California tells for-profit chain to stop enrolling veterans

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SAN FRANCISCO (AP) — A for-profit college company with 15 campuses in California was ordered by the state Friday to stop enrolling new or returning students who plan to fund their educations with GI Bill benefits.

The order to ITT Educational Services came in a suspension notice issued by a division of the California Department of Veterans Affairs that sanctions training programs to serve veterans.

ITT operates more than 135 schools in 39 states under the names ITT Technical Institute and Daniel Webster College.

The Securities and Exchange Commission filed a fraud complaint against the Indiana-based company this week over an alleged scheme to cover up losses from private student loans that ITT had guaranteed to its investors.

California officials suspended ITT as an approved provider because the chain has failed to submit audited financial statements required by the SEC and the U.S. Department of Education, said Paul Sullivan, a spokesman for the state Department of Veterans Affairs.

"We are looking out for the veterans and the dependents and the taxpayers," Sullivan said.

ITT did not respond to an email request for comment on Friday. It disputed the fraud allegations in a statement this week and said it was eager to have its reputation cleared in federal court in Indiana, where the SEC filed its complaint.

About 1,400 California veterans are attending ITT schools on the GI Bill, Sullivan said.

If the company does not produce the required financial reports by July 13, it will have its authorization as a VA provider in California withdrawn and students would no longer be able to use GI benefits to pay for classes at ITT campuses, he said.

The department has published a fact sheet ( ) for veterans now attending or planning to attend ITT schools.

A report issued last summer by former U.S. Sen. Tom Harkin, D-Iowa, found that about $1.7 billion — one-fourth of GI bill benefits paid during the 2012-13 academic year — went to for-profit colleges.

One of the top recipients was Corinthian Colleges, a chain headquartered in California that agreed to sell or close its more than 90 U.S. colleges amid a fraud investigation over advertising practices. It abruptly closed its 28 remaining campuses last month after the U.S. Department of Education fined the company $30 million.

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