U.S. Announces $95 Million Settlement with EDMC

The U.S. Department of Justice on Monday announced a $95.5 million settlement with the Education Management Corporation (EDMC) to resolve allegations that it illegally paid bonuses to recruiters.

A former EDMC employee filed the original whistleblower lawsuit against the for-profit chain in 2007. The Justice Department, as well as another former employee, joined the suit in 2011. The government lawsuit accused EDMC of creating a "boiler room style sales culture" in which recruiters were paid to enroll students, regardless of whether they were qualified; misleading students about their student loans; and hiding key evidence from auditors and accreditors, The Huffington Post reported.

The federal settlement is the largest ever with a for-profit education company under the False Claims Act.

Separately, a group of attorneys general from 38 states and the District of Columbia reached an agreement to resolve allegations that EDMC engaged in deceptive practices, according to Inside Higher Ed. The company will be required to fund $102 million worth of private student loan debt relief to as many as 80,000 students who briefly attended its colleges from 2006 to 2014. Eligible borrowers would receive an average of $1,370 in loan relief.

Education Management Corporation enrolls more than 100,000 students at its Argosy University, Art Institutes, Brown-Mackie College and South University campuses across the country.

EDMC did not admit any wrongdoing in either of the cases. The company said in a statement that it was "pleased to have resolved the civil claims raised by the Department of Justice and state attorneys general. Though we continue to believe the allegations in the cases were without merit, putting these matters behind us returns our focus to educating students."

 

Related Links

U.S. Department of Justice Press Release

http://www.justice.gov/opa/speech/attorney-general-loretta-e-lynch-delivers-remarks-press-conference-announcing-955-million

The Huffington Post

http://www.huffingtonpost.com/entry/education-management-corporation-fraud-settlement_56464d56e4b0603773490408

Inside Higher Ed

https://www.insidehighered.com/news/2015/11/17/obama-administration-states-reach-major-settlements-education-management-corporation