Washington Post's Kaplan unit to cut 770 employees
Tuesday, December 7, 2010; 8:45 PM
Dec. 7 (Bloomberg) -- Washington Post Co.'s Kaplan Higher Education division said it plans to cut about 770 employees, or about 5 percent of the workforce, because of slowing enrollment.
"These are difficult decisions to make, but necessary if we are to maintain the same high-quality education and support services our students expect," Jeff Conlon, chief executive officer of Kaplan Higher Education, said in a statement today.
Tom Hoyt, a spokesman for Kaplan, said the workforce reduction happened today. He said the job cuts aren't related to any pending litigation.
Last week, a former dean of the unit alleged the company engaged in fraud to get U.S. student aid as he defended himself against criminal cyber-harassment charges in a federal jury trial under way in Chicago.
In testimony in U.S. District Court, Bennie Wilcox, a former dean of law and legal studies at Kaplan University, said he witnessed Kaplan executives commit "multiple schemes" to defraud the U.S. government and taxpayers out of $1 billion. Kaplan denies the allegations. Wilcox claims the company retaliated against him when he exposed fraud in a pending whistleblower lawsuit in Florida filed in 2007.
Florida is investigating Kaplan Inc. and four other for- profit colleges for possible misrepresentations about their financial aid, recruitment and accreditation. The civil investigation was initiated after consumer complaints and the U.S. Government Accountability Office issued a report for a U.S. Senate hearing in August about for-profit colleges.
Washington Post rose $4.53 to $394.20 in New York Stock Exchange composite trading. The shares have dropped 27 percent since closing at a 52-week high April 15, as Kaplan and other for-profit colleges have come under scrutiny by Congress, the U.S. Department of Education and the GAO.
On Nov. 12, the Washington Post Co. said Melinda French Gates would be leaving its board.
In a statement upon her departure, Gates said she was impressed with Washington Post Co.'s work with Kaplan, "whose new approaches to education are allowing students opportunities that would otherwise not be possible."