Watch CBS News

California Awarded $1.1B Judgment Against Corinthian Colleges

SACRAMENTO (AP) — A San Francisco Superior Court judge has awarded California a $1.17 billion default judgment against the bankrupt operator of for-profit colleges.

Corinthian Colleges Inc. filed for bankruptcy in May 2015, and it's unclear if the state can collect. But Attorney General Kamala Harris said the judgment can help former students pay off loans through aid programs.

The judge ordered $820 million in restitution to the students, with the rest going to civil penalties.

In 2013, Harris sued the Santa Ana-based company and its subsidiaries that operate the Everest, Heald, and Wyotech colleges, saying their illegal predatory practices left tens of thousands of students with large debts and useless degrees. Harris' office set up a site where former students get help.

Attorneys for Corinthian did not answer the state's lawsuit or show up for Wednesday's court hearing. Attorney Evan Borges said in an email Thursday that his former client ceased to exist in September, when the companies dissolved.

The company previously closed its campuses or transferred them to new owners.

The attorney general's office said Thursday that the judgment can help students get assistance from state and federal recovery funds, and it may help them get relief from private student loans now that a judge has ruled they were defrauded.

Judge Curtis Karnow ruled that Corinthian engaged in false advertising the exaggerated its job-placement rates along with other illegal behavior. It promised classes it did not actually provide, unlawfully used the official seals of branches of the U.S. military, engaged in illegal debt collection, and misrepresented its financial health and how easily its class credits could be transferred to other colleges.

"For years, Corinthian profited off the backs of poor people - now they have to pay. This judgment sends a clear message: there is a cost to this kind of predatory conduct," Harris said in a statement.

(Copyright 2016 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.)

View CBS News In
CBS News App Open
Chrome Safari Continue
Be the first to know
Get browser notifications for breaking news, live events, and exclusive reporting.