January 4, 2012
110 for-profit colleges accused of lying, defrauding taxpayers
TAMPA - A whistleblower at one of the biggest for-profit college companies in the country is speaking to the I-Team, claiming Education Management Corporation, which operates more than 100 schools nationwide, is involved in lying to students and defrauding taxpayers.
The I-Team first exposed allegations of unethical practices at Education Management Company (EDMC) in an investigation in October.
Mariet Aguila is a graduate of the Art Institute in Tampa, one of the schools operated by EDMC. She wanted to be a visual effects artist, and she claims recruiters at the Art Institute convinced her the school would help her get there.
“I thought that could get me the head start that I needed,” Aguila said.
After two years of studying and thousands in student loans, Aguila got her degree. But she says businesses she interviewed with weren’t impressed.
“It’s like whenever they heard of the Art Institute, it seemed like the name always brought up a red flag, and would kind of turn them away,” Aguila said.
She’s currently a cashier at a supermarket. She says the Art Institute failed to live up to its promise of helping her get a job.
“Just pretty much stuck where I am right now,” Aguila said.
As we first reported in October, Florida’s attorney general is currently investigating EDMC-operated Argosy University for allegations of misrepresentation and unfair and deceptive tactics in its recruitment, accreditation, and job placement and graduation rates.
EDMC operates Argosy University, South University, Brown Mackie College, and the Art Institutes, spanning more than 110 schools and more than 150,000 students.
Jason Sobek, the former associate director of admissions for South University, says recruiters were encouraged to say whatever it takes to convince students to sign up.
“We were trained to target low-income students, single mothers, women staying at women’s shelters,” Sobek said.
I-Team investigator Michael George asked Sobek why those groups were targeted.
“They were easy victims,” Sobek said.
But there was more to it than that. Sobek says low-income students were desired because they qualify for the most federal aid. EDMC’s schools received $1.8 billion dollars in federal grants and loans in 2010 alone, according a report on for-profit schools by the U.S. Senate. That’s taxpayer money.
“The whole business model was to get as much federal aid as possible,” Sobek said.
Sobek quit his job and filed a whistleblower lawsuit against EDMC, claiming their tactics defrauded taxpayers out of millions of dollars. He says he has also provided information to the U.S. Department of Education. Sobek provided the I-Team with documents he says show EDMC’s internal job placement statistics.
According to the records, an EDMC graduate working as a salesperson at Banana Republic is listed to be working in the field of “fashion management”. A dollar store cashier is listed as working in a field related to “business management”. A McDonald’s cashier is listed as working in a field related to “accounting”.
Sobek claims cases like these highlight that EDMC’s job placement rates, which they provide both to prospective students and the government, are exaggerated.
“You’re going to get a great job, you’re going to make a lot of money, you’re going to change your life. But in fact, often times, it was ruining their lives,” Sobek said, of the promises made by recruiters.
EDMC denies all of Sobek’s allegations and is seeking to dismiss his lawsuit. A company spokesman said they are limited in their response due to the current litigation, but said, in an e-mailed statement,
“Education Management maintains a deep commitment to doing things right by our students, regulatory bodies and our own internal Principals by seeking to maintain the highest ethical standards and adhere to all legal and regulatory requirements on all matters, including those alleged by Mr. Sobek.
With regard to the claims made by Mr. Sobek in his lawsuit, we believe that they are without merit. In fact, The Department of Justice, after reviewing the complaint, declined to intervene in the case, and the plaintiff, on his own, voluntarily abandoned two of the claims in his original complaint.
With regard to his new claims related to our current recruitment and marketing practices, we also deny his allegations. Mr. Sobek’s employment with our fully online programs ended in 2010, and he never worked at any of our campuses, therefore, he would not have any firsthand knowledge, experience or insight into our current student recruitment and marketing efforts. “ –Jay McCaffrey, assistant vice-president of marketing communications, EDMC
Senator Dick Durbin of Illinois is taking Sobek’s claims seriously. A frequent critic of the practices of for-profit colleges, he has asked for an audit of EDMC’s job placement statistics.
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