Financial probe expands

N.Y. targets athletics programs nationwide, including ECU

ALBANY, N.Y. -- New York Attorney General Andrew Cuomo is now investigating whether top college athletics departments nationwide -- including those at Auburn, East Carolina, Ohio University and Texas Christian -- steered athletes and other students to education lenders in exchange for kickbacks.

Cuomo said Wednesday that he served 39 universities with subpoenas and requests for documents about deals between athletics departments and Student Financial Services Inc., which operates as University Financial Services. He said he's looking at how team names, mascots and colors were used to suggest the company was the college's preferred lender.

"Students trust their university's athletic departments because so much of campus life at Division I schools centers around supporting the home team," Cuomo said. "To betray this trust by promoting loans in exchange for money is a serious issue, especially when Division I schools already generate tremendous revenue from their student athletes."

East Carolina was among the schools that received subpoenas and document requests, according to a news release on Cuomo's Web site at www.oag.state.ny.us.

Officials at East Carolina, though, said they had no knowledge of subpoenas or requests.

"So far as we know, nobody has subpoenaed [East Carolina],'' said John Durham, director of public affairs at ECU. "The university as a whole does not have any arrangement with preferred lenders."

Pirates athletics director Terry Holland was on vacation and unavailable to comment.

Cuomo began the investigation as an outgrowth of his national investigation of student loan providers and college administrators, which he said uncovered a pattern of favoritism for lenders who provided kickbacks, "revenue-sharing" plans, and trips and other gifts in exchange for designations as recommended lenders. Sometimes the colleges provided campus employees to staff telephone banks for lenders drumming up business.

Cuomo's findings led to state and national reforms.

"Today's action is an important new step as we continue to examine the unethical conflicts that pervade the student loan industry," Cuomo said.

In a written statement issued late Wednesday, University Financial Services said: "The relationships between our company and athletic departments of various colleges and universities are part of our generalized marketing efforts, the same as advertising at any sporting event, and do not involve the financial aid departments of the schools involved. ... UFS supports the student loan code of conduct and plans to fully cooperate with the New York attorney general's office."

Ohio University spokeswoman Sally Linder said the school received a subpoena and will cooperate with Cuomo, as it did in a student loan probe by the Ohio Attorney General's office. She declined further comment until the university's lawyers review the subpoena.

"We feel confident what we are doing is above board," Linder said.

Auburn athletics spokesman Kirk Sampson said the university has no preferred aid provider.

"However, the Auburn Athletic Department will thoroughly examine and respond to any suggestion that the university's name, logo or any representation of it has been used improperly in connection with specific lenders," Sampson said.

A representative of Texas Christian didn't immediately respond to requests for comment.

Cuomo said that during his first investigation, he found the athletics director of Dowling College on New York's Long Island entered into a revenue-sharing agreement with University Financial Services that paid the college $75 for every new loan application, provided exclusive marketing advantages on campus and allowed the lender to use the department's interns to disseminate its brochures.

Dowling ended the relationship with the company as part of its settlement of Cuomo's investigation.

Cuomo's investigation has resulted in settlements and reforms with 12 lenders -- including Nelnet Inc., Citibank, Sallie Mae, JP Morgan Chase and Bank of America -- and several colleges, with $13.7 million in payments made to a national education fund to help high school students and their families more wisely and safely apply for student loans.

(N&O staff writer A.J. Carr contributed to this report.)