Florida Joins Suit Against For-Profit College Chain
Monday, August 8, 2011
By: Nicole Creston

August 8, 2011 | WMFE - Florida Attorney General Pam Bondi is joining three other states and the Obama Administration in a lawsuit against the nation's second-largest chain of private, for-profit colleges.

Pittsburgh-based Education Management Corporation is accused of paying recruiters incentives based on the number of students they enroll. That’s illegal for any school that receives federal financial aid. The federal Higher Education Act of 1992 says it may encourage recruiters to enroll ineligible students.  

The complaint filed Monday says the company has been making false statements since 2003, in order to collect $11 billion dollars in federal and state financial aid.

The lawsuit started as an employee whistleblower suit. Now, the Justice Department has joined up, along with state attorneys general from Florida, California, Illinois and Indiana.

Education Management Corporation is the parent company for private, for-profit colleges such as The Art Institutes and Argosy University.

In a statement, the company says its compensation plan “followed the law in both its design and implementation,” and calls the lawsuit “flat-out wrong.”