And as mentioned, these predatory industries target low-income students and saddle them with high amounts of loan debt (  Student loan businesses work hand and hand with financial aid offices to assure to peg students to high cost loans.

Years old statistics, some of the only ones around, indicate that of the borrowers whose first student loan payments came due between October 2008 and October 2009, a startling 22.7% of those who had gone to a for-profit college had defaulted by Sept. 2011. That’s more than double the 11% three-year default rate for students at public institutions and triple the rate (7.5%) for those who had gone to private, non-profit schools (  And legislators and federal regulators who have investigated for-profit colleges’ vigorous marketing tactics have found that most of these schools have pushed students into taking out loans they did not need.  That is certainly the case for UOP and their parent company, the Apollo Group.

But there is more:

  1. While 50% of students at four-year colleges received federal student loans in 2009 – 2010, 86% of students at for-profit institutions received federal loans.
  2. 2.     Public university students had a 5.2% default rate in 2009 (the most recent statistics we have), private (non-profit) university students had a 4.5% default rate and for-profit institution students had a 15.4% default rate!
  3. 3.     From 2000-2010, there was a 30% increase in enrollment in traditional colleges and universities.  Enrollment in for-profit universities increased nearly 450% during that time period!  See KC Fed chart below (

The University of Phoenix, a serial criminal in the student loan ‘juice’ racket is in business to take federal dollars, monetize students and turn them into profits. So, in order to do this, they attract and admit students who will not graduate nor even have a chance of graduating.  And virtually all of their students obtain federal loans.  When someone takes on student debt they are simply being sold a future that is not much different than a debtor’s prison or purgatory.  To make matters worse, these for-profit institutions are growing at a much faster rate than traditional universities.

Thus, the debt-cancer colleges and universities like UOP are saddling taxpayers with literally billions in debts for it is we who will be forced to bail out the student loan debacle, now over one trillion dollars of debt, when the chickens come home to roost.  The for-profit buccaneers, like UOP walk to the bank.  Add to this the spiraling debt is preventing any investment by debtors in the choking economy as they are forced to send a large portion of their low-paid income to the companies that collect the debt, another big business.

The Apollo Group awards CEO’s ridiculous and excessive pay-outs for ongoing criminal activities

While the Obama administration talks ‘doublespeak’ about making college more affordable and as college debt skyrockets beyond the average person’s comprehension, CEO pay at the University of Phoenix is not only exorbitant, it is ridiculously excessive, especially in light of plummeting stock prices, financial failure and predatory practices that bilk students and taxpayers.  UOP has put in place a reward structure that much like Wall Street, awards the most criminal of practices through excessive bonuses, CEO pay and pay-outs to high level administrators.

Back in November of 2010, Bloomberg News reported that:

“Top executives at the 15 U.S. publicly traded for-profit colleges, led by Apollo Group Inc. and Education Management Corp., also received $2 billion during the last seven years from the proceeds of selling company stock, Securities and Exchange Commission filings show. At the same time, the industry registered the worst loan-default and four-year-college dropout rates in U.S. higher education. Since 2003, nine for-profit college insiders sold more than $45 million of stock apiece. Peter Sperling, vice chairman of Apollo’s University of Phoenix, the largest for-profit college, collected $574.3 million (

Gregory W. Cappelli, CEO for the Apollo Group saw his pay shoot up more than 1,400 percent in 2011.  He also received $23.5 million in stock and stock options.  Cappelli isn’t even the company’s sole CEO (  (Capelli splits the title with Charles B. Edelstein, who received even bigger stock option grants in 2008.) Stock options are supposed to give CEOs an incentive to promote long-term growth.  But as we saw, growth is plummeting at UOP and at Apollo while corporate pay is rising.

Executives at Apollo, like most for-profit executives, are more lavishly compensated than leaders of public and non-profit colleges and universities. Executive compensation across the for-profit sector drastically outpaces both compensation at public and non-profit colleges and universities, despite poor student outcomes at many for-profit institutions.


In 2009, Apollo Founder and Chairman John Sperling received $8.6 million in compensation, more than 13 times as much as the president of the University of Arizona, who received $633,206 in total compensation for 2009-10. Co-CEOs Charles Edelstein and Gregory Capelli together received $3.4 million. The chief executive officers of the large publicly traded for-profit education companies took home, on average, $7.3 million in fiscal year 2009.


