Bostic R Steven – ‘DFAN14A’ on 5/2/06 re: Career Education Corp

On:  Tuesday, 5/2/06, at 5:10pm ET   ·   Effective:  5/2/06   ·   Accession #:  914121-6-1267   ·   File #:  0-23245

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Additional Definitive Non-Management Proxy Solicitation Material   —   Schedule 14A
Filing Table of Contents

Document/Exhibit                   Description                      Pages   Size 

 1: DFAN14A     Schedule 4                                             9     35K 

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SCHEDULE 14A

 INFORMATION REQUIRED IN PROXY STATEMENT
 SCHEDULE 14 INFORMATION

Proxy Statement Pursuant To Section 14(A) Of The Securities Exchange Act of 1934

Filed by the registrant |_|                                                     

Filed by party other than the registrant |X|                                    

Check the appropriate box:                                                      

|_|   Preliminary Proxy Statement                                               

|_|   Confidential, for Use of the Commission Only (as permitted by Rule        
14a-6(e)(2))                                                        

|_|   Definitive Proxy Statement                                                

|X|   Definitive Additional Materials                                           

|_|   Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12             

 CAREER EDUCATION CORPORATION.
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(Name of Registrant as Specified in Its Charter)

 BOSTIC R STEVEN
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(Name of Person(s) Filing Proxy Statement, if other than the Registrant)

Payment of Filing Fee (Check the appropriate box):                              

|X|   No fee required                                                           

|_|   Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11   

(1)   Title of each class of securities to which transaction applies:           

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(2)   Aggregate number of securities to which transactions applies:             

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(3)   Per unit price or other underlying value of transaction computed pursuant 
to Exchange Act Rule 0-11:                                          

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(4)   Proposed maximum aggregate value of transaction:                          

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(5)   Total fee paid                                                            

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|_|   Check box if any part of the fee is offset as provided by Exchange Act    
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid   
previously. Identify the previous filing by registration statement number, or   
the Form or Schedule and the date of its filing.                                

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(1) Amount Previously Paid:                                                     

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(2) Form, Schedule or Registration Statement no.:                               

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(3) Filing Party:                                                               

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(4) Date Filed:                                                                 

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The following is a letter that Steve Bostic issued to stockholders of Career    
Education Corporation on May 2, 2006:                                           

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STEVE BOSTIC
Wachovia Plaza
P.O. Box 31046
 Sea Island, Georgia 31561

                                                                     May 2, 2006

Dear Fellow Stockholder,                                                        

      Your vote at this year's annual meeting of stockholders is critical to the
future of CEC. I am seeking your support for not only my slate of nominees, but 
for a mandate for necessary change in the management, policies and direction of 
the Company. Your vote can decide whether the failed leadership of John Larson  
and his management team is to continue, or whether CEC can be set on the path to
real growth and the sustainable profitability it is capable of.                 

Consider the Company's record under Larson's management:            

     o     Probationary status imposed on American InterContinental University
         (AIU) by the Southern Association of Colleges and Schools (SACS);

     o     Four ongoing inquiries or investigations by: the U.S. Department of
         Education; the U.S. Department of Justice; the Bureau of Consumer
         Protection of the Office of the Attorney General in PA; the Texas
          Higher Education Coordinating Board, and the New Jersey Department
of Labor and Workforce Development;                     

o     Litigation against the Company's California regulatory body;  

      o     Ongoing lawsuits by stockholders, employees and former students; and

    o     What we believe is the result of Larson's mismanagement - the loss
of $3.4 billion in shareholder value.                   

     Consider the above and decide how much more of this record of failure you
can afford. I own over a million shares of CEC, and I have had enough. I am     
asking for your vote to elect myself and my two nominees to the CEC Board. I    
believe that with sufficient support from the stockholders we will have a       
mandate for change that the other independent directors on the Board will not be
able to ignore. As the former Chairman and CEO of AIU, the Company's flagship   
school, I believe that I have the experience and know-how to fix what is wrong  
with CEC. I have a plan and the will to execute it, but I need your vote. No    
matter how many shares you own, your vote is important. Your clear support for  
our slate will be the base upon which a new, revitalized CEC can grow.          

