University of Phoenix Owners Must Pay Damages

No sooner had I posted the article yesterday about the University of Phoenix, did I see a news story stating that the owner of the school, the Apollo Group Inc. had fraudulently misled investors. A federal court ordered the group to repay shareholders about $280 million in damages.

A 2004 Department of Education report that criticized the University of Phoenix’s recruitment policies was covered up by the Apollo Group according to company shareholders. The findings from that report stated that the University of Phoenix paid enrollment counselors strictly based on their success in obtaining enrollees, a violation of federal regulations.

Phoenix-based Apollo, for its part, said in a press release that it’s “disappointed” in the ruling, arguing that the plaintiff class “did not suffer any damages.” The DoE report — the contents of which Apollo described as “unsubstantiated allegations” — had “caused no statistically significant movement in Apollo’s stock price,” the company said.

Apollo also said evidence showed that it had “acted responsibly” and “at all times communicated truthfully to the market.” Added Apollo attorney Wayne Smith, “The law does not require the disclosure of preliminary or unproven charges in a government investigation.”

Investors had asked and will be receiving restitution of $5.55 per share, provided the Apollo Group doesn’t challenge the court’s ruling.

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