SACO — Maine Sen. Olympia Snowe says a for-profit college corporation where her husband is board chairman is frustrated the government is suing the company because it had taken extra steps to ensure it was in compliance with federal law.
The Justice Department and four states on Monday intervened in a whistleblower lawsuit against Pittsburgh-based Education Management Corp., which operates 105 schools in 32 states and Canada. The suit alleges the company broke a 1992 law prohibiting for-profit colleges from paying recruiters incentive compensation.
The lawsuit says the company, which also offers classes online, repeatedly made false statements to conceal its practices and receive $11 billion in federal and state financial aid – nearly all of the company’s revenue.
The complaint alleges that enrollment was the sole focus of Education Management’s compensation system, and that the company instructed recruiters to use high-pressure sales techniques like playing on the applicant’s psychological vulnerabilities and inflating claims of career placement opportunities to enroll students regardless of their qualifications.
The company denies the allegations.
Snowe’s husband, former Maine Gov. John McKernan, is the company’s board chairman and formerly served as CEO.
Snowe said the company is frustrated with the lawsuit because it had hired two independent law firms to verify its compliance with federal regulations.
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