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Author: IlanBigfoot Three stars, 500 posts Old School Fool CAPS All Star Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 29  
Subject: Title IV investigation Date: 2/26/2004 10:50 PM
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Think Equity Partners analyst Trace Urdan said that, based on [ ITT Chief Executive Rene] Champagne's comments, he believes the probe is likely related to Title IV, a regulation that requires educational companies to report certain student data.

"If there were a smoking gun and criminal activity, I find it really hard to believe that the credit agency, other regulatory processes and audits wouldn't pick that up in some way," said Urdan. He rates ITT's stock "equalweight" and does not own it.

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Big federal sweep on ITT's headquarters, without any information (that I can find) on how this would change ITT's business, caused a 40% drop in share prices.

Is this now a good buy? I've done well with past legal issues that didn't affect the business (HRB, MO, and RMBS) causing huge dips.

Any comments on buying the stock or options now?
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Author: Dinkumoil Three stars, 500 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 9 of 29
Subject: Re: Title IV investigation Date: 2/26/2004 11:00 PM
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Ilan,

Sure I've got a comment since you may have ignored my earlier post. Based on my experience of last year this organization is in trouble. If they lied about metrics that have do to with enrollments, placements, retention, etc then this can jeopardize accreditation status.

Better look before you leap into this one. You could be jumping into a black hole.

Dink

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Author: IlanBigfoot Three stars, 500 posts Old School Fool CAPS All Star Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 10 of 29
Subject: Re: Title IV investigation Date: 2/28/2004 7:36 AM
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Thank you for your reply. There hasn't been much activity on this board.

Your previous post indicated that they were jerking you around. Do they treat all teachers and students like this? How are retention rates? I'd love to hear more about your thoughts that they are in trouble.

The thing that interests me is that the Fed hasn't yet accused ITT of anything. Do you think it is likely ITT has lied about these metrics? Could there be some other reason for this investigation?

Is loss of accreditation the worst-case scenario? Even if ITT has lied about the metrics somewhere, can it work with the prosecutors to avoid this? They seems to be cooperating now.

Just for reference, I consider ESI to be worth ~$44/share, so it's still not really cheap, but I'd like to know your opinion of the odds that this investigation will harm ESI's business.

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Author: Dinkumoil Three stars, 500 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 11 of 29
Subject: Re: Title IV investigation Date: 2/28/2004 9:10 AM
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Ilan,

The fact is they did jerk me around (after several interviews and a teaching assignment offer) and I declined to teach at one of their locations in Illinois. I took this all the way to ITT (ESI) CHQ in Indianapolis, Indiana and got nothing. Nada. The hiring process and pay scale was nothing sort of ridiculous.

The questions you are asking about are good ones and the ones I think the Feds want to know about (actual stats of placements, retention, etc vs reported numbers). It's hard to believe authorities would just decide to raid locations on a whim or just for the fun of it. Someone somewhere had to tip them off. Now it's a matter of what may have been misreported, over what period of time, who will be held accoutable, and what will the sanctions be.

What is the ultimate scenairo? Loss of grant monies and/or loans for students. Given the tuition rates at private schools like ITT (up to 8x a public post secondary school) they need funding sources for students to be able to afford their classes.

Hope that helps.

Dink

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