--------------------------------------------

PLEASE SHOW YOUR SUPPORT. SIGN, DATE AND RETURN THE ENCLOSED
BLUE PROXY CARD TODAY.

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LARSON, OGATA AND DOWDELL - HISTORY REPEATS ITSELF

The failure of management and oversight that threatens the future of CEC is only
the culmination of a pattern of failed education companies that Jack Larson,    
Keith Ogata and Robert Dowdell have left in their wake.                         

Prior to forming CEC in 1994, Larson, from 1980 to 1993, served in senior       
executive positions with two large, but now defunct, national school companies -
National Education Centers (Education Centers), a subsidiary of National        
Education Corporation (NEC) and Phillips Colleges, Inc. (Phillips). Ogata and   
Dowdell were fellow executives with Larson at Education Centers - Dowdell       
serving as President of Education Centers from 1984 to 1988 and Ogata serving as
Chief Financial Officer, Treasurer and Vice President of NEC from 1987 to 1998  
and as President of Education Centers from 1996 to 1998. During the tenure of   
Larson and Dowdell, in the late 1980s, Education Centers' schools began to      
develop excessive federal student loan default rates, which by the early 1990s  
impaired the access of many of the schools to federal student aid programs.     
During Ogata's tenure at NEC in the 1990s, NEC shut down its Education Centers  
business, closing 25 schools and selling off the rest by 1996. The closure and  
sale of schools resulted in a $70 million loss at NEC.                          

At Phillips, Larson held the position of Senior Vice President of College       
Operations from 1989 to 1993, which included oversight of all of Phillips'      
admissions and sales activities. By the late 1980s, Phillips had become the     
largest national operator of postsecondary institutions, owning close to 100    
schools at its zenith. Phillips developed extensive regulatory and operational  
problems in the early 1990s and faced multi-million dollar liability assessments
by the U.S. Department of Education (DOE) for improper administration of federal
student aid programs, including unpaid refunds, lack of proper documentation,   
excessive cash drawdowns, high loan default rates and use of commissioned sales 
representatives in a "Onestop Shopping" sales program from 1987 to 1990 to      
improperly promote federal student loans. The Onestop Shopping sales program,   
which Phillips used in 1989 and 1990 after Larson took over admissions and sales
at Phillips, eventually led to a DOE audit determination in early 1993 that the 
program violated federal regulations and required repayment of $155 million to  
federal lenders. This $155 million liability was later upheld in 1994 and 1995  
by an administrative law judge, the Secretary of Education and the courts. Also 
during Larson's watch, in 1992 the DOE determined that Phillips was in such poor
financial condition that it could not continue to participate in the federal    
student aid programs unless it posted a $5 million letter of credit. Larson left
Phillips in 1993, but the regulatory problems which began under Larson's tenure 
ultimately led Phillips to close 43 schools and to sell off the rest.           

It is not too late to prevent CEC from joining NEC and Phillips on the          
scrap-heap of failed education companies on Jack Larson's resume.               

I have attached to this letter two charts chronicling in detail the time periods
in which Larson, Ogata and Dowdell served with NEC and Larson served with       
Phillips, as well as school closings and other adverse developments during those
time periods, together with sources for each item listed in the charts.         

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 WHO IS RESPONSIBLE FOR AIU'S PROBATIONARY STATUS?

CEC's management has made much of the fact that the SACS placed AIU "on         
sanction", in their words, for six months in 1997, while it was being operated  
by EduTrek, the company of which I was CEO. This is yet another attempt to      
distract you from the gravity of the problems that are facing CEC today. The    
fact is that of all of the measures that can be taken by SACS against an        
educational institution, there are five "negative actions" that are the most    
serious, and these include the extremely serious public sanction of Probation.  
SACS has confirmed to us in writing that during the time period that EduTrek    
operated SACS, there were no such negative actions taken by SACS against AIU.   
This is in stark contrast to what has occurred on Jack Larson's watch. SACS     
initially imposed the public sanction of Warning status on CEC. AIU is now on   
Probation and its accreditation is at risk. This is unprecedented in AIU's      
history and threatens its very existence, and it is Jack Larson's fault, not    
mine.                                                                           

