Career Education Corporation

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Career Education Corporation
Industry Higher education and training services
Headquarters Schaumburg, Illinois, USA
Number of locations
United States; More than 50 campus locations, including online
Key people
Scott W. Steffey, President and Chief Executive Officer
Number of employees
7,400[citation needed]

Career Education Corporation (CEC), is for-profit postsecondary education provider with campus-based and online curricula. Headquartered in Schaumburg, Illinois.,[1] the organization operates more than 50 campuses in the United States with over 50,000 students enrolled. The company's schools offer a variety of associate, bachelor's, master's, doctoral, and certificate programs in career-focused disciplines.


Career Education was founded in 1994 by John M. Larson[2] who served as the company’s president, CEO and was a member of the board of directors until 2006. Under his leadership, Career Education grew to include over 24 U.S. campuses. In 2009, Career Education purchased the right to operate Le Cordon Bleu schools in the United States and Canada [3] and on July 1, 2003, Career Education Corporation merged with competitor Whitman Education Group, Inc., gaining control over the latter's Sanford-Brown Colleges, Ultrasound Diagnostic Schools (now known as the Sanford-Brown Institute), and Colorado Technical University. And also the former Western School of Health and Business.[4] In the same year, CEC was sued for inflating financial results and issuing misleading statements, thus violating the Securities Exchange Act. [5]

In March 2007, Gary McCullough joined the company[6] and served as CEO until November 2011, when Steven H. Lesnik assumed the role of president and CEO on an interim basis. Lesnik is the former chairman of the Illinois State Board of Education.[7] In April 2013, Scott Steffey -- a veteran of Strayer Education Inc. and former vice chancellor of the State University of New York (SUNY) system -- was named as Lesnik's permanent replacement.[8]

California Regent Richard Blum (Dianne Feinstein's husband)has been a significant shareholder of Career Education stock. [9]

CEC schools[edit]

Controversies and federal scrutiny[edit]

Career Education was investigated by the United States Securities and Exchange Commission[10] for various issues of non-compliance in 2005. On February 15, 2005, the company announced an adjustment related to an increase in the estimate for its allowance for doubtful accounts and a restatement for a change in revenue recognition method for its Culinary and Healthcare externships. [11] In January 2008, CEC reported that the SEC has closed its investigation and will take no action against the company.[12][13][14] A Department of Justice investigation began in 1994[15] and was terminated in April 2007, with the DOJ declining prosecution. Another investigation on a different matter was begun by the Civil Division of the DOJ in June 2006 and is currently ongoing.[16]

In June 2005, the U.S. Department of Education prohibited CEC from expanding until it had resolved issues with financial statements and program reviews connected with Collins College and Brooks College two CEC schools.[17] In January 2007, the U.S. Department of Education lifted its restrictions on the company opening new schools or acquiring existing ones.[18]

Career Education's American InterContinental University was placed on probation in December 2005 with its accrediting agency, SACS.[19] The probation status was reviewed after one year, in December 2006, and extended an additional 12 months.[20] On December 11, 2007, CEC announced that SACS has removed AIU's probation and that the university's accreditation remains in good standing.[21]

Brooks College, a Career Education owned school, was the subject of an unfavorable examination of for-profit trade schools in the CBS news magazine 60 Minutes which focused on alleged misrepresentations by admission representatives to prospective students. A CBS producer with a hidden camera visited several Career Education schools in the New York area, including the Katharine Gibbs School.[22] In June 2007, Career Education announced that it will close both campuses of Brooks College.[23]

In January 2007, the New York State Education Department reported deficiencies at the Katharine Gibbs School's New York campus. The problems related to faculty qualifications and remedial course offerings. Career Education has since closed Katharine Gibbs School's New York campus.[24]

California Culinary Academy, which was purchased by Career Education in 1999, was the subject of an unfavorable article in the San Francisco Weekly focusing on alleged misrepresentations and omissions made to prospective students to enroll them in the school.[25] According to the Chronicle of Higher Education, a lawsuit was filed over the matter.[26]

On November 1, 2011 Career Education's Chief Executive Officer resigned as corporate profits significantly fell and allegations were made involving inflated student placement statistics at its career-oriented schools in New York.[27][28] Over the year the stock value dropped about 48%.[29] Steve Lesnik was appointed by the Board of Directors to serve as the new CEO. Lesnik was also a visiting lecturer at Northwestern University and a Director of the Illinois Math & Science Academy Foundation.[30] Several lawsuits were filed by investors who claimed they were defrauded. CEO Gary McCullough was paid nearly $9.8 million in 2011.[31]

In 2014, Career Education Corporation was under investigation by more than a dozen states Attorneys General, although no charges of any kind have been filed by them. The company said it was cooperating fully with the request for information. [32]


After seeking unsuccessfully to sell several of its campuses, in June 2007 Career Education announced that it would close the Brooks College campuses in Sunnyvale and Long Beach, California, and the Pittsburgh branch of the International Academy of Design and Technology. No new enrollments would be accepted, and the final graduation dates would be September 2008 at the Sunnyvale campus, December 2008 in Pittsburgh, and March 2009 in Long Beach.[33]