The Senate Government Media Center reported in 2011 the 2010 compensation for top executives at Apollo and UOP:


John G. Sperling Founder and Chairman (2009) $8,617,597.00 (2010) $6,963,239.00

Joseph L. D’Amico President and COO (2009) $5,115,263.00 (2010) $5,500,246.00

Brian L. Schwartz Senior VP and CFO (2009) $2,345,379.00 (2010) $2,369,601.00

William J. Pepicello President, University of Phoenix (2009) $2,035,470.00 (2010) $2,035,470.00

Charles B. Edelstein Co-CEO (2009) $1,800,000.00 (2010) $1,636,950.00

Gregory W. Cappelli Co-CEO (2009) $1,659,712.00 (2010) $1,659,712.00

Total  (2009) $21,573,421.00 (2010) $20,165,218.00 (

 Juxtapose this with what you have just read regarding plunging stock prices and revenues for the company and ask yourself why and how these executives receive so much in CEO pay.  As indicated, Apollo has lost two-thirds of its market value in the past year while it has fired 800 employees, this while CEO pay skyrockets. Also, it cannot be emphasized enough that these CEO salaries represent tax payer subsidies as the monies are sucked out of Title IV funds and Pell Grants (Apollo collects more Pell Grant dollars than any other college in the country, passing $1 billion in 2010.) and it must be stated, this amount does not include revenue received from Departments of Defense and Veterans Affairs education programs, the Department of Defense Tuition Assistance program and post-9/11 GI Bill funds which in 2010 accounted for approximately 3.4 percent of Apollo’s revenue, or $144 million — all subsidized by you, the reader (ibid).=

Insider Trading at the Apollo Group

But there is more.  In 2010, Apollo disclosed that the Securities and Exchange Commission (SEC) had requested information from the company about its insider trading policies relating to stock sales made by John Sperling and his son Peter in 2009.  In April 2012, the SEC announced it was investigating the company for insider trading following a February 2012 announcement of lower than expected earnings (

In January of 2013, the University of Phoenix also announced that it expected to be placed on probation by one of its accrediting agencies, The Higher Learning Commission of the North Central Association of Colleges and Schools. The accrediting agency has charged that the school lacked sufficient autonomy from its corporate owner, Apollo, and it also raised concerns about dropout rates and the school’s overreliance on federal aid (

Buying corrupt politicians and subsidizing with taxpayer funds sensible regulations of the for-profit college industry while furthering the material conditions for ongoing public theft

Never mind government investigations, the Department of Justice sanctions, or False Claim suit settlements for insider trading by Apollo,  corporate founder, John Sperling, now 92 years old, is a major donor to Democratic and progressive causes – this to cover his bets, assure a steady trickle of public monies is available to Apollo and to assure that the syndicate is not held responsible for continuing fraud.  He has spent millions to assure no sensible regulations that protect the public can be legislated into law.  His favorite recipients: corporate democrats.

Jerry Brown, the Democratic candidate for governor, has received the largest contributions from the Apollo Group to any individual state candidate. The company gave $13,000 to his campaign for Governor (

Shortly thereafter, in 2012, Terry Bishop was appointed by Governor Jerry Brown of California to the California Student Aid Commission.  Ms. Bishop worked at the Apollo Group since 1997 serving most recently as the executive vice president of academic strategy and senior advisor to the chief executive officer (


Then there is Chris Christie, the bombastic Governor of New Jersey who worked lobbying for the Apollo Group and UOP ( (  Christie left for the private sector and began a lucrative career as a lobbyist at Dughi, Hewit, a friend’s law firm, advocating for such clients as the University of Phoenix, a for-profit college; Edison Schools, a for-profit operator of public schools; and the Hackensack University Medical Center (  Now Christie is doing what he was paid for: lobbying for full spectrum privatization of schools (

Das Williams Assemblyman from Ventura County and Santa Barbara, like Jerry Brown, is another corporate democrat who is pushing for a two-tiered privatized toll booth system for entry into community colleges in California is an Apollo Group recipient (  His AB955 is the darling of the for-profits.

