Education Management Corp. Will Pay $95.5 Million to Settle Whistle-Blower Lawsuit

The Education Management Corporation will pay $95.5 million to settle a 2007 lawsuit asserting that it illegally received federal student aid by paying admissions recruiters on the basis of how many students they enrolled while lying about it to the Education Department. The U.S. Department of Justice, which joined the suit in 2011, announced the settlement at a news conference on Monday morning.

Calling it the largest false-claims settlement ever in the for-profit-education sector, Loretta E. Lynch, the attorney general, said the “landmark settlement” reflected the Obama administration’s priority of reining in abuses at for-profit colleges.

The education secretary, Arne M. Duncan, said other for-profit colleges should view the settlement as a warning against engaging in deceptive practices.

The company has denied the allegations. In a statement, the company’s president and chief executive, Mark A. McEachen, said that the allegations in the suit “were without merit” but that the company was “pleased” to resolve the suit.

Two former employees filed the whistle-blower suit against the company in 2007 and were joined by the Justice Department, 11 states, and the District of Columbia.

For more, see this Chronicle article.