WASHINGTON ― The Education Department is removing a law firm hired to oversee the turnaround of schools owned by Corinthian Colleges Inc., a for-profit education company whose financial collapse had placed at risk more than $1 billion in federal student loans.
An Associated Press investigation identified conflicts with the ostensibly independent monitor.
The department said it was removing the firm, Hogan Marren Babbo & Rose Ltd. of Chicago, after the AP reviewed with senior agency officials its findings last week after a nine-month investigation examining the Obama administration’s response to Corinthian’s extraordinary collapse in 2014 amid allegations of mismanagement and fraud. The department had previously said only that it intended to review the firm’s performance going forward.
The chairman of the firm’s education practice, Charles P. Rose, declined Monday to discuss his firm’s removal. A spokeswoman for Zenith did not respond to an email and phone call asking how much the company had been paid.
The monitor has been overseeing the business practices of Zenith Education Group, an offshoot of a student-loan debt collection firm that took over Corinthian’s operations. It was serving as the U.S. government’s close-up eyes and ears, reviewing Zenith’s marketing materials and admissions phone calls and the accuracy of graduation and employment statistics.
“I’ve notified Zenith and Hogan Marren that we do not intend to approve renewal of Hogan Marren as the independent monitor,” Education Undersecretary Ted Mitchell told the AP. “We believe we need a monitor with different capacities to serve in this next phase of Zenith’s development.”
The mess of how to deal with Zenith and its struggling for-profit former peers is among the most serious problems confronting the Education Department and its new leadership. John B. King Jr., who won Senate confirmation late Monday as education secretary, was hired as an adviser in January 2015, after the department had set Zenith’s path under then-Secretary Arne Duncan.