Take a look at Apollo and just some of their political contributions

Teacher pension funds buy millions of shares of the Apollo Group in an effort to chase 8% returns: Lack of transparency makes it difficult to know what assets are being purchased or how they are valued.The trail of Apollo investments by teacher pension funds is outrageous.  That public pension funds would stuff their portfolios with stock from a criminal enterprise like the University of Phoenix and their parent group, the Apollo Group is unconscionable.

Take a look below at the amount of Apollo stock and the pension funds that own them:

CA Pension funds and Apollo

NEW YORK STATE TEACHERS RETIREMENT SYSTEM12/31/2012 227,064 (300) (0.13) 4,183


TEACHERS ADVISORS INC12/31/2012 112,166 16,825 17.65 2,066

PUBLIC EMPLOYEES RETIREMENT SYSTEM OF OHIO12/31/2012 89,872 68,361 317.80 1,655

STATE OF WISCONSIN INVESTMENT BOARD12/31/2012 87,534 1,540 1.79 1,612

TEXAS PERMANENT SCHOOL FUND12/31/2012 55,333 (5,776) (9.45) 1,019

PUBLIC SECTOR PENSION INVESTMENT BOARD12/31/2012 35,261 3,100 9.64 650

ARIZONA STATE RETIREMENT SYSTEM12/31/2012 34,576 (300) (0.86) 637PUBLIC EMPLOYEES RETIREMENT ASSOCIATION OF COLORADO03/31/2013 34,323 (10,207) (22.92) 632

ONTARIO TEACHERS PENSION PLAN BOARD03/31/2013 28,499 2,717 10.54 525


OREGON PUBLIC EMPLOYEES RETIREMENT FUND12/31/2012 17,600 1,034 6.24 324

NEW MEXICO EDUCATIONAL RETIREMENT BOARD03/31/2013 16,549 (600) (3.5) 305

UTAH RETIREMENT SYSTEMS12/31/2012 15,233 0 0.00 281

TEACHER RETIREMENT SYSTEM OF TEXAS03/31/2013 13,443 (1,797) (11.79) 248


Apollo Group holdings (APOL, Nasdaq)


Entering the correct debate: declassifying education as a commodity and pointing the finger at capitalism as a failed economic system

Institutions like the Uof P are little more than insidious little RICO ‘suits’ waiting to be popped by some courageous prosecutor looking for some high level, deep pocketed perps (see my four part article at

Not only are the for-profit predatory colleges a disservice to the public, they are like private pike in a public lake, threatening to cipher off more and more of the public economic coffers so they can place themselves as the “primary provider” of education while the government entities that provide education at what is supposed to be no cost, sink deeper and deeper into decline becoming then the secondary providers.

Sound like the health care debate?  It is similar and it is already happening — take California where City College of San Francisco was denied accreditation forcing 90,000 students into the streets, for-profit prisons or for-profit colleges like the University of Phoenix.  This is a tragedy and not only an example of the ‘Shock Doctrine’ but worse, capitalism is creating more and more crisis from which to feed on.  See how the Apollo Group boasts of benefits from Shock Doctrine politics (

Defining the “educational product” is not what is needed now; what is needed now is to define the educational and socio-economic debate.  What the times call for now is a clear and straightforward understanding of how capitalism actually works — the system of market fundamentalism that has transferred public wealth to the private sector at rapid speeds and shows its negative impacts on communities and public institutions.  Education is certainly not alone in bearing the brunt of the damage; we’ve seen the privatization of almost everything within the last thirty years from mercenaries to prisons.  In so doing the system has bankrupted what were once notable public institutions and forced them into a race to the bottom they simply can never win.  Then, the pols newspeak it as Race to the Top.

The tragedy is that we are not looking at capitalism with clear and open eyes but through bleary, half-opened and often disillusioned shutters.  As the New York Times article notes, it is the stress associated with work and the lack of it that is impacting the American student and their families more than anything else.  A system that cannot employ people who wish to work, that asks that productivity goes up decade after decade while wages continually decline, that gives large tax breaks and bonuses to the rich while the working class suffer with health care costs and bankruptcy; what kind of criminal system is this and how can anyone expect it to offer any educational services let alone money or ideas?

