Federal Probe Targets ITT Tech
3/2/2004 -- Classes are back to normal at ITT Technical Institute campuses across the country after federal agents raided the company's headquarters and 10 of its campuses last week in response to grand jury subpoenas and search warrants seeking various enrollment data.
Last Wednesday, agents searched ITT's Indianapolis, Indiana headquarters and 10 schools, including campuses in California, Nevada, Texas, Florida, Oregon and Louisiana. The grand jury subpoenas that triggered the searches were issued by a U.S. District Court in Houston, and sought data on student placement, retention, attendance and grades, along with recruitment and admissions materials, graduate salaries, and transfers of credits to other schools.
Classes were cancelled for the day at the targeted campuses, and students, faculty and staff were questioned. In a statement, a U.S. attorney in Houston did not give a reason for the raids. No charges have been brought against the company.
ITT spokeswoman Nancy Brown said today that the probe won't affect current ITT students, and will have no effect on anyone holding a degree from any ITT Tech school. "All the colleges are open and functioning perfectly normally," she added.
At an investor conference call this morning, ITT's chairman and CEO, Rene R. Champagne said he believes the company has had strong internal controls and that the investigation "will show that we're in compliance." Analysts who focus on the education market said the probe might be related to Title IV, a federal regulation that requires education companies to report certain student data related to federal low-income grants to states. According to company regulatory filings, about 68 percent of ITT's 2003 revenue came from federal education aid programs.
The federal raids immediately affected the company's stock, which fell from last week's high in the mid-50s to a low of $34.50 last Thursday. ITT Educational Services Inc. trades on the New York Stock Exchange under the symbol "ESI." News of the probe also affected the entire for-profit education sector, whose shares tend to fluctuate as a group. ITT was trading around $35 a share by mid-week this week, and the remaining stocks in the sector had largely returned to their pre-probe numbers. "In light of the pending federal grand jury investigation of the company and resulting shareholder class action lawsuits," Champagne said during Wednesday's conference call with shareholders, "the company is not able to confirm the internal goals and other projections for the Company's 2004 fiscal year that were previously disclosed by the company."
The dramatic drop in stock prices triggered several class action lawsuits by investors late last week - a common practice when a stock price drops substantially. The lawsuits claim the company artificially maintained or inflated its stock price by issuing false facts or omitting other pertinent ones.
ITT, with some 75 locations in 30 states, is the largest operator in the U.S. of post-secondary school technical education. It offers technology-based associate, bachelor and masters degrees in a variety of subjects, including computer programming, Web development, and engineering, to over 37,000 students. It also offers online education. According to the U.S. Department of Education, ITT granted nearly 15 percent of the total number of associate and bachelor degrees awarded in the U.S. in electronics and electronics-related programs in the 2000-2001 school year, the largest percentage of any single institution.  -Linda Briggs
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There are 658  user Comments for “Federal Probe Targets ITT Tech”
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| 3/3/04: ITT Tech Grad from Lufkin, TX says: |
I'm an ITT Tech alumnus and have to say that ITT Tech should be indicted on fraud charges. Why didn't I quit? I had already spent several thousand dollars to begin classes and by the time I figured out how shady the operation was...I wouldn't have been able to recoup that money. ITT knows once you are financially involved, they've got a noose around your neck. |
| 3/4/04: Rod from Oregon says: |
I also graduated from ITT and would like to say that as with any educational institution you get out of it what you put in. I went to school with many people that felt the school was shady, but they also complained about every aspect of their lives. All a degree does for you is show potential employers that you have the ability to learn and commit to a plan. |
| 3/4/04: Guy from Illinois says: |
I am currently attending ITT in Matteson, and when I first got there, I was oblivious to the bad teaching styles, and unprofessional ways of the teachers there. I agree with the others about the financial bull that ITT tries to pull. All I have to say, is go to a university, it's a way better experience. |
| 3/5/04: Michael from California says: |
I am currently attending ITT and believe me, they are shady!!! Their teachers are a joke!!! One of my previous teachers was soooo bad that she's sitting in on other classes to learn how to teach!!! |
| 3/5/04: Glen from Virginia says: |
While I attended ITT, I thought what I was getting was the real deal until I got my first job 6 weeks before graduating. It was my first day on the job, when I realized that the eduaction I was receiving at ITT was nothing compared to what I learned on the first day of my job. "We just prepare you" they said. That they did, they prepapred for me to realize that I could have just went into the workforce without a degree and 1. I would have learned a lot more and 2. I would have saved money that I could have used for something else. I am currently an Application Specialist for an ATC out East and I got this job because of the hard work that I put into it, not ITT. I would have to admit, that I would not have got my first job if it was not for ITT, but the only thing that the company looked for was that piece of paper....the same piece of paper I could have gotten some place else for a lot less money. I have been on both ends of the industry, I was a person who hired and I was a person who fired. While I interviewed students from ITT, and keep in mind that these were their best, most of them could not answer any of the questions that I presented infront of them. Some were AutoCAD related,while others were Architectural or Structural questions. Again, this was the best that ITT had to offer and they all failed in the qualifations that I was looking for. I feel that what ITT has to offer is not exactly what it is made up to be. The commercials that they play on television, make me laugh. To those of you who are thinking about ITT, FOTGET IT!!! Get your degree some place else. All you are to them are dollaer signs. |