 THE REAL "HEAVY LOSSES"
---           

Jack Larson has also said that EduTrek suffered "heavy losses" during my time as
its CEO and that in 1996, it reported a $5.5 million loss for nine months.      
Again, this is an attempt to distract your focus from the real "heavy losses",  
namely the loss of $3.4 BILLION in shareholder value under Jack Larson's        
management of CEC. In 1996, as CEC management acknowledges in its investor      
presentation, EduTrek was a start-up company. As a result, it had significant   
start-up expenses, in this case related to opening four new AIU campuses and    
establishing the AIU Online university - in other words, building what is now   
CEC's principal asset, accounting for more than 75% of its market value. Without
AIU, CEC would resemble what Larson, Ogata and Dowdell built in the 1980s and   
1990s - career colleges with a fraction of CEC's current market value. And now, 
under the leadership of Larson, Ogata and Dowdell, this valuable asset is in    
grave jeopardy.                                                                 

RHETORIC VS. REALITY

The title of management's recent investor presentations has been "The Year of   
the Graduate". These materials state that "CEC prepares more than 100,000       
students annually for career success in their chosen field". Elsewhere, they    
talk about CEC's "strong student outcomes" and strong graduation rate. But what 
is behind all of this rhetoric? In support of CEC's supposedly high graduation  
rate, management cites a Banc of America research report from October 2004 that 
shows graduation rates for 2001 through 2003. Why does management need to rely  
on a three-year old, secondhand estimate of graduation rates? We have repeatedly
asked management to disclose both current graduation and drop-out rates. They   
have not done so. What are they trying to hide? Had management disclosed the    
conclusions in the most recent Banc of America research report on CEC, from     
February 21, 2006, they would have revealed "the company's first ever year/year 
decline in new student growth." The February 2006 report adds that the          
new-student decline "bodes poorly for the future". There is an endemic lack of  
transparency at CEC. Management is playing a game of smoke and mirrors - trying 
to conceal the ugly truth behind upbeat rhetoric.                               

In CEC's 2005 annual report, Jack Larson makes the following statements in his  
letter to stockholders: "CEC provides students with the skills they need to     
pursue rewarding careers in the fields that they love. Graduates enter their    
professions prepared not only for today but for a lifetime of success." Contrast
Larson's words with the stark conclusions presented in The                      

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Chronicle of Higher Education's January 13, 2006 article on CEC, entitled       
"Promises and Profits". The Chronicle undertook a three-month investigation into
the recruiting practices at the Los Angeles branch of AIU. Here is what it      
found: "The sources painted a picture of a college devoted to enrolling students
by any means necessary, but that did little for them once they were enrolled and
their financial aid was collected. As a result, the sources said, hundreds of   
dissatisfied students dropped out each year, heavily in debt with student loans,
but without the skills they needed to pursue careers in the fields in which they
sought training. Even many of those who have graduated are unhappy. Despite the 
promises made in its advertisements, Career Education Corporation offered them  
little help in finding jobs.... The problems identified by The Chronicle do not 
appear to be isolated to the one campus." In fact, SACS has cited AIU for lack  
of "integrity of student academic records and accuracy in recruiting and        
admissions practices", among the 15 violations of SACS' Principles of           
Accreditation for which SACS has placed AIU on Probation.                       

I and my nominees share a commitment to the ethical renewal of CEC and the      
restoration of its reputation and standing in the educational community. We have
a clear and practical plan we believe will get us to that goal. We believe that 
with a mandate from CEC stockholders, we will be able to work with the          
independent directors on the CEC Board to effectuate it. It is only your vote   
that will give us that mandate. We therefore urge you to SIGN, DATE and RETURN  
YOUR BLUE PROXY CARD TODAY.                                                     

Thank you for your support,                                                     

/s/ Steve Bostic                                                                
--------------------                                                            
Steve Bostic                                                                    

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 IMPORTANT

If your shares are held in your own name, please sign, date and return the
 enclosed BLUE proxy card today. If your shares are held in "Street-Name,"
 only your broker or bank can vote your shares and only upon your specific
instructions. Please return the enclosed BLUE proxy card to your broker or
 bank and contact the person responsible for your account to ensure that
 a BLUE proxy is voted on your behalf.

