A California for-profit online education services company last week announced it’s moving its headquarters to south Chandler and changing its name – less than a month after a class action lawsuit by investors was filed against it and the Securities and Exchange Commission launched an investigation into its financial activities.
Bridgepoint Education Inc. announced earlier this week it is changing its name to Zovio, moving its headquarters to a new 130,000-square-foot building at 1181 E. Northrup Blvd., and eventually expects to house 800 jobs over the next two years, starting with 200 employees now in temporary offices in Tempe.
The announcement came less than a month after Bridgepoint advised that investors should not rely on two of its consolidated financial statements filed last year because it had “identified errors, relating to revenue, provision for bad debts, accounts receivable and deferred revenue, which resulted in the overstatement of revenue and expenses.”
The announcement triggered a series of actions for the company, which is already under investigation by the federal Consumer Financial Protection Bureau and the attorneys general for five different states for, among other things, allegedly inflating its student retention rate.
A class action lawsuit was filed by investors against the company, and two law firms began courting potential clients by announcing that Bridgepoint could be held liable for losses they incurred between March 6, 2016, and March 7, 2019.
Bridgepoint’s stock also plummeted by 34 percent.
On March 12, 2019, Bridgepoint filed amended financial statements for the periods containing restatements of balance sheet and income statement data.
“We’re focused on investors’ losses, admitted improper accounting, whether the so-called ‘errors’ were in fact ‘irregularities,’ and the extent to which Defendants may have misled investors,” said Hagens Berman partner Reed Kathrein.
Hagens Berman, a national investor-rights law firm, also posted invitations on social media to whistleblowers that stated “persons with non-public information regarding Bridgepoint Education should consider their options to help in the investigation.”
Block & Leviton LLP, a securities litigation firm, which filed the class action suit, accused Bridgepoint of maintaining “deficient internal controls” and said it was “prone to and did commit material accounting errors related to revenue, provision for bad debts, accounts receivable and deferred revenue.”
Those accounting errors, the suit said, “resulted in the overstatement of revenue and expenses and as a result, Bridgepoint’s public statements were materially false and misleading at all relevant times.”
The owners of online Ashford University, Bridgepoint says it “partners with higher education institutions and employers to deliver innovative, personalized solutions and is redefining education technology.”
Bridgepoint spokeswoman Dori Abel said while the company could not comment on the class action litigation, she noted that “Ashford has never been found liable of any wrongdoing despite an almost obsessive focus on our institution.”
She also said the move to Chandler “has been in the works for a much longer time” and was unrelated to any of the company’s legal challenges.
Bridgepoint CEO Andrew Clark said the rebranding is “advancing the company’s strategy and transformation to an education technology services company.”
“Today, America has 7 million jobs currently vacant because of a shortage of qualified workers – a skills gap that threatens our country’s competitiveness in a global economy,” Clark said in a release, adding:
“Zovio will work alongside education institutions, employers, and learners to provide technology and services differentiated by meaningful insights gained through powerful data and analytics, which will enable our partners to address the skills-to-employment challenge.”
He said the company was moving in order to “tap into local talent, enjoy a favorable business environment, and provide a more reasonable cost of living for our transferring employees with opportunities for transferring spouses to find employment.”
The company also explained its new name in a news release, which said:
“The name was inspired by the Greek word ‘sophos,’ meaning ‘skillful and intelligent,’ and the Latin prefix ‘vi’ for ‘visionary.’ It speaks to the company’s ability to provide colleges and universities, corporations, and learners with the right insights to improve outcomes.”
Both Mayor Kevin Hartke and Gov. Doug Ducey hailed the announcement.
“With the relocation of their headquarters, more than 800 employees and their families also will call Chandler home,” Hartke said. “I’m confident they will enjoy Chandler’s quality of life.”
Ducey said, “Arizona’s education programs are training corporate employees, software developers and more. As we expand these programs, education technology must also keep up. We’re proud that Zovio chose Arizona to expand its headquarters and congratulate them on their growth.”
The company signed a lease for more than 11 years for a building in a multi-use business parked near Chandler Airport Center called Ascend, at the Loop 202 and Cooper Road interchange.
That building recently opened and boasts “an energy-efficient and open working environment, with a café, gym, and on-site health clinic.”