Federal agents investigating ITT

INDIANAPOLIS — Federal agents on Wednesday searched the headquarters of ITT Technical Institutes and some campuses of its chain of technical schools in eight states. Shares of its parent company, ITT Educational Services Inc., plunged 33 percent.

ITT Educational Services said the investigation involved grand jury subpoenas of records concerning student placement, retention, graduation, attendance, recruitment, grades, graduates' salaries and transfers of students' credits to other colleges.

Law enforcement officers did not allow students, staff and faculty to enter about 10 of ITT's 77 campuses in 30 states, ITT spokeswoman Nancy Brown said.

Classes elsewhere were unaffected, and ITT hoped to resume all classes today, she said.

"They've given us no idea specifically what they're looking for," said Brown, who was shut out of her offices in the 150-employee headquarters in Carmel. "They told us they believed we'd be back in our offices tomorrow (Thursday). It's difficult, because no assurances have been given."

About 68 percent of the company's 2003 revenue of nearly $523 million came indirectly from federal education aid programs, according to a company regulatory filing. And most ITT students pay a substantial portion of their tuition and other expenses with money received under federal programs.

Brown said she did not know whether the federal aid was the focus of the probe.

Rene R. Champagne, the Indianapolis-based company's chairman and chief executive, said in a prepared statement that the company was cooperating with investigators.

"We have not been informed of any specific allegations or charges at this time," he said.

The U.S. Attorney's Office in Houston, which was leading the investigation, issued a statement by U.S. Attorney Michael Shelby saying "no conclusions should be drawn from today's activity."

Shelby said law enforcement officers were investigating at ITT's headquarters and at campuses in Indiana, Texas, Virginia, Florida, Louisiana, Nevada, California and Oregon.

ITT's Brown and federal authorities declined to say in which cities the campuses that were searched are located. Brown said investigators did not tell the company why the search involved only some ITT schools.

The parent company's shares, traded on the New York Stock Exchange, fell $18.90 to close at $38.50.