Do not sign any White proxy card you may receive from CEC.

 If you have any questions, or need assistance in voting your shares, please
contact the firm assisting us in the
solicitation of proxies:

INNISFREE M&A INCORPORATED

 TOLL-FREE: (877) 750-9499

Banks and Brokers call collect: (212) 750-5833

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 EXPERIENCE AT NEC AND EDUCATION CENTERS
 ---------------------------------------

                                                        [Enlarge/Download Table]

------------ -------------- -------------------------- ----------- -------------------------------- -------------------------------
Yrs at NEC   Larson         Ogata                      Dowdell     Adverse Developments             Source                         
& Education                                                                                                                        
Centers                                                                                                                            
------------ -------------- -------------------------- ----------- -------------------------------- -------------------------------
                                                                                                                                   
1980-83      VP Mktg,                                                                               Forbes.com, MtkGuideIdPerson   
             Admissions                                                                             Tearsheet                      
------------ -------------- -------------------------- ----------- -------------------------------- -------------------------------
1984-86      Same                                      President                                    Forbes.com                     
                                                       Education                                                                   
                                                       Centers                                                                     
------------ -------------- -------------------------- ----------- -------------------------------- -------------------------------
1987         Same           Fin. Officer & Treasurer   Same                                         Forbes.com                     
                            of NEC                                                                  NEC 10K FYE 12/31/04, p.13     
------------ -------------- -------------------------- ----------- -------------------------------- -------------------------------
1988         Same           Same                       Same                                         Same                           
------------ -------------- -------------------------- ----------- -------------------------------- -------------------------------
1989         Same (left     VP, Treas. of NEC                      High student loan default        USDOE default records          
             in March,                                             rates; 2 schools closed          USDOE closed schools website   
             1989)                                                                                                                 
------------ -------------- -------------------------- ----------- -------------------------------- -------------------------------
1990                        Same                                   High default rates               USDOE default records          
------------ -------------- -------------------------- ----------- -------------------------------- -------------------------------
1991                        VP, Treasurer and CFO of               Same; 1 school closed            USDOE closed schools website   
                            NEC                                                                                                    
------------ -------------- -------------------------- ----------- -------------------------------- -------------------------------
1992                        Same                                   Same; 2 schools closed           Same                           
------------ -------------- -------------------------- ----------- -------------------------------- -------------------------------
1993                        Same                                   $23.6 Million Est. Charge for    NEC 10K FYE 12/31/94, p.3      
                                                                   closing 13 schools                                              
------------ -------------- -------------------------- ----------- -------------------------------- -------------------------------
1994                        Same                                   Plan adopted to dispose of       NEC 10K FYE 12/31/94, pp 11-12 
                                                                   Education Centers; $40 Million   & 22                           
                                                                   Charge; 10 schools closed        USDOE closed schools webpage   
------------ -------------- -------------------------- ----------- -------------------------------- -------------------------------
1995                        Same                                   10 schools closed                USDOE closed schools webpage   
                                                                   28 schools sold                  NEC FYE 12/31/95, p.12         
                                                                                                    Newsroom, Educational marketer,
                                                                                                    7/17/95                        
------------ -------------- -------------------------- ----------- -------------------------------- -------------------------------
1996                        Same; President                        3 former NEC campus officials    OIG Semiannual Rpt to Congress 
                            Education Centers                      plead guilty to Title IV fraud   for period 4/1/96 to 9/30/96   
------------ -------------- -------------------------- ----------- -------------------------------- -------------------------------

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EXPERIENCE AT PHILLIPS
----------------------

                                                        [Enlarge/Download Table]

---- ------------------- ------------------------------------------------------------------------- ---------------------------------
Year Larson              Adverse Developments at Phillips                                          Source Information               
     Position                                                                                                                       
---- ------------------- ------------------------------------------------------------------------- ---------------------------------
                                                                                                                                    
