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The Oregonian recently published a hair-raising story about the misuse of federal college aid money by Corinthian Colleges, Inc. a private for profit education company.
In September, federal regulators sued Corinthian (which owns Everest and Apollo colleges), accusing the company of making false and misleading claims about the success of its graduates—and then pushing students toward an in-house loan program that reaped the company millions in profits.
Corinthian, the feds allege, did so knowing its students faced a 60 percent default rate. That didn't matter to Corinthian: The feds say the revenue from the loans allowed Corinthian to keep federal college aid pumping into its bank accounts—a cash flow that far outweighed any losses from the loans.
The Corinthian story had previously been told when the Consumer Financial Protection Bureau filed suit against the company last September.
But the Oregonian story by reporter Jeff Manning broke new ground in revealing the central role of a role a Beaverton loan servicing firm in Corinthian's operations.
That firm is Genesis Financial Solutions. Its founder, Irving Levin, has made a fortune by loaning money to people who often can't get conventional loans.
Manning's story showed how Levin's company originated and serviced the loans for Corinthian. The high default rates alone probably should have set off alarms.
Levin told Manning his company did nothing wrong. The federal lawsuit does not name Genesis as a defendant.
But the back story on Levin shows how money and political power in Oregon often merge, leaving many of the players far richer than before.
In the case of Levin, the man who changed state law to bring him to Oregon was then-Gov. Neil Goldschmidt.
As WW reported in a 2004 story, Goldschmidt profited personally—and in a big way—from his relationship with Levin.
WWeek 2015