Tags: sec | itt | fraud | college | operator

SEC: ITT Fraud Committed by Top Executives

By    |   Wednesday, 13 May 2015 01:35 PM

The U.S. Securities and Exchange Commission (SEC) charged ITT Educational Services Inc. and two of the for-profit college operator’s executives, CEO Kevin Modany and CFO Daniel Fitzpatrick, with fraud Tuesday.

ITT guaranteed high-risk loans for private lenders in its “PEAKS” and “CUSO” loan programs. The SEC complaint alleges that the executives deceived investors to hide the losses of the programs, which left investors with tens of millions of dollars in bad debt, the Los Angeles Times reported.

“Our complaint alleges that ITT’s senior-most executives made numerous material misstatements and omissions in its disclosures to cover up the subpar performance of student loans programs that ITT created and guaranteed,” Andrew J. Ceresney, director of the SEC’s Division of Enforcement, said in a statement. “Modany and Fitzpatrick should have been responsible stewards for investors but instead, according to our complaint, they engineered a campaign of deception and half-truths that left ITT’s auditors and investors in the dark concerning the company’s mushrooming obligations.”

ITT agreed to guarantee the loans if defaults rose above a certain level. That level was triggered and started to balloon in 2012, but the company allegedly concealed that it projected paying hundreds of millions of dollars on its guarantees, CNN Money reported.

The company said it will fight the charges.

“We vehemently disagree with the SEC’s position and we are confident that the evidence does not support the SEC’s claims. We are eager to have the court clear our reputation that has been unnecessarily endangered by the SEC’s action,” ITT said in a statement.

Tuesday’s complaint follows a lawsuit the U.S. Consumer Financial Protection Bureau filed against ITT last year for alleged predatory lending practices, USA Today reported.

Twitter users were concerned about the charges.




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The U.S. Securities and Exchange Commission (SEC) charged ITT Educational Services Inc. and two of the for-profit college operator’s executives, CEO Kevin Modany and CFO Daniel Fitzpatrick, with fraud Tuesday.
sec, itt, fraud, college, operator
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2015-35-13
Wednesday, 13 May 2015 01:35 PM
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