Class Action Lawsuit

Capella University, a for-profit college claims to offer professional training to its students and this is the main reason that for-profit colleges can exist. However, it has been proven that this training provided to students by the company is neither professional nor helpful. The classes taught by the company are not only ineffective but also harmful to students. The University Class Action lawsuit filed against Capella University is one of the cases that brought awareness to the negative consequences of attending a for-profit college. There are several other similar lawsuits.

The University Class Action lawsuit was filed by the AFT, American Federation of Teachers, and the National Education Association, and the National Institutes for Hispanic Education, Educational Research Service, Inc.

The Complaint names as defendants: Dr. Miguel P. Corrado, President of Capella University, and his wife, Mrs. Victoria Corrado, both of whom are involved in leading the strategic education program at Capella; Dr. Ramy Karanel, former Director of the Strategic Education Program at the Massachusetts Institute of Technology (M.I.T.) and presently an adjunct professor at the University of Florida; Mr. Joseph V. Angarella, a former Marketing Professor at M.I.T., and Mr. Theodore R. Tanahara, a former Marketing Professor at the University of Miami, who are involved in teaching curriculum at the for-profit University. These individuals are accused of deceiving the students of their degrees and of participating in activities that do not support the professional practice of education.

The Capella University Class Action lawsuit charges that Dr. Corrado, President of Capella University, and Mrs. Corrado, a former education administrator at the University, knew that the University was illegally discriminating against students based on race, gender, national origin, and disability when it comes to granting educational benefits and loans.

In addition to the illegal behavior outlined in the Class Action lawsuit, the cheating allegedly conducted by these individuals further endangered the credibility of the University. Many current and former students who have received aid from the Department of Education while at Capella University, such as the Perkins loan program and the Direct Stafford Loan program, were not properly informed about the classes required to fulfill the requirements for receiving those programs, and had to spend additional time and money obtaining those classes to receive benefits from the educational programs offered at the University. The State Attorney General has charged the following individuals with criminal offenses:

Mr. Joseph V. Angarella, a former Finance Chair and Assistant Dean at Capella is alleged to have participated in a scheme to defraud the beneficiaries of federal student loans by signing fictitious checks.

He is additionally alleged to have participated in a scheme to defraud the beneficiaries of various other federal programs, including the Federal Perkins Loan Program by signing checks that purported to be federal Student Aid grants when they were cash bonus arrangements arranged by the principals of the now-defunct Sallie Mae Corporation. Mr. Joseph V. Angarella is the husband of Mrs. Maria Pappano, a current beneficiary of the Federal Perkins Loan Program. Mr. Joseph V. Angarella faces several federal counts, including conspiracy to defraud the government and falsifying records or documents. He has additionally been charged with one count of money laundering by making payments to a person who is a beneficiary of the Federal Perkins Loan Program.

Mr. John J. Varfolo is a retired United States Navy captain and is the president of Sallie Mae. Mr. Varfolo is alleged to have instructed his subordinates to falsify degrees earned by employees in the student loan debt collection department and instructed his lieutenants to avoid taking the proper action when it was discovered. Mr. Varfolo is currently serving a two-year prison sentence, which was supposed to be commuted, according to court documents. Mr. Varfolo is also being sued for his role in the death of Robert E. Thompson, a former Sallie Mae loan collector. Mr. Varfolo is the father of a son who is enrolled at Capella University, which is currently facing a Class Action lawsuit regarding the deaths of three college students who were killed while studying at the University of Virginia.

The Class Action lawsuit targets not only Mr. Varfolo but also the for-profit company that he worked for, called WMS. The lawsuit says that WMS intentionally misstated the income and job statistics of its former and current students to make its for-profit applicants far more attractive to lenders and that the falsified degrees and job information provided to the government caused many current students to default on their federal student loans, resulting in large losses to WMS and its investors. The Class Action lawsuit is expected to be one of the biggest legal disputes in the last decade, and it could cost companies like Sallie Mae extremely well.

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