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VOL. 131 | NO. 108 | Tuesday, May 31, 2016

Education Department Replaces Career College Chain Monitor

JEFF HORWITZ, Associated Press

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WASHINGTON (AP) – The Education Department has appointed a new lawyer to oversee the turnaround of schools once owned by Corinthian Colleges Inc., following an Associated Press review that found trouble at the schools and questioned the previous monitor's independence.

Corinthian Colleges was one of the largest chains of for-profit colleges when it collapsed in 2015 amid allegations of fraud. The episode raised questions about whether the government should set higher standards for colleges accepting federal aid.

On Friday, the agency said Clark Kent Ervin, an attorney at Squire Patton Boggs LLP, will oversee the business practices of Zenith Education Group, an offshoot of a student-loan debt collection firm that took over Corinthian's operations. His new role makes Ervin the government's eyes and ears within Zenith, which receives tens of millions of dollars in federal student grant and loan dollars.

Ervin is a former inspector general of the Homeland Security and State Departments who was ousted from his Homeland Security job in late 2004 after delivering reports highly critical of the agency under the Bush administration.

Unlike the lawyers he will replace as monitor, Ervin does not appear to have a background representing for-profit colleges. But Squire Patton Boggs helped defend Corinthian in at least one case brought by students alleging that the school committed fraud.

Some education advocates expressed skepticism of selecting a lawyer from the firm on the grounds that the firm's past work to defend Corinthian's schools posed a conflict of interest.

"Is it possible for Zenith to find an independent monitor that did not work for Corinthian?" said David Halperin, a Washington attorney and writer who helped identify misconduct at Corinthian.

The Education Department said it chose him from among seven candidates put forth by Zenith.

In March, the Education Department announced it would replace the previous monitor, Hogan Marren Babbo & Rose Ltd. The announcement came after the AP found trouble at Zenith – including its flagship Everest College brand – which the monitor apparently did not. The AP reported that Zenith still recruited students through large-scale telemarketing, had not made major changes to its curriculum and retained senior Corinthian executives in key posts. Zenith also continued to recruit students using some of the same ads that Corinthian ran during the same daytime TV talk shows.

The AP also raised concerns about Zenith's relationship with Hogan Marren. Under the terms of Zenith's initial arrangement with the firm, its lawyers had an attorney-client privileged relationship with Zenith and were not obligated to provide the government with access to their work product.

In announcing the hire of Ervin, the Education Department explicitly ruled these things out.

Ervin could not be immediately reached by phone or email Friday. The Education Department did not immediately respond to requests for comment about the past legal work but said in its announcement of Ervin's selection that he would have "full independence" in his monitoring work.

Copyright 2016 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

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