AG Corbett Ignores LV College Students Scammed by College Lenders

In 2005, the Morning Call reported that Lehigh Valley College - a for profit educational institution - was practicing deceptive loan practices that resulted in unemployed graduates unable to pay off high interest loans.

Incumbent Attorney General Tom Corbett settled a 2 1/2 year investigation by letting the college buy its way out of trouble. Price tag? $200 grand. Chump change for LV College owner Career Education, whose annual revenue is $1.7 billion. Incidentally, not a dime of that money goes to the students who were actually defrauded. In its editorial headline, The Morning Call concludes this "settlement" seems unfair.

District Attorney John Morganelli, Corbett's likely opponent in the next AG race, agrees. John tells me "leaving the victims completely out of the financial settlement is a shocking and a self-serving result."

He's asking AG Corbett to re-open the case, a permissible practice when further proceedings are in the public interest. Even if Corbett refuses, Morganelli wants all settlement proceeds immediately redirected to the actual victims in a pro rata distribution. Here's some of what John has been saying.

The law under which the Attorney General acted is called “The Consumer Protection Law.” The key words here are “Consumer Protection.” What part of the words, “consumer protection, ” did Mr. Corbett miss when he settled this matter, completely ignoring the “consumers” who were the victims of these entities. This settlement left the victims completely out in the cold with not one cent of restitution. The Morning Call investigation of this matter uncovered unscrupulous business practices, which saddled students and their families with loans carrying 15% interest, a rate associated with credit cards, not student loans. There are real victims out there with substantial debt. The Attorney General made the state treasury and his office the top priority while leaving students and their families with huge debts. It is quite frankly shocking that Attorney General Corbett put the state treasury, which received $50,000, and his own office, which received $100,000, ahead of the victims who were gouged with overly expensive tuition and high-interest loans. The first priority should have been recovering money for the consumer/victims, not the office of Attorney General.

Moreover, the amount and terms of this settlement shows a lack of interest in aggressively pursuing the matter and is inadequate for several reasons. First, the Assurance of Voluntary Compliance accepted by the AG is not even considered an admission by the company that it violated the law. Secondly, the amount of the settlement is almost laughable in light of the fact that Career Education Corp. is reportedly a company that generates revenue of $1.7 billion a year with about 80 for profit schools nationwide including a few in Pennsylvania. Third, the voluntary compliance applies only to LV College and not to other operations of Career Education Corp. leaving the company free reign to engage in similar practices elsewhere. After a 2 ½ year investigation, this is an embarrassing and totally inadequate result.

So Corbett ignores the actual victims of deceptive trade practices, but his own office gets $100 large. Is it because he's heavily involved in a major mob prosecution, like the DeNaples case? Nah, he's letting the Dauphin County DA handle that one. And he still has reached no decision on whether to prosecute political consultant Tom Severson's meltdown during a funeral mass, a matter that any cop could figure in about three seconds.

Update: The Morning Call and Express Times have both published Morganelli's recent criticism of AG Corbett's bizarre settlement, in which none of the victims are compensated. Corbett claims Morganelii does not know the facts. Does Corbett? He should have made an honest effort to collect the money owed to students. That's why he was elected.