April 26, 2024

University of Phoenix Paying $4.5 Million to Settle California Charges It Deceived Troops

University of Phoenix Paying .5 Million to Settle California Charges It Deceived Troops

California Attorney General Rob Bonta announced Thursday that the University of Phoenix has agreed to pay $4.5 million to settle allegations that the for-profit college engaged in aggressive and illegal recruitment tactics directed at military service members, in violation of California consumer protection laws and Department of Defense rules.

In a press release, Bonta said the settlement “sends a strong message that schools who use predatory practices to recruit servicemembers and veterans will be held to account.”

In a complaint filed Thursday in California Superior Court, Bonta alleges that the University of Phoenix violated Pentagon directives requiring schools to obtain permission from specified military officers before recruiting on a military base and limiting how and where schools can market their programs to service members. The complaint also charges that Phoenix recruiters lied in order to get access to career fairs and unlawfully displayed official military seals on “challenge coins” the school used to promote its programs.

In addition to paying $4.5 million, including funds to support military service relief organizations, Phoenix agreed to accept an injunction prohibiting it from soliciting at or participating in various military events and from misusing military seals.

Bonta’s office alleges that the unlawful military recruiting by Phoenix occurred between 2012 through 2015.

A 2015 investigative report by the news outlet Reveal exposed abuses by the University of Phoenix in recruiting service members. Those revelations led the Defense Department to temporarily suspend Phoenix from military recruiting.

The University of Phoenix has been for decades one of the top recipients of taxpayer education aid dollars provided by the Department of Defense and Department of Veterans Affairs, as well as by the Department of Education.

But Paul Rieckhoff, founder and CEO of Iraq and Afghanistan Veterans of America, said in October 2015, in the wake of the Phoenix military recruiting scandal, that the University of Phoenix has been the “worst by far“ for-profit college in terms of taking advantage of the veterans who are members of his organization. A letter sent that same month to Secretary of Defense Ashton Carter by more than 30 veterans, civil rights, and consumer organizations supported the Pentagon’s suspension of Phoenix and cited, as support, the complaints of hundreds of service members and veterans “who experienced deceptive recruiting” by the school. 

The president of the University of Idaho, C. Scott Green, has been seeking to conclude a deal to purchase the University of Phoenix for $685 million from its owner, private equity giant Apollo Global Management, but he has received heavy pushback this year from legislators and other officials and observers in his state. Among other concerns, Idahoans have worried that the state could be on the hook for millions in financial liability to cover Phoenix’s past abuses. Bonta’s announcement should add to those concerns.

Green’s team has repeatedly assured Idahoans that Phoenix’s misconduct occurred under former leadership, not a supposedly new team in charge. But, in fact, Gregory Cappelli, who was the CEO of Phoenix’s parent company, Apollo Education Group, during the years 2012 to 2015, remains an insider board member who is closely tied to the company.