Southeast Financial Credit Union is suing The College Network, an Indianapolis-based college test preparation company.
The lawsuit alleges that The College Network owes the credit union more than $12 million and that The College Network is insolvent and trying to shield assets from creditors.
According to the lawsuit, the credit union has had a business relationship with The College Network since 2003 and holds about $35 million in loans taken out by about 10,000 of the college test preparation company's nationwide customers.
Since The College Network is not a school, the loans were not student loans; but rather personal loans subject to higher interest rates and immediate repayments.
The Attorney Generals of Indiana and New York are also suing The College Network for fraud. They contend that very few people actually complete the program and earn a college degree.
The Indianapolis Star reported last year that The College Network allegedly used outright fraud and high-pressure sales tactics to sign up customers.
One last thought, why did Southeast Financial partner with The College Network and extend its contract with the company last year?
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The last clause is indeed very perplexing as to why the finance company would want to continue any forms of relationship at all with the organization that is it about to sue. My personal opinion is perhaps the finance company has its own agenda such as retrieving as much info as possible through their affiliation.
ReplyDeleteThe real question is why would a credit union, an organization who is supposed to be focused on saving its members money, want to extend essentially fake student loans? Since CUs aren't supposed to be profit-driven, where is the incentive? Surely before now (12 year old relationship between SE and TCN) someone at the CU realized that TCN was engaging in shady practices.
ReplyDeleteAlso no mention in this article that the TCN loans being financed by SE were/are referred to a collection agency owned by the same guy that owns TCN!