OIG Investigative Report, U.S. Files Complaint Against Education Management Corp. Alleging False Claims Act Violations Skip to main contentAbout UsContact UsFAQs Language Assistance Englishespañol中文: 繁體版Việt-ngữ한국어TagalogРусский U.S. Department of Education Search for: Toggle navigation U.S. Department of Education Student Loans Grants Laws Data About ED OFFICES Home Reports & Resources Programs/Initiatives News Office Contacts Investigation Report U.S. Department of Justice Office of Public Affairs FOR IMMEDIATE RELEASE Monday, August 8, 2011 U.S. Files Complaint Against Education Management Corp. Alleging False Claims Act Violations WASHINGTON – The United States has intervened and filed a complaint in a whistleblower suit pending under the False Claims Act against Education Management Corp. (EDMC) and several affiliated entities, the Justice Department announced today. In its complaint, the government alleges that EDMC falsely certified compliance with provisions of federal law that prohibit a university from paying incentive-based compensation to its admissions recruiters that is tied to the number of students they recruit. Congress enacted the incentive compensation prohibition to curtail the practice of paying bonuses and commissions to recruiters, which resulted in the enrollment of unqualified students, high student loan default rates and the waste of program funds. “Colleges should not misuse federal education funds by paying improper incentives to admissions recruiters,” said Tony West, Assistant Attorney General for the Civil Division of the Department of Justice. “Working with the Department of Education, we will protect both students and taxpayers from arrangements that emphasize profits over education.” “Federal tax dollars must be protected from abuse,” said David J. Hickton, U.S. Attorney for the Western District of Pennsylvania. “This 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.” The False Claims Act allows for private citizens to file whistleblower suits to provide the government information about wrongdoing. The government then has a period of time to investigate and decide whether to take over the prosecution of the allegations or decline to pursue them and allow the whistleblower to proceed. If the United States proves that a defendant has knowingly submitted false claims, it is entitled to recover three times the damage that resulted and a penalty of $5,500 to $11,000 per claim. When the government intervenes, the whistleblower can collect a share of 15 to 25 percent of the United States’ recovery. The suit was originally filed by Lynntoya Washington, a former EDMC admissions recruiter, who later filed an amended complaint, jointly with Michael T. Mahoney, a former director of training for EDMC’s Online Higher Education Division. The states of California, Florida, Illinois and Indiana have also intervened as plaintiffs. The suit is United States ex rel. Washington et al. v. Education Management Corp. et al., Civil No. 07-461 (W.D. Pa.). This matter was investigated by the Commercial Litigation Branch of the Justice Department’s Civil Division; the U.S. Attorney’s Office for the Western District of Pennsylvania; and the Department of Education, Office of Inspector General. The claims contained in the complaint against ACC are merely allegations and do not constitute a determination of liability 11-1026 ### Printable view Last Modified: 03/26/2012 How Do I Find... Student loans, forgiveness College accreditation No Child Left Behind FERPA FAFSA 1098-E Tax Form 2015 Budget Proposal More > Information About... Transforming Teaching Family and Community Engagement Early Learning K-12 Reforms More > Connect Facebook Twitter YouTube Email RSS Google+ More > MISUSED FOIA OIG Fraud Hotline Our mission is to promote student achievement and preparation for global competitiveness by fostering educational excellence and ensuring equal access. Student Loans Repaying Loans Defaulted Loans Loan Forgiveness Loan Servicers Grants & Programs Apply for Pell Grants Grants Forecast Open Grant Competitions Find Grant Programs by Eligibility Laws & Guidance No Child Left Behind FERPA Civil Rights Data & Research Education Statistics Postsecondary Education Data State Education Data Nation's Report Card What Works Clearinghouse About Us Contact Us ED Offices Jobs News FAQs Budget, Performance Notices FOIAPrivacySecurityInformation qualityInspector GeneralWhitehouse.govUSA.govBenefits.govRegulations.gov
U.S. Files Complaint Against Education Management Corp. Alleging False Claims Act Violations. Washington, DC., August 08, 2011
Published by the Department of Education, Office of Inspector General on 2011-08-08.
Below is a raw (and likely hideous) rendition of the original report.