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Bloomberg: Education Management Violated Student-Aid Rules, U.S. Says

On August 8, 2011, Bloomberg reported:

Education Management Corp. (EDMC), the second-largest U.S. for-profit college chain, used improper recruitment practices to secure more than $11 billion in U.S. student aid, prosecutors said in a civil lawsuit.

[…]

Prosecutors spelled out their case against the company for the first time since May, when the Justice Department joined an employee whistleblower suit. Colleges that receive federal aid are barred from paying recruiters incentives tied to enrollment because it may encourage companies to register unqualified students. The government claimed Education Management enrolled students who appeared to be under the influence of drugs.

Education Management “fraudulently induced” the Education Department to make the company eligible for more than $11 billion in federal grants and loans since 2003, according to the complaint. “Each and every one of the claims it submitted or caused a student to submit violated” the U.S. False Claims Act, the government said.

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