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ITT Educational Says Little About Feds' Raid

The trade school says Federal probe may not end quickly because of volume of data involved.

ITT Educational Services

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warned on a Thursday conference call that the Department of Justice's investigation of the company may not be concluded quickly due to the amount of information and documents the company provided investigators on Wednesday.

The company failed to provide much more information regarding the investigation. No charges have been filed.

Shares of the company erased pre-conference call gains, after falling more than 30% to $38.50 yesterday. Recently, shares were down $1.30, or 3.4%, to $37.20.

On Wednesday, investigators searched 10 of the company's 77 locations nationwide, as well as its corporate headquarters in Indianapolis, seeking records on graduation and retention rates, attendance figures and other enrollment data.

The company said in a statement Thursday that it is cooperating with the federal investigation and that locations raided yesterday are holding classes as usual. ITT said few details of the investigation have been disclosed and that the investigators said that no conclusions should be drawn from Wednesday's searches.

In recent months, the industry has been hurt by periodic reports and speculation questioning record keeping and other business practices.

"The company, which holds itself and its people to the highest ethical, legal and regulatory standards, will continue to meet the educational needs of its 37,000 students nationwide during the ongoing investigation," ITT said.

The company also said in Thursday's statement that until it receives more detailed information about the nature of the investigation, it will not comment further.

The initial search warrant on Wednesday and related grand jury subpoenas related to information and documentation regarding placement figures and rates, retention figures and rates, graduation figures and rates, attendance figures and rates, recruitment and admissions materials, student grades, graduate salaries and transferability of credits to other institutions.

The company said on the call that information was also released related to promotions, demotions, terminations, suspensions, reprimands, resignations, employee disciplinary actions, internal investigations and grievance actions.

"The investigators have disclosed very few details and therefore I am unable to take questions," said Rene R. Champagne, chief executive of the company. "I can assure you that we will strive to keep you informed as more information becomes available."