Corinthian Colleges gets federal grand jury subpoena in California

Corinthian Colleges Inc., the beleaguered Orange County for-profit college firm, told investors Wednesday that it received a grand jury subpoena from the U.S. attorney’s office in Los Angeles.

The broad subpoena requests documents and records on the company’s job placement rates, graduation rates, marketing materials and student loan default rates.

The subpoena is the latest in a string of headaches for Corinthian, which announced last month that it would sell 85 of its 107 campuses and online programs amid heightened scrutiny from the U.S. Department of Education.

Claiming Corinthian failed to provide documentation on job placement rates and other academic data, the Education Department restricted the company’s access to federal student aid in June. The sanctions put the company in a severe cash crunch, and Corinthian told investors it might have to shut down without additional funds.

In early July the company agreed to sell of most or its schools and close a dozen of them.

Patrick Fitzgerald, a former U.S. attorney in Chicago, is serving as an independent monitor overseeing Corinthian’s operations.

The company’s business practices are also being investigated by attorneys general in more than a dozen states, the Securities and Exchange Commission and the U.S. Consumer Financial Protection Bureau.

Since Corinthian announced plans to sell schools, several states have tried to prevent Corinthian from enrolling new students.

The California attorney general’s office successfully pushed for Corinthian to clearly disclose its dire financial situation to prospective students. And the company has stopped enrolling new students at campuses in Illinois, after state higher education authorities argued that students faced an “unacceptable risk” in attending schools up for sale.

Veterans agencies in five states, including California, have suspended Corinthian’s enrollments of veterans using GI Bill funds.