| 3/5/04: Dave from Indiana says: |
I said from the start that ITT was bad, but my parents didn't see it. I passed classes without doing any work. The teachers sucked and I usually helped them teach the class and they passed me anyway because I knew what was going on. In high school the teacher and learning was harder than ITT. I missed so much school that I should have been kicked out 3 times, and even the students in my classes tried to kick me out, but they didn't kick me out because I had an A average. My parents finally realized how bad it was when I got my loan info after graduation. $29,000 for 2 years at ITT. I got a decent paying job right out of ITT, but it was too far away from my family and friends so I quit and moved back to my home town. I graduated in 1999 and worked from September of '99 to 2000 and then I couldn't find a job anywhere. My degree isn't worth anything. I cannot find a job with my EET associates degree. I am not qualified to do anything in any work with my degree without an employer training me FULLY from the start. Therefore I wouldn't need the degree in the first place. Like everyone else here, I say "DO NOT GO TO ITT" all they do is put you in debt for 20 years and maybe...and I stress MAYBE get you a job that pays more than you make already (a few do, but not many that I have went to school with). I make more right now than most job offers I got right at graduation, and I don't make much. They are robbers whose commercials sell a huge picture and promises that they cannot keep. It was a waste of 2 years of my life and my job history isn't any better now than when I started ITT. |
| 3/7/04: Matt from Oregon says: |
I went to the ITT Tech in Oregon and I have to agree with most people on this site. I saw the adds I talked to the recruter and I thought that it was a wounderful thing. Then by the time I relized just how big of a joke it was I was half way done and it was to late. I had one teacher tell me that I payed $30,000 to get an entry level job. All through scholl they were saying how I would get a job paying $16-$20 an hour, when I graduate I was seeing jobs paying $12 to $13. I could have went to a comunity collage and got the same degree for about a tenth of the cost. It was a wast of 2 years of my life and now I have to live with it for the next 20 years. For anyone reading this thinking that you want to go to ITT Tech I strongly urge you not to. |
| 3/7/04: dogbert from Las Vegas says: |
The situation with ITT sounds like what happened with CLC (though the circumstances were much different) a few years ago. The problem with education is that you will need to learn more on your own than what you get in class. I take classes at my local community college (finished my AAS in Internetwork Technology (Cisco-Novell concentration) in Fall of 2002. I am working on a 2nd Associate's in Electronic Crime Investigation (fancy term for computer-internet forensics). With my work schedule, I can usually take no more than 2-3 classes a semester (which is fine, I don't need the degree to do my job). I am not shocked by some of the messages posted on here, as computer training is useful, but I agree with many of the posters on here. If you have a local community or junior college in your area, take courses there towards a degree, when you have that finished, and wind up with a job in field, then you can start looking down the road at getting a bachelor's, certs, etc. Getting a "real" education can take an entire lifetime (IMO). |
| 3/7/04: Methos from Michigan says: |
Here is a copy of the letter I sent to the US Attorney in Houston who is directing the federal investigation into ITT. Mr. Michael T. Shelby, US Attorney: I am writing you with regard to the ITT ESI case. While, unfortunately, I would not qualify as a co-plaintiff in the suits being brought against ITT on behalf of many of its investors, I am writing to offer you and those working with you in your office my encouragement and perhaps some small insight. I do so in the hopes that, however meager this insight may be, it may still somehow contribute to your success. I was associated with ITT Troy (Michigan) first as a student, then as a student worker (lab technician/de facto teacher’s assistant), and finally, as an instructor. Thus, my total association lasted on and off (mostly on) from 1994 to 2002. Just after I had received my 5-year service pin, I was euphemistically “laid off” on June 8, 2002 due to “class consolidation” resulting in the need for fewer teachers (though shortly after that, the classes that had been “consolidated” were again separated). The real reason for my dismissal is much more in line with the charges you are making against the management of ITT. These individuals have a long history of putting people in positions so untenable that either they must leave in order to satisfy the just demands of their own consciences, or management will simply manufacture a situation to “legitimize” the dismissal of good people. We saw it happen more than once. Approximately 11 to 13 weeks before June 8, 2002 I was summoned into a closed meeting with the then Dean of Troy, Nadine Palazzolo; Department Chair, Robert Fugate; and, another Chairperson, Mr. Steve Kue, to discuss the grades of a certain class from the quarter that had most recently finished (sometime in February or March of 2002). After being repeatedly accused by Mr. Fugate of “failing” the students of this particular math class (strangely, he would, after a few minutes of haranguing me, stop and ask “Dean” Palazzolo, “Was