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July 26, 2012 / Admin

U.S Joins Suit Against For-Profit College Chain

In a New York Times article, it was announced that the Justice Department plans to intervene in a whistle-blower lawsuit charging that one of the nation’s largest for-profit college companies, the Education Management Corporation, defrauded the government by illegally paying recruiters based on the number of students they enrolled, according to a Securities and Exchange Commission filing on Monday.

This is the first time prosecutors have joined such a case, one of dozens in recent years that accuse the for-profit college industry of illegal practices devised to increase federal student aid revenue.

The company, which enrolls nearly 150,000 students, operates several career-college chains, including the Art Institute, Argosy University, Brown Mackie College and South University.

EDMC, 40 percent of which is owned by Goldman Sachs, said in its securities filing that its compensation plan for recruiters did not violate the law, and that it would “vigorously defend itself.”

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