The for-profit educational retail chain has been sued by the Justice Department and eleven states, based on allegations that the firm falsely reported to government officials that it was not basing recruiter salaries on incentives, which is an illegal ploy the for-profits have used to increase enrollment. The government alleges that they did use incentive pay for recruiters.
If the allegations are proven, then EDMC will be held liable for the theft of billions in government funds from Title IV. This could raise some eyebrows regarding McKernan’s role as CEO during the time that the company allegedly received Title IV monies illegally and could subject the former governor of Maine to criminal liability.
The Sunlight Foundation reported:
According to the senator’s most recent financial disclosure form, she and her husband, former Maine Gov. John McKernan Jr., have investments worth between $2 million and $10 million in Education Management Corp., a Pittsburgh-based company that operates for-profit higher education institutions.
Snowe’s husband owns more than 835,000 shares in the company, worth more than $14.9 million at current prices. That was up from the 128,000 shares he owned when he became CEO in 2003”
The influence-mapping web site Muckety provides a stunning chart that details both Snowe and McKernan’s political and economic ties to the for-profit educational company” ((http://truth-out.org/news/item/8160-why-olympia-snowe-really-resigned).).