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For-profit educator’s business model under scrutiny
BPP Law School’s long-term goal of transforming itself into a full-blown university could be in jeopardy thanks to its US parent Apollo Group being investigated by the SEC in connection with accounting irregularities.
The probe, which Apollo claimed is an “informal inquiry”, is the second time the group has been put under the SEC’s microscope for its revenue recognition policies.
Although full details of the investigation are not known, it is understood that it relates to the way Apollo accounts for revenue relating to students enrolling at the University of Phoenix who are refunded for dropping out early. The University of Phoenix is the largest for-profit educator in the US.
In a separate case, the university is embroiled in an $80m (£48.06m) pay dispute with staff. Also, it is understood that in 2004 Apollo paid out nearly $10m to staff after it allegedly broke the law by tying their remuneration to student enrolments.
In a statement Apollo clarified that it is attempting to settle and resolve a six year old False Claims Act lawsuit — in which the US Department of Justice declined to intervene - relating to its compliance with a single provision of the Higher Education Act. The previous $9.8m settlement was with the US Department of Education to resolve similar allegations.
BPP chief executive Peter Crisp said in a statement: “In its fourth-quarter and year-end results statement [issued 27 October 2009], Apollo Group announced its full cooperation with the SEC on an informal inquiry into one area of its accounting practices. The inquiry relates to Apollo’s US operations only and not BPP, which remains a UK company subject to UK legislation.”
However, rival LPC providers in the UK claim the probe raises major concerns about BPP’s longer-term plans to achieve university status.
BPP became the first privately owned company to receive degree-awarding powers in September 2007 and has since launched an undergraduate law degree that attracted 100 students in its first year.
College of Law chief executive Nigel Savage said: “This raises serious issues if Apollo’s US tactics are being embraced by its UK subsidiary.
“I want to know if they [BPP] are playing by the rules of the jungle, or are the regulators going to embrace a more robust system of compliance. If so, that’s not a job for worthy academics or worthy practitioners, this is about hardnosed compliance.
“Otherwise we’re going to finish off with a legal education model like the banking system.”
The course director at another LPC provider argued that this raised issues about who is keeping an eye on the ownership of UK degree-awarding institutions.
“We need to be absolutely sure that quality is being assured,” he stated.