Close Window

Software company accuses Phoenix university of theft
Craig Harris
The Arizona Republic
Jul. 22, 2003 12:00 AM

The Federal Bureau of Investigation is looking into allegations that the University of Phoenix helped a local company take information from a San Diego software firm that had provided tutorials and student placement tests for the school.

George Madden, chief executive officer of Chariot Software Group, said, "We went to the FBI. . . . You know the FBI doesn't mess around with shoplifting."

Jan Caldwell, an FBI spokeswoman, said Monday that the San Diego office has conducted a preliminary investigation and no charges have been filed. She would not elaborate.

Kenda Gonzales, chief financial officer for Phoenix-based Apollo Group, parent of the University of Phoenix, said the FBI has not contacted her company. But she denied that the University of Phoenix engaged in any wrongdoing.

"From our perspective, we do not have a dispute with them (Chariot)," Gonzales said. "I was definitely surprised that the FBI was investigating." Madden said his 20-person firm had provided online placement tests and study materials to University of Phoenix students from late 1997 to Sept. 15, 2002, when the contract expired. He said Chariot was paid $10,000 a month.

A statement on Chariot's Web site alleges that the University of Phoenix, the largest for-profit university in the country, retained Phoenix-based Momentum Interactive to develop a system that would replace Chariot's. Chariot claims the University of Phoenix then gave Momentum, which is now called Veleo, the log-in identification and passwords necessary to gain access to Chariot's system.

Other claims in the statement:

• Momentum intruded into Chariot's Web servers during a six-month period in 2002.

• Momentum copied online Web page code from copyrighted Chariot System pages. The copied code was then employed in the replacement system developed by Momentum.

• When Momentum implemented its replacement system on University of Phoenix servers, students were directed to Chariot servers to access test items five months after the contract between Chariot and the University of Phoenix had expired.

Gonzales denied the University of Phoenix provided Momentum passwords.

"We did not have access to any of their source codes or anything behind the scenes," she said.

Calls to Veleo were not returned.

Apollo has become a widely used resource for adults seeking additional education, and its stock and income have soared.

Net income for its third fiscal quarter, which ended May 31, increased to $74.3 million, up 46 percent over the year-earlier quarter. The share price has doubled from a year ago. Apollo's stock on Monday fell $2.17, to $61.98.