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Indiana part of suit against for-profit college

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The Obama administration and four states, including Indiana, are accusing a private, for-profit college of illegally paying recruiters to enroll students in an $11 billion fraud, the latest action in a long-running examination of the industry's recruitment techniques and an allegation the company called "flat-out wrong."

The Justice Department and the attorneys general of California, Illinois, Florida and Indiana on Monday intervened in a whistleblower lawsuit against Pittsburgh-based Education Management Corp. Their complaint says the company broke a 1992 law prohibiting for-profit colleges from paying recruiters incentive compensation.

Locally, Education Management operates Brown Mackie College and the Art Institute of Indianapolis. It also has Brown Mackie College outlets in South Bend, Merrillville, Michigan City and Fort Wayne.

The 1992 law was passed in response to reports of overly aggressive sales procedures in the industry that led to the enrollment of unqualified students and high student loan default rates. It was the first time the federal government intervened in a suit alleging a violation of the ban.

The governments' complaint says the company, which offers classes online and at 105 locations in 32 states and Canada, repeatedly made false statements to conceal its practices and receive $11 billion in federal and state financial aid — nearly all of the company's revenue. The complaint alleges that student enrollment was the sole focus of its compensation system, and the company instructed recruiters to use high-pressure sales techniques like playing on an applicant's psychological vulnerabilities and inflating claims of career placement opportunities to enroll students regardless of their qualifications.

U.S. attorney David J. Hickton in Pittsburgh, where the suit was filed, said in a statement that Education Management's practices "enriched the company, its shareholders and executives at the expense of innocent individuals seeking a quality education."

A statement issued by Education Management said federal regulations issued in 2002 allowed companies to consider enrollment in admission officer compensation as long as it wasn't the sole factor considered. The statement said the company's plan required consideration of five "quality factors" along with enrollment numbers to determine salary.

"The pursuit of this legal action by the federal government and a handful of states is flat-out wrong," said the statement from Bonnie Campbell, a former Iowa attorney general and member of the state Board of Regents who is an adviser to the college's legal counsel. "EDMC's 2003 compensation plan followed the law in both its design and implementation."

Education Management offers undergraduate and graduate programs as well as diplomas in trades such as design, media arts, health sciences, culinary, fashion, business, education, legal and information technology.

"EDMC's colleges are accredited institutions offering career-focused academic degrees to it students, many of whom would not otherwise attend college, and EDMC's combined graduation rate is better than other schools serving similar student populations, whether those schools are public, private or proprietary," Campbell's statement said.

The 2007 lawsuit was filed by former Education Management employees Michael Mahoney and Lynntoya Washington. If the Justice Department can prove its case, Education Management could be forced to repay three times the damage, plus penalties, with the whistleblowers able to collect 15 percent to 25 percent of the recovery.

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  • All the TV ads-I wondered about them
    I guess I lump most such ''colleges'' along with these personal injury lawyers-----out for the buck and not worth the time to check on them...mostly crooks. Yes, there are a few that are good, but, most I would not give the time of day to....particularly those that advertise over and over and over. One can very quickly get sick of hearing about them.

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  1. So much for Eric Holder's conversation about race. If white people have got something to say, they get sued over it. Bottom line: white people have un-freer speech than others as a consequence of the misnamed "Civil rights laws."

  2. I agree, having seen three shows, that I was less than wowed. Disappointing!!

  3. Start drilling, start fracking, and start using our own energy. Other states have enriched their citizens and nearly elminated unemployment by using these resources that are on private land. If you are against the 'low prices' of discount stores, the best way to allow shoppers more choice is to empower them with better earnings. NOT through manipulated gov mandated min wage hikes, but better jobs and higher competitive pay. This would be direct result of using our own energy resources, yet Obama knows that Americans who arent dependent of gov welfare are much less likely to vote Dem, so he looks for ways to ensure America's decline and keep its citizens dependent of gov.

  4. Say It Loud, I'm Black and Ashamed: It's too bad that with certain "black" entertainment events, it seems violence and thuggery follows and the collateral damage that it leaves behinds continues to be a strain on the city in terms of people getting hurt, killed or becoming victims of crimes and/or stretching city resources. I remember shopping in the Meadows area years ago until violence and crime ended make most of the business pack you and leave as did with Lafayette Square and Washington Square. Over the past 10 to 12 years, I remember going to the Indiana Black Expo Soul Picnic in Washington Park. Violence, gang fights and homicides ended that. My great grandmother still bears the scares on her leg from when she was trampled by a group of thugs running from gun fire from a rival gang. With hundreds of police offices downtown still multiple shootings, people getting shot downtown during Black Expo. A number of people getting shots or murdered at black clubs around the city like Club Six on the west side, The Industry downtown, Jamal Tinsley's shot out in front of the Conrad, multiple fights and shootings at the skating rinks, shootings at Circle Center Mall and shooting and robberies and car jackings at Lafayette Mall. Shootings and gang violence and the State Fair. I can go on and on and on. Now Broad Ripple. (Shaking head side to side) Say It Loud, I'm Black and I'm Ashamed.

  5. Ballard Administration. Too funny. This is the least fiscally responsive administration I have ever seen. One thing this article failed to mention, is that the Hoosier State line delivers rail cars to the Amtrak Beech Grove maintenance facility for refurbishment. That's an economic development issue. And the jobs there are high-paying. That alone is worth the City's investment.

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