(NASDAQ: COCO): GAO Investigation puts Pressure on Sector

If you trade education stocks like COCO WFR DV AMED CECO EDMC GILD you need to read the recent Government Accounting Office Study where they found fraud and high pressure sales tactics. If you look at price action for the group over the last 3 month’s you could see it coming.
Here is some information so you can Google the entire report and below is a small snippet.


FOR-PROFIT COLLEGES


Statement of Gregory D. Kutz, Managing Director Forensic Audits and Special Investigations


Undercover tests at 15 for-profit colleges found that 4 colleges encouraged fraudulent practices and that all 15 made deceptive or otherwise questionable statements to GAO’s undercover applicants. Four undercover applicants were encouraged by college personnel to falsify their financial aid forms to qualify for federal aid—for example, one admissions representative told an applicant to fraudulently remove $250,000 in savings. Other college representatives exaggerated undercover applicants’ potential salary after graduation and failed to provide clear information about the college’s program duration, costs, or graduation rate despite federal regulations requiring them to do so. For example, staff commonly told GAO’s applicants they would attend classes for 12 months a year, but stated the annual cost of attendance for 9 months of classes, misleading applicants about the total cost of tuition. Admissions staff used other deceptive practices, such as pressuring applicants to sign a contract for enrollment before allowing them to speak to a financial advisor about program cost and financing options. However, in some instances, undercover applicants were provided accurate and helpful information by college personnel, such as not to borrow more money than necessary.



United States Government Accountability Office


Fraudulent, Deceptive, and Otherwise Questionable Practices
De
gree/certificate, location

Sales and Marketing Practice


Certificate Program – California

Undercover applicant was encouraged by a college representative to change federal aid forms to falsely increase the number of dependents in the household in order to qualify for grants.


Associate’s Degree – Florida

Undercover applicant was falsely told that the college was accredited by the same organization that accredits Harvard and the University of Florida.


Certificate Program – Washington, D.C.

Admissions representative said that barbers can earn up to $150,000 to $250,000 a year, an exceptional figure for the industry. The Bureau of Labor Statistics reports that 90 percent of barbers make less than $43,000 a year.


Certificate Program – Florida

Admission representative told an undercover applicant that student loans were not like a car payment and that no one would “come after” the applicant if she did not pay back her loans.