Gibson, Dunn & Crutcher partner Brian Lane (left), former director of the SEC’s Division of Corporation Finance, represents ITT. The company’s chief executive, Kevin Modany, turned to Jones Day partner Joan McKown, previously chief counsel of the SEC Enforcement Division. Daniel Fitzpatrick, the chief financial officer, hired Fredric Firestone, head of McDermott Will & Emery’s securities defense group and a former SEC Enforcement Division associate director.
Firestone said Fitzpatrick is “an honest and decent man, a man of integrity. We do not think he did anything wrong and look forward to our day in court.”
Lane and McKown were not immediately reached for comment.
The SEC is seeking disgorgement and civil penalties. The agency also wants the executives barred from serving as directors of any public company, and to return their bonuses and stock sale profits.
Indiana-based ITT has more than 55,000 students enrolled in online classes or at one of its 130 campuses.
The company is “highly dependent on a steady flow of students capable of paying its fees,” SEC Enforcement Division director Andrew Ceresney said in a conference call with reporters on Tuesday. ITT executives, Ceresney said, created “a sophisticated scheme designed to mislead investors,” including making minimum payments on behalf of student borrowers who were behind on what they owed.
ITT also faces a suit by the Consumer Financial Protection Bureau, which accused the company of predatory student lending in February 2014. Ceresney said the SEC suit focuses on harm to investors; the CFPB case focuses on harm to consumers. “We’ve generally been in touch with the CFPB, but this investigation was conducted primarily by the SEC,” he said.
The SEC investigation team included Zachary Carlyle, Jason Casey and Anne Romero, with assistance from Judy Bizu.
The litigation will be led by Carlyle, Nicholas Heinke and Polly Atkinson.
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