Agents raid ITT tech schools

Wednesday, Feb. 25, 2004 | 11:06 a.m.

SUN STAFF AND WIRE REPORTS

ITT Educational Services Inc. today said federal agents were executing a search warrant at the company's corporate offices in Indianapolis and at several ITT Technical Institutes, including one in Henderson.

The warrant and related grand jury subpoenas relate to information and documentation regarding placement figures and rates, retention figures and rates, graduation figures and rates, attendance figures and rates, recruitment and admissions materials, student grades, graduate salaries and transferability of credits to other institutions, ITT said in a statement.

ITT operates a campus at 168 N. Gibson Road in Henderson. The Nevada Commission on Postsecondary Education said the campus reported 328 enrolled students between July 2002 and June 2003, the most recent reporting period.

A sign posted on the door of the Henderson campus said classes were closed today but that "we expect to return to normal operations tomorrow."

Inspection agents for the U.S. Postal Service were outside the building this morning and refused to let reporters enter. They referred questions to the U.S. Attorney's Office in Houston.

Employees leaving the building this morning said they didn't know anything about the warrants, which came without warning.

"We're really all in the dark," said Racquel Pankau, who has worked at the Henderson office for about a year and a half and is also an ITT graduate. "They're investigating, but they won't tell us what they're investigating."

Pankau said she found out about the search this morning when she tried to enter the building from the front and the doors were locked.

"I'm surprised and shocked. I'm also worried and concerned," she said.

She said she was hopeful the campus would reopen Tuesday because agents "said (the search) would take four to 10 hours."

Tim Breen, education specialist with the state Commission on Postsecondary Education, said ITT's Henderson campus is licensed through the commission and there are no outstanding complaints against the school.

He said every large school has some complaints against it, but ITT has always been able to resolve any concerns.

Shares of ITT Educational Services plunged more than 30 percent by early afternoon to $39.88.

Most ITT students pay a substantial portion of their tuition and other expenses with money received under federal aid programs, according to a company financial filing.

Rene R. Champagne, the Indianapolis-based company's chairman and chief executive, said in a statement that the company was cooperating with investigators.

"We have not been informed of any specific allegations or charges at this time," he said.

The U.S. Attorney's Office in Houston, which was leading the investigation, issued a statement by U.S. Attorney Michael Shelby saying "no conclusions should be drawn from today's activity."

Shelby said law enforcement officers were investigating at ITT's headquarters and at campuses in Henderson and in Indiana, Texas, Virginia, Florida, Louisiana, California and Oregon.

The U.S. Attorney's Office declined to answer further questions.

ITT operates 77 schools in 30 states and provides postsecondary courses to about 37,000 students. There was no immediate explanation of why the search involved only some of its schools.

Sun reporters

Elizabeth Benston, Kevin Rademacher and Michelle Swafford contributed to this story.