College CrazinessHere's our idea for a great new course at America's for-profit colleges: Scam the Government 101. The Government Accountability Office released a study Tuesday saying that more than a dozen for-profit colleges encouraged fraudulent practices and made deceptive statements to prospective students. Posing as students, GAO investigators applied for admission at 15 for-profit colleges across the U.S. only to find that school personnel coached them on falsifying financial aid forms. How cool is that? The feds went Back To School just like Rodney Dangerfield. Unfortunately, in this case the result was not nearly as funny, as shares of U.S. education companies got slammed with market-leaders Apollo Group ( APOL) and Corinthian Colleges ( COCO) both finishing down nearly 5% on the news.
Dov vs. DeloitteAs if feminists, journalists, lawyers and Academy Award-winning film directors weren't enough, American Apparel ( APP) founder Dov Charney has a brand new class of people running away from him: Certified public accountants. Hip clothing seller American Apparel revealed late last week that Deloitte & Touche, its independent auditor for over a year, resigned earlier this month. The Los Angeles-based retailer said it rehired Marcum LLP as its not-so-new auditor. The firm, then known as Marcum & Kliegman, was fired from that role in April 2009. Shares of American Apparel fell 14% on the news to $1.55.
EA's Madden MoneyElectronic Arts ( ERTS) must not care about getting sacked because it blatantly refuses to watch its blind side. Former Bengals and Bucs RB Tony Davis filed a class-action lawsuit against the video game-maker this Monday on behalf of nearly 6,000 retired NFL players over its Madden NFL 09 edition. The suit, which was first reported by gaming site IGN, claims that EA "knowingly and intentionally" used player likenesses in its historic edition in such a way that the company would avoid paying licensing fees.
H-P's PenaltyFor those keeping score, add Hewlett-Packard ( HPQ) to the growing list of American companies paying the government millions of dollars for crimes they supposedly didn't commit. The tech heavyweight said Monday that it has agreed in principle to settle a lawsuit by the Department of Justice alleging that it paid kickbacks to Accenture PLC ( ACN) in exchange for government work. HP denied "engaging in any illegal conduct." Still, the deal will reportedly lower the company's fiscal third-quarter profit by 2 cents per share, which works out to about $50 million.