Settlement Could Bring Millions In Loan Debt Relief to Defrauded Corinthian

August 31, 2017 by · Leave a Comment 

Former students who took out private loans to attend now-defunct Corinthian colleges will be eligible for more than $51 million in loan relief, under a settlement agreement announced last Friday by state Attorney General Xavier Becerra.

Santa Ana-based Corinthian Schools Inc., which once had 107 campuses throughout the country, shut down all of its schools and declared bankruptcy in May 2015 following investigations that found the company had intentionally targeted low-income, vulnerable people through deceptive and false advertising.

Last year, the state attorney general’s office won a judgment of more than $1.1 billion against the for-profit college operator.

Many Corinthian students were unable to pay back their federal student loans and private loans, as the education provided by Corinthian did not lead to good-paying jobs as promised, Becerra said.

As the result of a settlement between the Consumer Financial Protection Bureau and Aequitas Capital Management — which allegedly helped Corinthian Colleges carry out the lending scheme — more than 40,000 former students will be eligible for relief from their student loans once the settlement is approved by a federal judge in Oregon.

The settlement reached with Aequitas will provide $192 million for former Corinthian students across the country. California was a principal lead in settlement negotiations on behalf of the participating states.

“Thousands of students who attended Corinthian Colleges have been waiting too long for this debt relief,” Becerra said. “However, our work is not over — there are still Corinthian students who have not obtained the debt relief they deserve.

“As attorney general of California, I will continue to seek justice for Corinthian students and hold for-profit colleges accountable,” he said.

“I’m prepared to take any and all action necessary to ensure that all who seek higher education can do so without worrying that their American dream will be stolen by a so-called educational institution.”

Becerra previously announced an outreach program encouraging thousands of affected California residents to apply for federal loan cancellation and urged the U.S. Department of Education to expedite federal loan forgiveness for Corinthian students. In addition, the attorney general said the U.S. Department of Education is unlawfully delaying the implementation of regulations aimed at protecting students from deceptive practices and fraud.

Ever since Corinthian’s troubles came to light in 2014 amid a federal investigation into inflated job-placement numbers, student activists, lawmakers and state attorneys general have called on the Department of Education to help students shouldering massive debts.

Fraud Probe Leads to Closure of Car Donation Charity

June 29, 2017 by · Leave a Comment 

A Los Angeles-based car donation charity accused of soliciting vehicle donations using false and misleading advertising has agreed to pay up to $900,000 and permanently close as a result of a fraud probe, it was announced Monday.

In December 2015, the state attorney general and Los Angeles County district attorney filed a lawsuit against the People’s Choice Charities. At the time of the filing, the lawsuit alleged the organization promised 100 percent of the proceeds from the sale of cars would be given to charities selected by donors. However, an estimated 97 percent of funds were purportedly used toward administrative costs, including advertising, towing and car repairs.

“Any time charities lie to consumers, they breach the public’s trust,” Attorney General Xavier Becerra said. “I won’t stand for that. As the chief law enforcement officer of California, I will vigorously investigate and prosecute any charity that deceives and exploits the good will of generous Americans.”

The stipulated final judgment places a permanent injunction on Gary Stone, the nonprofit’s president, barring him from serving as a director, officer, trustee or employee of any California charitable organization.

Moreover, Stone is permanently enjoined from doing contract work with charities, holding any management or supervisory position, or engaging in fundraising activities. People’s Choice Charities will also be dissolved.

“This settlement should serve as a warning to any other organization that takes advantage of the kindness of consumers,” said District Attorney Jackie Lacey. “Donations generated through deceptive advertising take valuable resources away from legitimate charities.”

The settlement provides for a monetary judgment of $900,00— $30,000 of which will be paid to the California Community Foundation for the benefit of children. The payment of the remaining judgment is stayed but may be enforced if Stone violates the permanent injunction against him, authorities said.

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