According to an article in the online Campus Progress of December 5th, entitled “Scandal-Plagued Former For-Profit CEO Receiving $5 Million Settlement”, a former CEO of Career Education Corporation (you guessed it another predatory for-profit gangster college) has received a golden handshake. The article reported that:
“Despite his resignation after investigations revealed deceptive reporting of job placement figures, former Career Education Corporation CEO Gary McCullough is set to receive a hefty severance package topping $5 million, according to a new federal filing” (Campus Progress, December 5, 2011, Scandal-Plagued Former For-Profit CEO Receiving $5 Million Settlementhttp://campusprogress.org/articles/scandal-plagued_former_for-profit_ceo_receiving_5_million_settlement/).
- $1.6 million for two years of his salary
- $2.4 million for two years of his average bonuses
- $1 million for his prorated 2011 bonus
- $88,000 for retirement and other benefit plans
- up to $100,000 for outplacement services
- and two years of continued health, dental and vision benefit coverage and life insurance coverage
The payments are part of McCullough’s separation agreement with the company. They are detailed in a recent filing with the Securities and Exchange Commission. They detail that while he gets the golden handshake, we as taxpayers and students get the golden handjob.
Career Education Corporation enrolls more than 100,000 students at various colleges across the country, including American Inter-Continental University,Colorado Technical University, Le Cordon Bleu North America, and others. The company has brought in nearly $1.5 billion in revenue already this year thanks to taxpayers like you. They are another example of the manure shoveled up as education.
Here is the story as reported in Campus Progress, by Brian Stewart and detailed in California Watch (http://californiawatch.org/dailyreport/profit-college-firm-pay-5m-ex-ceo-13884).
It seems that McCullough’s departure from the company came shortly before a Securities and Exchange Commission filing revealed some of the company’s schools—namely, Health Education and Art and Design campuses— falsely reported job placement figures that “lacked sufficient supporting documentation or otherwise did not meet applicable placement guidelines” (ibid).
According to the filing, McCullough was not terminated for cause and is therefore entitled to the severance package hammered out by his lawyers. According to the report in California Watch, the for-profit school could have terminated McCullough with cause if, “he admitted to or was convicted of fraud, was convicted on felony criminal charges, committed willful misconduct or malfeasance in performance of his duties, or willfully misrepresented anything material to the company or the board.” Of course he would not admit to any such wrongdoing and instead took the golden parachute out of what could have been a criminal indictment. The real crime is that he was not indicted by prosecutors that are supposed to be putting criminals in jail and then brought to trial. Much like the federal Department of Justice, the preferable way of handling these scandals is to settle with the perp.
McCullough was paid $4.6 million in salary in 2010, monies that come from taxpayers in the form of subsidies and he also received other compensations, according to California Watch. The report also noted that a whopping 82 percent of Career Education Corporation’s tuition revenue came from taxpayers in the form of federal aid. That means, of course, so did McCullough’s salary, perks and bonuses. We the taxpayers are once again not simply filling the coffers of the decrepit company with public subsidies; we are also giving McCullough the golden parachute when he should receive iron chains and be frog marched to justice. The whole thing is despicable and shows how the one-percent receive their own form of ‘justice’ under corporate capitalism. Corporate crime, as we can see from the lack of any indictments of Wall Street crooks, pays off big time. No doubt his lawyers got their face in the public trough as well by charging hefty fees to defend the miscreant and draft the settlement for the little piglet. The whole coterie slopped up tax funds.
Career Education Corporation has faced allegations of violations of a number of regulatory issues in the past; this is not the first time — just like many other for-profit predatory colleges. Take a look at the GAO report released this October (For-Profit Schools: Experiences of Undercover Students Enrolled in Online Classes at Selected Colleges, GAO-12-150 October 31, 2011 http://www.gao.gov/products/GAO-12-150). The manure is piled high and the stench is still palpable. Yet no one goes to jail and few cases are pursued under the False Claim Act.
Earlier this year, Career Education Corporation settled with former students from San Francisco’s California Culinary Academy who claimed that the school’s high job-placement rate was fraudulent and misrepresented the college’s claims as many of the “reported jobs” were students working as waiters or as baristas at Starbucks (Read More: Too Many Cooks in the Kitchen—Spoiled the Broth).
The whole enterprise of the Culinary Arts ‘school’ is born from the Food Channel and other media marketing gimmicks that lead many people to believe they can become chefs in faraway exotic places. This is no different than military ads that tell recruits they will be able to travel and meet people from all over the world and see exotic places they would never see if they ‘just sign up’. It is fraud and misrepresentation at its best and the full force of marketing is in place, from the cable channels to the actual marketing efforts by the predatory for-profit schools. Eager youth are easily duped by the ‘pitch’ as they often sit home unemployed facing no futre and watch the commercials that these predatory institutions run on TV.
Readers can be assured that as we go forward more and more such stories will emerge and more and more of students’ lives will be ruined by such for-profit practices. It’s a crime and should be handled as such. However, under Eric Holder and the Department of Education led by the rancid Arne Duncan one would be remiss to hold their breath. Both of the men and their departments seem to work to protect such gangsterism in lieu of prosecuting them.