Remarks as prepared for delivery
Good morning and thank you all for being here. I want to begin by commenting on the horrific terrorist attack that occurred in Paris on Friday. This was a crime against civilization and this department is committed to doing everything within our power to assist our French law enforcement colleagues in bringing those responsible to justice. I spoke with the President and his National Security team at the White House on Saturday prior to his visit to the G20 Summit. Justice Department attorneys, the FBI and other agencies are currently working with French authorities through our international legal assistance channels to obtain further information that may be relevant to the attacks. And we are working on an expedited basis to ensure that our Office of Justice for Victims of Overseas Terrorism is available to assist any American victims and their families. As this work goes on, we will continue to stand in solidarity with France, just as France has so often stood with us. Our thoughts and prayers are with the victims and their loved ones at this heartbreaking and immensely difficult time.
I am joined today by Secretary [Arne] Duncan from the Department of Education; U.S. Attorney [David] Hickton of the Western District of Pennsylvania; and Attorney General [Tom] Miller of the state of Iowa. We have come together to discuss a historic step forward in our collective and ongoing fight against fraudulent and abusive practices in the for-profit education industry.
Today, we are announcing a landmark settlement with Education Management Corp., which became the second-largest for-profit education company in the United States. Education Management Corp., also known as EDMC, operates chains of schools around the country under the brand names Argosy University, the Art Institutes, Brown-Mackie College and South University. EDMC enrolls more than 100,000 students and approximately 90 percent of EDMC’s revenue comes from taxpayers in the form of federal education funding for EDMC students.
This case not only highlights the abuses in EDMC’s recruitment system; it also highlights the brave actions of EDMC employees who refused to go along with the institution’s deceptive practices. Beginning in 2007, two EDMC employees blew the whistle on EDMC by alleging that it was running a high-pressure recruitment mill. Essentially, the more students a recruiter induced to enroll, the more money that recruiter would receive. These employees alleged that EDMC’s recruitment practices violated the Incentive Compensation Ban of Title IV of the Higher Education Act, which prohibits schools from basing recruiters’ pay on their success in securing new enrollees. That ban is in place so that schools will account for the unique qualities and needs of potential students, rather than simply treating them as a vehicle for tapping into federal student aid funds. Despite their alleged conduct, EDMC has certified its compliance with the ban to the Department of Education for over a decade. Falsely claiming federal grant and loan money is a violation of the False Claims Act – and in 2011, the United States intervened in the case alongside five individual states: California, Florida, Illinois, Indiana and Minnesota. Since that time, we have aggressively pursued justice in this case on behalf of the students and taxpayers that the Incentive Compensation Ban is designed to protect.
Under the settlement we are announcing today, EDMC has agreed to pay $95.5 million to resolve claims that it falsely obtained federal and state education funds – making this the largest False Claims Act settlement with a for-profit educational institution in American history. The unprecedented size of the payment – and the stringent compliance measures EDMC has accepted – reflect the fact that this kind of abuse hurts not only taxpayers, but also the students – many of them non-traditional learners like veterans, older individuals and working parents – who trusted EDMC to provide an education that would address their individual needs. EDMC’s actions were not only a betrayal of their students’ trust; they were a violation of federal law.
This resolution exemplifies the Justice Department’s deep commitment to protecting precious public resources; to promoting compliance with the law; and to standing up for those who are vulnerable to exploitation. It is an extraordinary accomplishment both for the men and women who fought to achieve it and for future EDMC students – and students at educational institutions across the country – who will no longer be victimized by unacceptable recruitment practices. In the days ahead, we will continue working with our invaluable partners at the Department of Education – through initiatives like the inter-agency task force on for-profit education – to ensure that our nation’s aspiring learners are finding and gaining access to educational opportunities that are right for them and that will help them thrive and achieve for many years to come.
Today’s resolution would not have been possible without the efforts of our remarkable team here at the Justice Department, including staff from the Civil Division, as well as the U.S. Attorney’s Offices in Pittsburgh and Nashville. I’d also like to thank our colleagues at the Department of Education and its Office of Inspector General for their close cooperation and I’d like to recognize our many state partners for their indispensable leadership in bringing about this historic result. This case is not only an example of what we can achieve when we work together, but also a demonstration of the values, commitment and mission we all share.
At this time, I’d like to introduce Secretary [Arne] Duncan, who will provide additional details on today’s announcement.