EDMC

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Education Management Corporation (EDMC)

I am Ai & Students Against EDMC

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We are a growing group of defrauded student debtors organizing with Debt Collective. You are not a loan. You can meet with other defrauded borrowers and alumni from The Art Institutes and other EDMC operated schools. Join Students Against EDMC and I am Ai on Facebook or follow us on Twitter @EDMC_Revolution and @IamArtInstitute

EDMC Facts, Lawsuits, and Investigations

  • Education Management Corporation is a for-profit college chain that operates the Argosy University, Art Institutes, Brown-Mackie Colleges, and South University brands.
  • EDMC has been the subject of multiple lawsuits and investigations.
    • In 2007, two former Employees, Lynntoya Washington and Michael T. Mahoney, filed a lawsuit against EDMC stating that they used an incentive based reward system based on how many students they enrolled, in violation of Title IV rules. 10 States and the District of Columbia are also listed as plaintiffs.
    • The whistle-blower lawsuit from former associate director of Admissions, Jason Sobek states that EDMC made false claims about their eligibility to receive federal loan funding, accreditation of programs, career placement statistics, tuition, and incentive based compensation, among other claims.
    • The testimony of former assistant director of admissions, Kathleen Bittel described a situation in which predatory lending, falsified career statistics, and no regard for students well being was the norm.
    • EDMC was implicated in the GI Bill Scheme.
    • In October 2010, The Florida Attorney General launched an investigation into Argosy University, which included the nine campuses located in Florida, from January 2, 2006 to the present. [1]
    • In December 2010, the Attorney General of Kentucky Office of Consumer Protection launched an investigation against EDMC that includes the period of January 1, 2008 through December 31, 2010 for the three Brown-Mackie College campuses in the state. [2]
    • On May 3rd 2011, The Department of Justice and 11 States Attorney General sued EDMC for $11 Billion stating that the company was not eligible for the federal aid it had received between 2003-2011, and had violated the False Claims Act, unsealing the lawsuit brought about in 2007 by former employees. [3] The case is still pending in the federal district court of Western Pennsylvania.
    • In August 2011, The Attorney General of the State of New York launched an investigation into EDMC's compensation and recruitment practices, covering the period between January 1st, 2000 - present, for their sole New York campus, as well as addressing online-only students living in the state. [4]
    • The City of San Francisco launched an investigation into EDMC's recruitment practices, and in December of 2011, the company settled with the city for $4.4 Million.
    • In May of 2012, EDMC was sued in a class-action suit by shareholders (Oklahoma Law Enforcement Retirement System v. Todd S. Nelson, et al.) for failing to inform them of their Title IV violations, falsifying career placement statistics, and failing to comply with the Department of Education's standards.
    • In August 2012, EDMC was again sued by shareholders (Stephen Bushansky v. Todd S. Nelson, et al) for violating "their fiduciary obligations to the Company's shareholders due to the Company's use of improper recruiting, enrollment admission and financial aid practices and violation of the U.S. Department of Education's prohibition on the payment of incentive compensation to admissions representatives." [5]
    • In September of 2012, The Attorney General for the state of Colorado launched an investigation and complaint against Argosy University for the period of January 1st 2006 - present, which was mostly directed at the College of Psychology and Behavioral Sciences at the Denver, Colorado Argosy campus. [6]
    • In 2013, The Massachusetts Attorney General launched an investigation into The New England Institute of the Art, which spanned from January 1st 2010- present, for their marketing claims, job placement statistics, student recruitment tactics, and methods for financing education. [7]
    • In May of 2013, EDMC "received a subpoena from the Office of Inspector General of the U.S. Department of Education requesting policies and procedures related to Argosy University's attendance, withdrawal and return to Title IV policies during the period of July 1, 2010 through December 31, 2011 and detailed information on a number of students who enrolled in Argosy University's Bachelor's of Psychology degree program."[8]
    • In 2013, EDMC received subpoenas from the SEC (Securities and Exchange Commission) Division of Enforcement after they launched an investigation into the good will and bad debt allowance of the company as well as letters of credit posted with the Department of Education.
    • EDMC "is a defendant in certain other legal proceedings arising out of the conduct of its business. Additionally, the Company is subject to compliance reviews by various state and federal agencies" [9]

Campus Closures, Employee Layoffs, and Recent News

In May of 2015, EDMC announced that it would be closing 15 of their Art Institute locations, and implementing a "teach-out" program that would allow the currently enrolled students to graduate. The School closures affected approximately 200 employees who were immediately layed off in the wake of the news.

EDMC has continued to announce further employee layoffs. In June of 2015, 300 employees were laid off. In October, 2015, another 115 employees were laid off.

In August of 2015, President and CEO of EDMC, Edward West, announced his resignation. Mark A. McEachen, a member of the EDMC Board of Directors, was named as West's successor.

On November 16th, 2015, The Department of Justice and 39 State Attorneys General settled the $11 Billion False Claims Case. "The $95.5 million settlement resolves allegations that EDMC violated federal and state False Claims Act (FCA) provisions by falsely certifying that it was in compliance with Title IV of the Higher Education Act (HEA) and parallel state statutes."[10] in addition the the $95.5 million settlement, there was an additional settlement between EDMC and 39 State Attorneys General "to significantly reform its recruiting and enrollment practices, and forgive more than $102.8 million in outstanding loan debt held by more than 80,000 former students nationwide.[11] The reality is that only a small subset of students are even eligible for loan cancellation in the settlement because they had to have dropped out within 45 days and the average debt cancellation would only be approximately $1300, doing nothing to help students struggling to pay fraudulent debts. In the aftermath of the ruling, former students from the Art Institutes staged protests at the open houses to educate prospective students on Ai, EDMC, and for-profit fraud in general. Senators Dick Durbin (D-IL), Elizabeth Warren (D-IL), and Richard Blumenthal (D-Conn) co-authored a letter to Department of Education Secretary Arne Duncan and Attorney General Loretta Lynch, expressing concerns over the EDMC ruling, and requesting a response by December 17th. 2015. [12]

Resources

If you are being garnished, please see the Garnishment Wiki

If you are trying to understand your loans, please see the Understanding your Debt Wiki

If you are ready to file your Defense to Repayment, please see the DTR Wiki


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