1989 Senior VP                                                                                     Forbes.com                       
     College                                                                                                                        
     Operations                                                                                                                     
---- ------------------- ------------------------------------------------------------------------- ---------------------------------
1990 Same                *4 schools closed                                                         USDOE closed schools website     
---- ------------------- ------------------------------------------------------------------------- ---------------------------------
1991 Same                *12 schools closed                                                        USDOE closed schools website     
                         *DOE program review at Phillips headquarters finds high occurrence of     Phillips Colleges, Inc. v        
                         late refunds of Title IV aid for dropped students                         Riley, 844 F. Supp. 808, 809     
                                                                                                   (D.D.C. 1994), aff'd, 50F.3d     
                                                                                                   1096 (D.C.Cir. 1995)             
---- ------------------- ------------------------------------------------------------------------- ---------------------------------
1992 Same                *6 schools closed                                                         USDOE closed schools website     
                         *4/29/92 DOE finding that Phillips failed to meet financial               Phillips Colleges, No. 94-27-ST  
                         responsibility requirements for Title IV aid programs                                                      
                         *7/24/92 -  Phillips avoids termination by DOE from Title IV programs                                      
                         by agreement to post $5 Million letter of credit                                                           
---- ------------------- ------------------------------------------------------------------------- ---------------------------------
1993 Same (left          *7 schools closed                                                         Forbes.com                       
     in Jan, 1993)       *2/11/93 final audit determination that Phillips "OneStop Shopping"       Phillips Colleges, 93-48-SP      
                         sales policy used from 1987-1990 violated DOE regulations " and           Phillips Colleges, No.           
                         imposition of $155 Million liability to repay GSL Lenders                 94-27-ST; Phillips Colleges,     
                         *8/26/93 DOE draw of $2.19 Million on Phillips letter of credit to pay    844 F. Supp. at 811.             
                         delinquent Title IV refunds                                                                                
---- ------------------- ------------------------------------------------------------------------- ---------------------------------
1994                     *2/28/94 ALJ ruling for repayment of $2.8 Million to GSL lenders          Phillips Colleges, 91-96-SA      
                         *4/24/94 Secretary DOE ruling ordering Phillips to make $3.19 Million     Phillips Colleges, 92-64-SA      
                         payment to replenish DOE letter of credit, in order to maintain Title     Phillips Colleges, 93-39-SP      
                         IV eligibility for 40 campuses and 16,000 students,                       Phillips Colleges, 93-48-SP      
                         *5/15/94 ALJ ruling to repay $110,356 of campus based Title IVaid due     Phillips Colleges, 93-58-SP      
                         to lack of documentation                                                  Phillips Colleges, 94-4-SP       
                         *8/23/04 ALJ ruling upholding $155 Million audit finding                  Phillips Colleges, 94-33-SP      
                         *8/24/94 AJ ruling for Phillips to pay $586,700 as interest for                                            
                         excessive drawdowns of Title IV aid                                                                        
                         *11/2/94 ALJ ruling for Phillips to repay $242,962 of fair share of                                        
                         campus based Title IV aid due to lack of documentation                                                     
                         *11/14/94 ALJ ruling for Phillips to repay $692,632 to GSL lenders and                                     
                         $256,799 to DOE due to improper sales practices                                                            
                         *11/16/94 ALJ ruling to repay $102,952 of Title IV aid due to student                                      
                         ineligibility                                                                                              
---- ------------------- ------------------------------------------------------------------------- ---------------------------------
1995                     *9 schools closed                                                         USDOE closed schools webpage     
---- ------------------- ------------------------------------------------------------------------- ---------------------------------
1996                     *5 schools closed; sale of 18 schools                                     USDOE closed schools webpage     
                                                                                                   Chronicle of Higher Education ,  
                                                                                                   11/15/96                         
---- ------------------- ------------------------------------------------------------------------- ---------------------------------

Dates Referenced Herein   and   Documents Incorporated by Reference

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This ‘DFAN14A’ Filing		Date		First		Last			Other Filings
Filed on / Effective on:		5/2/06		3		4			DFAN14A
		2/21/06		6					8-K/A,  DFAN14A
		1/13/06		7
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