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University of Phoenix recruiter lawsuit involving pay, perks, may get closure
Arizona Republic
October 4, 2009
Six years ago, two University of Phoenix enrollment counselors filed a lawsuit accusing the for-profit school of illegally rewarding them with fat raises and prizes based on the number of students they enrolled. The whistle-blowers are long gone. The corporate executives in charge at the time are now at different schools. But the case continues to dog the nation's largest private university.
A costly end appears to be in sight: University of Phoenix parent Apollo Group Inc. announced Wednesday that it was in settlement talks to resolve the litigation before the scheduled March trial. The Phoenix company did not disclose potential terms, but one Wall Street analyst estimates a settlement could run as high as $250 million. That is 25 times the record fine the University of Phoenix paid the U.S. Department of Education to settle similar charges in 2004.
But it is seen as a manageable price to pay to avoid a high-profile trial and the potential of a much larger payout given the size of the school and allegations the practices have gone on for years and continue today. "There's clear evidence that they knew what they were doing was wrong and did it nonetheless, essentially trying to pull the wool over the Department of Education and by extension you and me, the taxpayers who are footing the bill for a university that has abysmally low completion rates," said Lieff Cabraser attorney Robert Nelson, the lead attorney for the enrollment counselors, in an interview before the settlement talks were announced.