that good enough?” before beginning the tongue-lashing anew…this happened at least two or three times). Palazzolo then slid a grade sheet in front of me and asked whether I had miscalculated the grades. This was a ridiculous question as, not the teachers, but software recently installed by ITT actually calculated the grades…we just input the raw scores. I replied that I had not “miscalculated” anything and offered to show her the hardcopy paperwork. Mr. Fugate again repeated that I had failed this particular class (though, apparently, not any of my other classes) and Palazzolo again asked, without ever looking up at me from what she was doing, whether or not I couldn’t see my way clear to “correct” these grades before they had to send them in to corporate. As the horror of what was happening began to forcefully dawn on me, I slowly replied, “I don’t see how I can ethically go back and change anything now.” Palazzolo then said to me, “Listen, ethics and all that crap may be nice but…” I couldn’t believe what I was hearing…”ethics and all that crap”? The bottom-line was that I refused to alter the grades after which she took the paper back from in front of me and I was unceremoniously dismissed. After this gut-wrenching meeting I walked back into the teacher’s area and proceeded to tell 4 or 5 of my co-workers what had just happened. As we were still talking about it, Mr. Fugate, speaking like someone forced against his will to carry out the orders of a dictator, confirmed EVERYTHING I had just told my co-workers. Then, several weeks later (with only two weeks to go in that quarter), I found a lay-off letter in my mailbox. On the Tuesday of my last week I was pulled into the “Dean’s” office where I sat incredulous as I heard myself falsely accused by “Dean” Palazzolo of multiple instances of insubordination as apparently further justification (besides the class consolidation) for the layoff. Sir, this is the type of people with whom you are dealing. They have been falsifying not only records but also circumstances for years…creating pretexts upon which to dismiss some very fine people who were not only my co-workers, but some of who had even been my teachers! These people are very adept at creating circumstances that falsely enhance their appearance and that of the school. While not everyone was put under the kind of pressure that I was, and not everyone lost a job for not going along, rest assured that I am not the only one with a story like this to tell. One of my fellow instructors on hearing what had happened looked at me and said, “You didn’t actually turn in the real scores, did you?” In addition, former co-workers who are still current employees (and in a position to know) recently told me that members of management of the Michigan schools have gone back a |
| 3/7/04: Anonymous says: |
and altered attendance records to show students as being present without the knowledge or consent of the instructor. Such behaviour can only beg the obvious question: What else have they altered? All the things these suits allege and MUCH more have been known to, or suspected by, ITT faculty and staff for a very long time. The ITT management has employed fear and intimidation to keep some of the finest people I have ever known or worked with in fearful and nervous silence about what really goes on at these “schools.” During my last week there, one of my dear colleagues even came up to me and in hushed tones told me that she ‘prayed every night to God that she was doing the right thing.’ What does that tell you about what goes on there and just how much the corruption permeates this place? I wrote a letter to the Director of the Troy ITT, Steve Goddard. I told him what happened. He wrote me back a letter saying that he was sorry I felt the way I did but that nothing like that EVER happened at ITT. It was naïve of me to expect anything else, I suppose. [If you’d like, I would be happy to provide you with copies of the letter I originally sent as well as Goddard’s unfortunate response.] Mr. Shelby, these people are dirty as hell and have been for a long, long time. Perhaps this information does you no good. Then again, perhaps this little bit of information can be used to demonstrate a pattern of falsification that will be of assistance to you. Perhaps it will suggest different avenues of inquiry as you conduct your own investigation…people you might not have otherwise thought to interview so as to gather the information you need to strengthen your case. Just remember that these people are afraid. The guilty are afraid of being caught and the innocent are deeply afraid of being punished with the loss of their jobs if they tell. As for the various levels of ITT management, their greed and arrogance has resulted in closets full of skeletons and mass graves in their corporate basement containing the murdered trust of honest students, mistreated current and former employees, and now, apparently, investors. Your cause is just. You are on the right track. Don’t give up. Be relentless. The skeletons are just waiting there for diligent and dogged detectives to dig them up. Mr. Shelby, I know that there is no redress for myself or others like me who suffered what we did at their hands for the reasons we did, namely, for trying to conduct ourselves in an ethical and honourable fashion. They were too clever…too practised at this sort of thing. They knew enough to make sure that we would have no evidence, that it would only be our word against theirs. I must also acknowledge that the kind of justice being sought for those investors is of an entirely different sort than the justice for which so many others and myself long. Yet justice, whatever the reasons sought and attained, is still justice. There are many good people besides rich investors who are looking to you in the hopes of receiving some of this justice, even if only in principle, if only vicariously. I wish you and your office complete and unqualified success in this endeavour. The hopes for vindication and victory of many more people than you know will be with you in that courtroom. |
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