Relatives of Former Trade School Executives Settle SEC Complaints : Insider trading: The wife and son of United Education & Software officials agree to pay more than $217,000 in fines.

Two relatives of past executives at troubled United Education & Software Inc. have agreed to settle insider trading cases recently filed against them by the Securities and Exchange Commission.

Bettyann Lin, the wife of former United Education chairman Jack Lin, and Mark D. Cohen, the son of United Education’s former president, Aaron Cohen, did not admit or deny the allegations, but both agreed to permanent injunctions barring them from future violations of insider-trading laws. Also, Bettyann Lin agreed to pay $12,705 in fines, plus interest, and Mark Cohen agreed to pay a $204,809 fine, plus interest.

United Education, formerly based in Encino, is a trade-school operator whose main subsidiary is operating under bankruptcy-court protection. The bankruptcy filing was made in December, 1989, after a series of devastating problems that included student loan-processing foul-ups, a scathing federal audit of one of United Education’s schools and a $24-million consumer protection complaint against the company by the state of California. Along the way, the company’s stock price also collapsed.

The insider-trading complaints involve sales of United Education stock that occurred in 1988, when United Education’s student-loan processing subsidiary was being investigated by the U.S. Department of Education and the Higher Education Assistance Foundation, a nonprofit organization that guarantees student loans.

The SEC suit against Mark Cohen was filed on July 9 in federal district court in San Francisco, where Cohen lives. The SEC says Cohen sold 25,662 shares of United Education stock after learning from his father that the company’s loan-processing facility in Costa Mesa was being investigated.

The stock trades took place before the public knew of the investigation, which uncovered numerous problems at the unit, including failure to notify delinquent borrowers of government-guaranteed student loans, the suit says. Later, when United Education disclosed the bad news about its loan-servicing business, its stock fell by more than 30% in one day, the SEC says. By selling the stock before the company’s public disclosures, Cohen avoided losses totaling $102,404, the SEC says.

The complaint against Bettyann Lin was filed in federal district court in Los Angeles on July 9. The suit says Bettyann Lin sold 1,750 shares of United Education stock in her son’s account after learning non-public information from her husband about the loan-processing inquiry, and thus avoided $6,352 in losses.

Jack Lin is president and chief executive officer of National Technical Systems Inc., a Calabasas company that provides engineering and testing services.

Jack Lin could not be reached for comment, but a spokesman said Lin maintains that there was no wrongdoing in connection with his wife’s stock trades.

Aaron Cohen, in a telephone interview, said his son was “totally innocent,” but that his son settled the suit because he couldn’t afford to pay the legal costs of fighting it. Cohen said his son sold the stock because he was buying a house and needed the cash. Cohen said he didn’t reveal any inside information to his son regarding loan-servicing problems because he himself didn’t know how serious the problems were at the time.

Jack Lin and Aaron Cohen started National Technical Systems in 1961, and in the early 1980s United Education was started as a subsidiary of National Technical. In 1985, National Technical sold its stake in United Education--with Jack Lin remaining as chairman of United Education--while Lin continued to run National Technical. Cohen remained chairman of National Technical while focusing his efforts on United Education.

In 1989 Jack Lin resigned as chairman of United Education. Cohen resigned from National Technical in 1988 and resigned from United Education last summer, although he remains on United Education’s Board of Directors and serves as a consultant to the company. Stanley Schoen, a longtime United Education director, is now its chairman. United Education moved its headquarters to Los Angeles last year.

The 1988 investigation of United Education’s loan-servicing business was only the start of the company’s troubles. That loan unit was later sold, but Peat, Marwick Main & Co., United Education’s former auditor, was named as a third-party defendant in suits filed by banks that back the loans processed at the Costa Mesa facility. The banks stand to lose up to $650 million because the government said it would not pay for the loans processed there that went into default.

Peat, Marwick then named United Education as a third-party defendant in the bank suits. United Education filed a countersuit against the accounting firm, but company officials and attorneys for Peat, Marwick say they are in the process of settling the claims.

In 1989, another Department of Education inquiry uncovered widespread problems at United Education’s National Technical Schools in Los Angeles. Federal investigators said the school’s home-study computer courses were too short to meet minimum federal standards, that students were routinely misled regarding costs, and that academically unprepared students were admitted to the program.

As a result of those findings, the California Student Aid Commission, the state agency that administers the federal student-loan guarantee program, said it would no longer guarantee loans to students of National Technical Schools.

United Education closed the school, but in November, 1989, California Atty. Gen. John Van de Kamp sued United Education for $24 million, contending that National Technical Schools and other United Education schools had misled students and provided shoddy education. United Education denied the charges, but company officials say they’ve been trying to settle the suit. If no settlement is reached, the trial will begin Jan. 13.

By the time of its bankruptcy filing, United Education owed $52 million to its creditors--against assets of $72 million--plus about $5 million in refunds to former students. Its stock had fallen from an all-time high of $16.38 a share in March, 1988, to 19 cents a share. (The stock now trades at about 40 cents a share.) In the year that ended Jan. 31, 1990, the company lost $39 million on $67 million in revenue.

Meanwhile, United Education’s vice chairman and executive vice president, C. Ronald Kimberling, said the company hopes to file a reorganization plan within a few months. He said United Education has sold, closed or merged 16 trade schools and now operates 10 schools. Employment has been reduced to 600 from 1,600.

In the nine months that ended Oct. 31, 1990--the last period for which financial results are available--United Education narrowed its losses to $1.4 million on revenues of $28.7 million. Debts had been reduced to $12.8 million, versus assets totaling $35.7 million.