US: Top for-profit group sued for fraud

14 August 2011

The US Department of Justice and four states last week filed a multibillion-dollar fraud suit against the Education Management Corporation, the nation's second largest for-profit college company, charging that it was not eligible for the $11 billion in state and federal financial aid it had received from July 2003 to June 2011, reports Tamar Lewin for The New York Times.

While the civil lawsuit is one of many raising similar charges against the expanding for-profit college industry, the case is the first in which the government intervened to back whistle-blowers' claims that a company consistently violated federal law by paying recruiters based on how many students it enrolled. The suit said that each year, Education Management falsely certified that it was complying with the law, making it eligible to receive student financial aid.

"The depth and breadth of the fraud laid out in the complaint are astonishing," said Harry Litman, a lawyer in Pittsburgh and former federal prosecutor who is one of those representing the two whistle-blowers whose 2007 complaints spurred the suit.
Full report on the New York Times site

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