On February 2008 Career Education Corporation announced that it would also phase out operations of nine money-losing colleges, including several Gibbs College campuses, Lehigh Valley College, and McIntosh College in New Hampshire and to seek permission to convert two Gibbs college locations to Sanford-Brown College campuses.[23]

On February 18, 2008 CEC's American InterContinental University announced plans to gradually close down its Los Angeles campus. Current students would have the opportunity to complete their programs, but no new students would be enrolled. Dr. George Miller, CEO of American InterContinental University, said “the impact of a two-year probation, coupled with the current market for AIU’s programs in Los Angeles, is such that the student population at the campus has decreased significantly, and likely will not reach the sustainable level necessary to support the addition of new programs and necessary resources.”[34]

In January 2011, the company announced it would be laying off 600 people.[35] Due to continued declining enrollment, additional plans to lay off as much as 7% of CEC's workforce (900 jobs) and close 23 schools were announced on November 8, 2012.[36] The corporation made the announcement as it reported a $33.1 million net loss for the third quarter of 2012, as well a 23 percent decline in enrollment from a year ago. The Chicago Sun Times explained that "a U.S. Senate committee report last summer criticized for-profit schools for focusing on their own profits above their students’ job-readiness and for burdening students with loan debt at taxpayers’ expense. The scrutiny has hurt for-profit college enrollment."[37] 25% of the current faculty at the California Culinary Academy were notified of their termination in mid November, effective December 31, 2012.

Year over year, student enrollment dropped 16% from 2012 to 2013. [38]


  1. ^ "Legal Terms and Conditions." (Archive) Career Education Corporation. Retrieved on May 8, 2012. "Career Education Corporation 2895 Greenspoint Parkway, Suite 600 Hoffman Estates, IL 60196"
  2. ^ "Some Things You Just Can't Teach". 2005-05-15. 
  3. ^ "Career Education Corporation Announces Purchase of Le Cordon Bleu Brand Rights for Culinary Education Programs". 2009-08-05. 
  4. ^ "Mr. John M. Larson, Executive Chairman". 2012-09-14. 
  5. ^ "GLRS Files Class Action Lawsuit against Career Education Corporation". December 22, 2003. Retrieved Jul 27, 2013. 
  6. ^ "Career Education CEO Gary McCullough resigns". 2011-11-01. 
  7. ^ "Career Education chief resigns". 2011-11-02. 
  8. ^
  9. ^
  10. ^ By The Book At Career Education, Chicago Business News, Dec. 05, 2005, By Gregory Meyer,
  11. ^ "Career Education Corporation Reports Results for 2004 Fourth Quarter and Year-End". 
  12. ^ Career Education says SEC ends investigation without action, Reuters January 23, 2008
  13. ^ SEC Ends Probe of Career Education Corporation, Chronicle of Higher Education, January 23, 2008
  14. ^ SEC Ends Inquiry Into Career Education, Recommends No Action Be Taken CNN Money, January 23, 2008
  15. ^ Company News; Justice Department Is Investigation Career Education, New York Times, September 3, 2004
  16. ^ Career Education Corporation Provides Update on Department of Justice Investigations, American Digital Networks, April 20, 2007
  17. ^ Career Education Corp · 8-K · For 5/23/06
  18. ^ Career Education announces the U.S. Department of Education lifts growth restrictions, Reuters, January 22, 2007
  19. ^ SACS website, institutional details on AIU
  20. ^ Disclosure Statement Regarding the Status of American Intercontinental University, Commission on Colleges Southern Association of Colleges and Schools, January 2, 2007
  21. ^ American InterContinental University Announces Positive Result in Accreditation Review
  22. ^ For-Profit College: Costly Lesson Career Education Corporation, CBS News, January 30, 2005
  23. ^ a b Career Education Corp Will Close 3 Colleges It Has Tried to Sell Chronicle of Higher Education, June 29, 2007
  24. ^ "Doors are closing at Katharine Gibbs". 2008-02-15. 
  25. ^ San Francisco Weekly Burnt Chefs Former admissions representatives at CCA say they preyed on students’ dreams of becoming celebrity chefs and glossed over the painful economic realities of the industry, Eliza Strickland, June 6, 2007
  26. ^ "Lawsuit Accuses Career Education Corp. of Deceiving Students on Program's Quality" October 1, 2007
  27. ^
  28. ^
  29. ^ "CECO Historical Prices". 2012-09-25. 
  30. ^ "Career Education Corporation Appoints Steven H. Lesnik to Board of Directors". 2006-02-16. 
  31. ^ Becky Yerak, "Ex-CEO of Career Education got big bump in compensation after stock, enrollment sank" April 02, 2012 Chicago Tribune
  32. ^
  33. ^ Career Education Corp. Will Close 3 Colleges It Has Tried to Sell, The Chronicle of Higher Education, June 29, 2007
  34. ^ American InterContinental University Announces Plan to Teach-Out Programs at Los Angeles Campus, The Earth Times, 19 February 2008
  35. ^
  36. ^ Career Ed to cut 900 jobs close 23 campuses
  37. ^ Career Education cutting 900 jobs, closing 23 campuses, Chicago Sun-Times, November 8, 2012
  38. ^

Further reading[edit]

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