Whistleblower lawsuit claims for-profit college ITT defrauding students

By Amy R. Connolly  |  Updated Jan. 26, 2016 at 9:59 AM
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TALLAHASSEE, Fla., Jan. 21 (UPI) -- A Florida campus of the for-profit ITT Technical Institute routinely used deceptive practices to enroll and keep students, including enrolling a blind student for a computer repair program, and coerced students into racking up huge debt, a whistleblower lawsuit said.

The lawsuit, filed in U.S. District Court, alleges ITT Tallahassee pressured students into taking out huge student loans by misrepresenting programs, lying about graduation and placement rates, all part of a larger scheme to defraud the federal government out of financial aid payments. The suit states the whistleblower, Rodney Lipscomb, a former dean of academic affairs at ITT's Tallahassee campus, was fired after raising concerns about the school's practices.

Lipscomb alleged the pattern of abuses stretched through his four-year tenure at the school, from 2011 to 2015. The lawsuit was unsealed Jan. 15 after the U.S. Justice Department declined to join the case.

Among the allegations are:

- Students were admitted regardless of aptitude. This includes enrolling a blind student in a computer networking program that required identifying wires and plugs by color and reading codes. Lipscomb said he raised concerns with school administrators but was told "it was not ITT's problem." The student quit the program within four weeks, but was responsible for an academic quarter's worth of student loans.

- Students were misled about their job prospects. Recruiters were informed to tell prospective students that particular programs would lead to better paying jobs. In one case, students were told the school's criminal justice program would lead them to careers as forensic scientists, when the degree only trained students for entry-level criminal justice work.

- ITT used scare tactics to bolster student enrollment. Lipscomb claims recruiters encouraged a 72-year-old brick layer to enroll in the school's business management program to learn how to "flip" homes, by purchasing rundown homes, fixing them and selling them for a profit. The student quickly learned he was not equipped to handle the school's fast-paced, technological classes and quit. When the student became irate about his loans, the school told him "he would either have to re-enroll to defer payments, repay his loans or be sent to collections." Lipscomb said this was common practice to raise enrollment numbers.

- ITT changed grade requirements to force students to retake classes. In June 2012, the school instituted a new rule for nursing program students that required a B or above in all nursing classes to complete the degree. "This policy resulted in increased debt loads for the students and increased revenue for ITT," Lipscomb said. "As a result of ITT's B policy, many students have been expelled from ITT mid program, leaving the student without a degree and with substantial debt that they are unble to pay back."

- ITT financial aid counselors were encouraged to tell students who were worried about taking out education loans "nobody pays back the loans any way."

ITT spokeswoman Nicole Elam said, "The company denies the allegations," in the complaint and "intends to vigorously defend itself."

In a statement to UPI, she said, "The case was brought by a former disgruntled employee whose claims have not been substantiated. Allegations are only allegations. To date, there have been no findings of wrongdoing against ITT Tech on any issues raised by Mr. Lipscomb."

She suggested the Justice Department's decision not to intervene on the case shows the allegations are unfounded.

"This was filed under seal to give the DOJ time to conduct their own investigation into the allegations and determine whether they want to intervene or join the case. Here, the Department of Justice declined to intervene in this lawsuit," she said. 'The case is only unsealed because the DOJ declined to intervene."

The lawsuit comes as ITT and other for-profit colleges, including Corinthian Colleges, are under increased scrutiny after allegations of inflated graduation and job-placement rates. Nationwide, 37 state attorney generals are examining 152 for-profit colleges that have received a total of $8.1 billion in federal student loan and grant payments last fiscal year.

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