One of the nation's largest for-profit education companies -- Education Management Corp ("EDMC") -- "cannot put to rest allegations that it lied to snag" billions of dollars in federal student aid, according to a Courthouse News Service report. The federal whistleblower lawsuit was started in 2007 by a former admissions officers, Lynntoya Washington, who had worked at one of EDMC's schools, Art Institute of Pittsburgh. In 2011, the federal government along with 11 states and the District of Columbia joined the lawsuit, claiming that EDMC had improperly collected more than $11 billion in student aid while violating federal rules that prevented admissions counselors from being paid incentives to recruit students. According to the Courthouse News report, the federal judge to whom the case is assigned is permitting fact-finding in the case to proceed.
A federal judge has refused to dismiss a multi-billion dollar lawsuit brought by former employees and the federal government against one of the nation's largest for-profit education companies. The lawsuit against Pittsburgh-based Education Management Corp. (EDMC) alleges that the company illegally paid its admissions personnel based on the number of students that they each enrolled. The lawsuit, pending in federal district court in Pittsburgh, was filed in 2007 by former employees under a federal whistleblowing statute and joined in 2007 by the U.S. Department of Justice. In a ruling issued on May 5, federal district judge Terrence F. McVerry denied EDMC's request that the case be dismissed. Judge McVerry's decision was reported in the Pittsburgh Post-Gazette. "To put it starkly, plaintiffs allege a coordinated, multibillion-dollar corporate-wide fraud," U.S. District Judge Terrence F. McVerry wrote in the decision. "The fact that EDMC’s paperwork and salary database appear to be compliant [with federal law], on its face, is entirely consistent with Plaintiffs’ theory of the case." "What EDMC portrays as 'getting behind the numbers' may really be only manipulation of its numbers," the judge wrote. EDMC denies any wrongdoing and says it will continue to vigorously defend the lawsuit.
The U.S. Justice Department announced that it was accusing Stevens-Henager College and its owner in a civil lawsuit of illegally compensating recruiters. The college and its owner, The Center for Excellence in Higher Education, are alleged to have "falsely certified compliance with provisions of federal law that prohibit a university from paying incentive-based compensation to its admissions recruiters based on the number of students they recruit," according to the DOJ news release. The college and its owner are denying wrongdoing, and the lawsuit is pending. Under the federal False Claims Act, two former employees of the school who were "whistleblowers" and reported suspected wrongdoing to the government stand to receive financial rewards if the government is successful in recovering money previously paid to the college in the form of federal student aid. If you have concerns about possible wrongdoing at a school that you wish to share with an attorney, complete this form or call 877-540-8333 to contact the attorneys who operate www.collegewatchdogs.net.
The Huffington Post reports that one of the nation's largest for-profit education companies is attempting to rally opposition to federal regulations proposed by the Obama administration by offering students free pizza slices. According to the report by the Huff Post's David Halperin, the Art Institute of Fort Lauderdale, one of the schools run by Education Management Corporation (EDMC), posted on its Facebook page that students should "Stop by the library all week between 12-1 and 5-6 to sign in to SaveStudentChoice and enjoy a free slice of Pizza. Takes 5 minutes." SaveStudentChoice is a for-profit school industry-backed website aimed at opposing the Obama Administration's proposed federal regulations that would, among other requirements, condition a college's continued eligibility for federal student aid on the institution's ability to meet targets for gainful employment among its graduates. The for-profit school industry is attempting to inundate the U.S. Department of Education with complaints about the regulations before they are scheduled to take effect in late 2014.
Offering freebies to students at for-profit schools in exchange for help with lobbying or an address or phone number of someone that a school can recruit for enrollment is a practice that regularly occurs at for-profit schools, where aggressive efforts to sell programs to adults and problems with graduating students finding employment often can arise.
The U.S. Department of Justice has joined a lawsuit against the for-profit Stevens-Henager College that alleges that the school paid recruiters bonuses and incentive compensation in violation of federal law. The lawsuit, pending in federal court in Idaho, was filed by two former employees of the college who are pursuing the claims under a federal whistleblower law. The employees and the Justice Department accuse Stevens-Henager College and two affiliated schools, CollegeAmerica and California College of San Diego, of additional improprieties, including faculty members lacking minimum qualifications required by its accrediting body and officials falsifying student records. The lawsuit was disclosed by the Huffington Post. According to the 99-page Complaint filed in federal district court, the defendant schools have received more than $660 million in federal student aid since 2002. One of the alleged violations of federal law detailed in the lawsuit is a practice in which the schools "pay bonuses, commissions, and other forms of incentive compensation to employees in the admissions departments based directly and indirectly on the number of students that these employees enroll." The defendant schools deny any wrongdoing in the lawsuit, which is pending. Incentive compensation in enrollment has been a recurring problem at for-profit colleges. The federal whistleblower law provides an opportunity for employees and students who are witnesses to fraud to be rewarded financially for their reporting of such practices. If you wish to share a concern about improper practices at another college or trade school with an attorney, you may send an e-mail to email@example.com, or complete this form.