Education Management Corp. Facing Suit Over Misconduct and Violations of Federal Education Regulations
Oklahoma Law Enforcement Retirement System files suit to recover damages incurred as a result of company's gross mismanagement.
PITTSBURGH, PA, May 24, 2012
Today the Oklahoma Law Enforcement Retirement System (OLERS) filed suit in the Allegheny County Court of Common Pleas against the Allegheny County-based Education Management Corp. (EDMC) and its board of directors stemming from the company's systemic misconduct and blatant violations of federal education regulations.Read the complaint here.
Specifically, EDMC, one of the country's largest for-profit education providers, has engaged in aggressive and illegal recruiting and has compensated its recruiters based solely on the number of new student enrollments, which puts them in violation of the Department of Education's rules and regulations. This violation jeopardizes the institution's ability to continue to participate in Title IV federal student aid program, which constitutes approximately 90% of its revenue stream.
OLERS, a shareholder in EDMC, alerted the board of directors to this concern by letter in August of 2011, again in December of 2011, and again in January of 2012, however no significant action was taken by the board and EDMC continued to act in a way that jeopardizes its ability to participate in Title IV student loan programs.
EDMC already faces a number of legal actions brought by individuals, the states of California, Florida, Illinois, and Indiana, and by the federal government as a result of its mismanagement.
OLERS seeks to have the court order EDMC to overhaul its practices, implement new, compliant policies, establish internal controls, and compensate OLERS for the damages it has incurred.
OLERS is represented by William R. Caroselli of the Pittsburgh-based Caroselli, Beachler, McTiernan & Conboy and Jay W. Eisenhofer, Michael J. Barry, and Cynthia A. Calder of Grant & Eisenhofer in Wilmington, DE.
"The Oklahoma Law Enforcement Retirement System has seen the stock price of EDMC lose nearly half its value since they first invested," said Caroselli. "Thanks to the blatant mismanagement and failure to heed the warning calls, EDMC and its board essentially put the retirement funds of Oklahoma's law enforcement officials at risk. It was reckless and it was irresponsible and we intend to hold them accountable."
Website: http://www.cbmclaw.com/