Apollo Group Inc. (APOL), a leading private education company in the world, has agreed to pay $67.5 million to the U.S. government and an additional $11.0 million as attorney fees to resolve a lawsuit involving its subsidiary, the University of Phoenix.
In the lawsuit filed in 2003 in the U.S. District Court for the Eastern District of California, the Sacramento division, it was alleged that University of Phoenix violated a federal statute and directive stating that while it may compensate recruiters based in part on the number of students they enroll, it cannot be the sole factor for determining their compensation. With the settlement of a long-running dispute, Apollo Group has averted further litigation expenses and created new avenues for a strong synergy with the U.S. Department of Education, its lead regulator.
The shares of Apollo Group rose $5.23 or 9.2% to $61.80 on the favorable impact of the news. The company further remains confident of maintaining its focus as a premier higher education provider across the globe and expects to steer clear of such controversy in future.
Founded in 1973, Apollo Group offers both online and on-campus educational programs and services at the high school, undergraduate, graduate and doctoral levels. The company owns and operates through its subsidiaries such as the University of Phoenix, College for Financial Planning, Insight Schools Inc., Institute for Professional Development, and Western International University.
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