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Two former senior executives at defunct ITT Educational Services Inc. have agreed to pay penalties totaling $300,000 and refrain from holding top jobs at public companies for five years to resolve claims they concealed financial woes at the for-profit college, the SEC announced July 6.
Former CEO Kevin Modany will pay $200,000 and former CFO Daniel Fitzpatrick will pay $100,000 as part of their settlements with the Securities and Exchange Commission. A trial was set to start July 9.
Modany and Fitzpatrick faced fraud claims stemming from allegations they failed to inform investors that two student loan programs ITT financially guaranteed were performing poorly, according to the SEC. The company, which filed for bankruptcy in 2016, previously settled claims based on related allegations.
“Holding individuals accountable — particularly senior executives — is a critical focus of our enforcement program,” Stephanie Avakian, co-director of the SEC’s Division of Enforcement, said in a statement. “These settlements, entered into on the eve of trial after years of litigation, reflect our commitment to this accountability.”
Modany and Fitzpatrick didn’t admit or deny any wrongdoing as part of their deals with the commission.
David Miller, a New York-based Morgan, Lewis & Bockius LLP partner representing Modany, and Fredric Firestone, a Washington-based McDermott Will & Emery partner representing Fitzpatrick, told Bloomberg Law their clients are pleased this matter is now behind them.
The case is SEC v. ITT Educational Services, Inc. , S.D. Ind., No. 1:15-cv-00758-JMS-MJD, 7/6/18 .
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