The Department of Justice announced it has reached a landmark, global settlement with Education Management Corporation, the 2nd largest for-profit education company in the country. EDMC agreed to pay $95.5 million to settle allegations that the company violated federal and state False Claims Act laws.
James Hoyer client Jason Sobek, a former EDMC Project Associate Director of Admissions, was one of several whistleblowers who came forward to expose issues regarding how the schools recruited students and reported job placement numbers.
EDMC was accused of using predatory techniques to lure students to sign up, misrepresenting its job placement statistics, and paying employees incentives based on the number of students recruited. EDMC runs several for-profit colleges, including South University, The Art Institutes, Arogsy University, and Brown Mackie College.
“We are gratified that information Jason provided helped lead to the resolution of this case with a landmark, global settlement,” said Chris Casper, James Hoyer Managing Partner. “We are hopeful this will prompt much needed change in practices used by the for-profit college industry.”
The Department of Justice news release explains:
The primary allegation was that EDMC unlawfully recruited students, in contravention of the HEA’s Incentive Compensation Ban (ICB), by running a high pressure boiler room where admissions personnel were paid based purely on the number of students they enrolled. In addition to resolving these and other FCA claims, the global settlement also encompasses an investigation by a consortium of state Attorneys General, of consumer-fraud allegations involving deceptive and misleading recruiting practices.
In addition to offering information and help to federal investigators, Sobek shared his story with the public to help shed light on EDMC practices, warn students and bring about change. Among those reports were a story with ABC Network News, WTAE TV in Pittsburgh, and WFTS TV in Tampa.
Sobek’s portion of the settlement amounts to $2.5 million which will be paid out over the course of several years. Under the False Claims Act, whistleblowers are entitled to a percentage of a settlement as a reward for bringing forward information that leads to the recovery of money on behalf of taxpayers.
Click here to read more on the settlement in the Pittsburgh Post-Gazette.
Click here to read more on the settlement in the Pittsburgh Tribune Review.
Click here to read more on the settlement from WTAE TV in Pittsburgh.
Click here to read more on the settlement from CBS News.