The state is stopping Globe University and the Minnesota School of Business from operating after a Hennepin County judge ruled the for-profit universities misled students.
The ruling, which came Thursday, said the schools defrauded students who enrolled in training for law enforcement jobs.
The court said the schools "overpromised," particularly in the criminal justice program, according to Larry Pogemiller, the state's Office of Higher Education commissioner.
"Their programming did not lead to an ability to take the licensure test ... apparently the court felt they were misleading their students in that fashion," Pogemiller said.
His office has notified the schools they can't be registered in the state or take new students.
Pogemiller estimated that 600-700 employees and 1,000-1,700 students will be affected.
Globe and the School of Business are separate universities, but they're owned by the same entity.
The fraud and misrepresentation findings are serious enough that the higher education office had to pull the entire company's operating license, Pogemiller said.
The schools will have about a year to continue programs that still have students enrolled.
Pogemiller said his office hopes to help students who can't finish at the affected schools or want to transfer out. That could prove difficult, though, because transfer credit acceptance is at the discretion of each college.
While the court judgment is mostly limited to criminal justice programs, it's unclear how it could affect the value of degrees from the two universities.
"The marketplace will judge that," Pogemiller said. "But I think those who have taken nursing programs or other programs there hopefully will not be adversely affected by this."
Representatives of Globe University and the Minnesota School of Business could not be reached for comment.
Minnesota Attorney General Lori Swanson filed suit against the schools in 2014. She said students paid up to $78,000, and she plans to seek restitution for more than 1,000 of them.
As the schools were waiting for a decision in the suit, they announced the shuttering of six campuses in Minnesota and Wisconsin.