ITT Educational's stock plunges on SEC allegations that execs concealed student loan woes

MarketsAssociated Press

ITT Educational Services is facing charges that it duped investors by concealing huge losses on loans made to students attending the company's for-profit colleges.

A complaint filed Tuesday by the Securities and Exchange Commission alleges ITT engaged in scheme designed to cover up mounting problems in two different loan programs that helped finance the tuition of its students.

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ITT guaranteed the loans, threatening to hobble the Carmel, Indiana, company as students missed payments.

The SEC case in Indiana federal court portrays ITT CEO Kevin Modany and Daniel Fitzpatrick, the company's chief financial officer, as the masterminds of the fraud.

ITT says it "vehemently" disagrees with the SEC's allegations.

The company's stock plunged 37 percent to an all-time low of $2.55 in afternoon trading. Shares peaked at $133.75 in 2009.