Career Education reaches agreements with 48 states, sees $6.3M charge
Career Education announced that it has reached agreements with attorneys general from 48 states and the District of Columbia to bring closure to the multi-state attorneys general inquiry on-going since January 2014. As part of the agreements the company denied any allegations of wrongdoing or liability. In addition, the attorneys general have provided a release of potential claims that they may have brought. In connection with these agreements, Career Education expects to record a total pre-tax charge of $6.3M, consisting of a $5M payment to the attorneys general to cover expenses incurred during the course of their inquiry over the last five years and the write-off of approximately $1.3M of accounts receivable. It added, "Although the Company agreed to forgo efforts to collect on approximately $556 million of old accounts receivable that were incurred during the last 30 years by students at more than 100 campuses who reside in participating states, all but approximately $1.3 million of these old accounts receivable were written-off in prior reporting periods in the ordinary course of the Company's operations. The agreement to forgo efforts to collect on previously written-off receivables does not require additional write-off expense to the Company's financial statements." Career Education will work with a third-party administrator over the next three years who will provide ongoing oversight and review of the company's implementation of the terms of the agreements. The vompany will reimburse the administrator a total of $2M for fees and expenses to be paid over the next three years.