WASHINGTON, Aug. 9 (UPI) — The U.S. government has intervened in a whistle-blower lawsuit against one of the nation’s largest for-profit college firms, the Justice Department said.
The suit against Education Management Corp. of Philadelphia was filed by two former employees who accused the company of violating a federal law that prohibits paying incentive-based compensation to recruiters based on the number of students they sign up. EDMC operates numerous schools offering post-secondary academic programs in education, business, health sciences, and creative and applied arts in 32 states and Canada. It had more than 158,000 students in 2010, the corporation’s Web site said.
The states of California, Florida, Illinois and Indiana are plaintiffs in the suit, a Justice Department release said.
U.S. Attorney David Hickton of Pennsylvania said the action against EDMC “seeks to recover a portion of the $11 billion in federal student aid which EDMC allegedly obtained through false statements and which enriched the company, its shareholders and executives at the expense of innocent individuals seeking a quality education.”
“Federal tax dollars must be protected from abuse,” Hickton said.
EDMC is the second largest provider of private post-secondary education in North America.