A federal judge has overturned a $280 million verdict against Apollo Group Inc., the for-profit company that owns the University of Phoenix, deciding there wasn't enough evidence to prove it committed securities fraud.
In an 11-page ruling filed Monday, U.S. District Judge James Teilborg broke with jurors in the class action lawsuit brought by the Policemen's Annuity and Benefit Fund of Chicago.
Jurors had decided in January that Apollo officials lied about their student recruitment policies and ordered the company to repay investors for the subsequent loss of share value once those policies were revealed.
In his ruling, Teilborg agreed that Apollo misled the market, but he decided that lawyers for the benefit fund "failed to prove that Apollo's actions caused investors to suffer any harm."
Jeffrey A. Barrack, a lawyer for the policemen's benefit fund, said he planned to appeal.
Apollo's shareholders had claimed that officials covered up a 2004 Department of Education report that criticized the University of Phoenix's recruitment policies.
The report concluded that the school paid enrollment counselors "solely based on (the) recruiters' success in securing enrollments," which violated federal regulations.
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