The public needs to begin to look at what education really means for a society that wishes to be democratic;  what the goals and objectives of such an education would be, not simply treat education as another commodity. What is needed now is bold citizenship education and direct action, something not taught in the office buildings that house many of the for-profit colleges like criminal UoP.

The shame is that Americans know so little about how their intuitions are shaped, who governs them, how the institutions are financed, how they are then asset-stripped (as in the case of public education); nor do many understand how power works to translate the need for private profits from public life at the expense of working families and their children.  Without this understanding no education is possible.

It is high time we as adults  stand up and become the students we think we service.  Maybe then, and only then, can we stand in solidarity with all public participants and servants and begin the long climb towards equality.

“For, as we have said, the art of the sophist is a money-making art which trades on apparent wisdom, and so sophists aim at apparent proof… for sophistry is an appearance of wisdom without reality.”                                                                                                                                   —-Aristotle

(Quoted from Aristotle’s On Sophistical Refutations, 171b32-7. Tr. E. S. Forster. Loeb Classical Library Vol. 400 (Harvard, 1955). P. 63



Print Friendly

Share this Post



, , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , ,

Related Posts

About the author

Dr. Danny Weil is an investigative journalist, author and public interest attorney who practiced public interest law for more than twenty years and has been published in a case of first impression in California. He received the Project Censored "Most Censored" News Stories of 2009-10 award for his article: "Neoliberalism, Charter Schools and the Chicago Model / Obama and Duncan's Education Policy: Like Bush's, Only Worse," published by Counterpunch, August 24, 2009 and again in 2013 for his 2012 article, "HR 347 Would Make Many Forms of Nonviolent Protest Illegal" ( He writes profusely on education and for-profit predatory colleges.

  • Dahn Shaulis

    A compelling case against Apollo Group and University of Phoenix. Yes, these are criminal enterprises, funneling tens of billions in government funds to a few investors and CEOs, as vets, people of color, the disabled, and working class students are exploited by the millions.

  • Julia Stein

    Excellent article!

    • Guest

      Julia, University of Phoenix is particularly predatory on California. I hope you will pass this story on to others in your area.

    • Dahn Shaulis

      Julia, UoP is particularly predatory in California, where they hold a lot of clout by buying off politicians.

  • gruff

    I’ll read your article after I spend the next four hours writing a paper about hemichordates and nonvertebrate chordates for my invertebrate biology final. It’s for my bachelor’s in environmental science at the University of Phoenix. By the way, did you know that several species of marine molluscs serve as key bioindicators of water quality in lakes and rivers? It’s due to the fact that humans can study the filter feeding effects of water toxins combined with a relatively short generational time. I plan on doing some environmental fieldwork in a future career move, so I am thankful to have learned all about that subject. Information I have thanks to a so-called diploma mill.

    • Danny the union whore

      Gruff, best wishes in your career plans.

      And please excuse the author of the above article. He can’t help criticizing your hard work because he is jealous of those working to better themselves and not joining a union and becoming a burden on society like him and his ilk.

      • Dahn Shaulis

        Mr. Weil is seeking justice for working class people. The truth is, UoP is a failure factory that preys upon working class people, particularly vets, people of color, and women. Students would be much better off getting degrees from more legitimate (and less costly) public schools. Enrollment is dropping at UoP by the double digits because people know more about this ripoff. And DOD is distancing itself from this school.

    • Dahn Shaulis

      Gruff, good luck in your career. Hope you can find good work with a BS degree in environmental science from UoP. Of course you know that only 17% of your classmates will graduate and 26% will default.

      Just wondering, why did you decide to get a degree from a school that has Ivy League tuition ($500 a credit) yet has such a poor reputation?

      You could have gone to a community college and transferred to a great state university for significantly less, with enough money to get a Ph.D.

    • weilunion

      You could have written the paper without going nto debt, paying exorbitant fees and giving your money to a fiancial institution that poses as a college. The environmental field work will be great, but again, no need to pay a crminal organization for this.

      • Dahn Shaulis

        Ironically, UoP is teaming up with the American Petroleum Institute. So much for environmental justice.