Monday, May 9, 2011

Big News: U.S. Government Joins Suit Against Education Management Corp. (EDMC)

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According to a recent news report, the U.S. Justice Department has come out in support of a whistleblower, and joined a suit against Education Management Corp. (EDMC). In yet another example of how entangled the student lending industry is with Wall Street and global markets, 40% of the company is owned by Goldman Sachs. The report is noteworthy because this is the first time the Justice Department has gotten involved with a case against a for-profit company.

The board of directors for the Pittsburgh-based company includes John R. McKernan, Jr. MrKernan was the 71st governor of Maine, and was also a member of the U.S. House of Representatives. He is married to Senator Olympia Snowe (R-ME). Between 2005 and 2010, Snowe received $13,500 in campaign donations from Goldman Sachs.

EDMC responded to the suit, arguing that the case is "unwarranted and without merit." EDMC is the second-largest, for-profit operator in the United States.

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