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MEDIA WATCH: Crain's notes scandal at privatization outfit 'Career Ed'

Despite a general bias against Chicago's public schools (except the corporate "school reform" nonsense) and unions, Crain's Chicago Business, like the handful of serious and accurate business publications, gets the facts straight, even when those facts blast in the face of a creed (in this case, privatization of public education services). Thus, on November 21, 2011, Crains reported the growing scandal at "Career Ed," one of the many entrepreneurial outfits trying to such down the dollars in the "education market."

HERE IS THE CRAIN'S STORY:

Career Ed faces accreditation suspension at some schools, November 21, 2011

(Crain's) — Career Education Corp. said it faces suspension of accreditation for 49 institutions in its health and art and design areas.

The for-profit education company is to appear next month at a meeting of the Accrediting Council for Independent Colleges and Schools to “show cause” why the current accreditations should not be suspended, Schaumburg-based Career Ed said in a filing Monday with the Securities and Exchange Commission. The requirement to appear is related to “the adequacy of the administrative practices and controls relative to the company's reporting of placement rates to ACICS,” the filing says.

Career Ed's stock was down about 6% in early trading Monday as the broader market also fell but not as sharply.

"Improper practices" on how some of Career Ed's health education schools reported student placement rates were discovered and disclosed this year. The discrepancy was uncovered after New York's attorney general questioned how Career Education was marketing to and recruiting students.

Accreditation is necessary to participate in federal student aid programs, the filing says.

The instruction to “show cause,” which Career Ed received last week, is meant for a school to “demonstrate that a negative or conditioning action should not be taken,” the filing says.

“At the meeting, the company will review with ACICS the actions the company has taken to date to report accurate placement rates and the controls and procedures it has implemented to ensure the accurate determination and reporting of placement rates going forward,” the filing says. “The company continues to take corrective action and implement enhanced controls and procedures with respect to the determination of placement rates by the Health Education and Art & Design segment schools.”

Gary McCullough resigned Nov. 1 as the company's president and CEO. The company's chairman, Steven Lesnik, is taking over while the for-profit education company searches for a replacement.



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