Education Management Corporation
Encyclopedia
Private university
Private universities are universities not operated by governments, although many receive public subsidies, especially in the form of tax breaks and public student loans and grants. Depending on their location, private universities may be subject to government regulation. Private universities are...
for-profit
For-Profit School
For-profit education refers to educational institutions operated by private, profit-seeking businesses....
post-secondary educational institutions, primarily in the United States. The company's institutions provide primarily career-focused educational programs. It is the second largest for-profit college company in the United States, after the University of Phoenix
University of Phoenix
The University of Phoenix is a for-profit institution of higher learning. It is a wholly owned subsidiary of Apollo Group Inc. which is publicly traded , an S&P 500 corporation based in Phoenix, Arizona...
.
The company is based in Pittsburgh, Pennsylvania
Pittsburgh, Pennsylvania
Pittsburgh is the second-largest city in the US Commonwealth of Pennsylvania and the county seat of Allegheny County. Regionally, it anchors the largest urban area of Appalachia and the Ohio River Valley, and nationally, it is the 22nd-largest urban area in the United States...
and employs approximately 19,000 faculty and staff and had enrollment of approximately 158,300 students as of its fall 2010 semester. EDMC was founded in 1962, and is 41% owned by Goldman Sachs
Goldman Sachs
The Goldman Sachs Group, Inc. is an American multinational bulge bracket investment banking and securities firm that engages in global investment banking, securities, investment management, and other financial services primarily with institutional clients...
. The Chair of EDMC's Board of Directors is John "Jock" McKernan, Jr.
John R. McKernan, Jr.
John Rettie "Jock" McKernan, Jr. is an American politician who served two terms as the 71st Governor of Maine, from 1987 to 1995....
, the husband of Senator Olympia Snowe
Olympia Snowe
Olympia Jean Snowe , née Bouchles, is the senior United States Senator from Maine and a member of the Republican Party. Snowe has become widely known for her ability to influence the outcome of close votes, including whether to end filibusters. She and her fellow Senator from Maine, Susan Collins,...
(R-ME) and a former Governor of Maine
Governor of Maine
The governor of Maine is the chief executive of the State of Maine. Before Maine was admitted to the Union in 1820, Maine was part of Massachusetts and the governor of Massachusetts was chief executive....
from 1987 to 1995. The company operates a total of 105 individual schools, plus branches, under its four subsidiary names: The Art Institutes
The Art Institutes
-Fraud lawsuit:In August 2011 Education Management Corporation was investigated and sued by the United States Department of Justice and four states for illegal recruitment practices and fraudulent receipt of $11 billion in federal and state financial aid money....
, Argosy University
Argosy University
Argosy University is a for-profit university owned by Education Management Corporation, with 19 locations in 13 U.S. states and online. The university offers numerous programs at various levels, including certification; associates, bachelors, masters, specialist, and doctoral degrees, postdoctoral...
, Brown Mackie College
Brown Mackie College
Brown Mackie College is a collection of for-profit educational institutions for career preparation in the business, legal, health sciences, information technology, and creative fields. The system of schools has locations throughout the United States. The schools are owned by Education Management...
, and South University
South University
South University is a proprietary university owned by Education Management Corporation with programs in business, health care, design, and legal and criminal justice, operating at locations in Savannah, Georgia; Round Rock, Texas; Columbia, South Carolina; Montgomery, Alabama; Novi, Michigan; Glen...
.
On September 21, 2009, EDMC commenced an initial public offering of 20,000,000 shares of its common stock. The shares trade on The NASDAQ Global Market under the ticker symbol “EDMC”. This move to become a public company followed a June 1, 2006 transaction, in which a consortium of private equity
Private equity
Private equity, in finance, is an asset class consisting of equity securities in operating companies that are not publicly traded on a stock exchange....
investors acquired Education Management in a transaction valued at approximately $3.4 billion. The principal investors in Education Management are Providence Equity Partners
Providence Equity Partners
Providence Equity Partners is a global private equity investment firm focused on media, entertainment, communications and information investments...
, Goldman Sachs Capital Partners
Goldman Sachs Capital Partners
Goldman Sachs Capital Partners is the private equity arm of Goldman Sachs, focused on leveraged buyout and growth capital investments globally....
and Leeds Equity Partners
Leeds Equity Partners
Leeds Equity Partners is a private equity firm focused on investments in the Knowledge Industries. The Firm is currently investing its fifth private equity fund, Leeds Equity Partners V, L.P., the largest fund focused exclusively on investing in this sector, an estimated $3.5 trillion domestic...
. The leveraged buyout
Leveraged buyout
A leveraged buyout occurs when an investor, typically financial sponsor, acquires a controlling interest in a company's equity and where a significant percentage of the purchase price is financed through leverage...
of EDMC was the largest buyout in the for-profit education sector to that point.
The company has been the target of investigations and lawsuits alleging overzealous and inappropriate recruitment practices.
Programs
- Argosy UniversityArgosy UniversityArgosy University is a for-profit university owned by Education Management Corporation, with 19 locations in 13 U.S. states and online. The university offers numerous programs at various levels, including certification; associates, bachelors, masters, specialist, and doctoral degrees, postdoctoral...
– Argosy University provides professional educational programs at doctoral, master’s, bachelor’s, and associate’s degree levels. With 19 campuses in 13 states, Argosy offers undergraduate and graduate-level programs in business, education, health sciences, and psychology and behavioral sciences. Led by President Craig D. Swenson, PhD, Argosy University is accredited by the Higher Learning Commission and a member of the North Central Association. EDMC acquired Argosy in July 2001 through a merger. - The Art InstitutesThe Art Institutes-Fraud lawsuit:In August 2011 Education Management Corporation was investigated and sued by the United States Department of Justice and four states for illegal recruitment practices and fraudulent receipt of $11 billion in federal and state financial aid money....
– The Art Institutes, a system of more than 45 education institutions located throughout North America, is a source of design, media arts, fashion, and culinary arts professionals. Led by President John M. Mazzoni, each school within The Art Institutes system is licensed by the state in which it is located. Some are accredited by the recognized regional accrediting bodyRegional accreditationRegional accreditation is a term used in the United States to refer to educational accreditation conducted by any of several accreditation bodies established to serve six defined geographic areas of the country for accreditation of schools, colleges, and universities...
in their particular region, though others have national accreditation. EDMC acquired Ai in 1970. - Brown Mackie CollegeBrown Mackie CollegeBrown Mackie College is a collection of for-profit educational institutions for career preparation in the business, legal, health sciences, information technology, and creative fields. The system of schools has locations throughout the United States. The schools are owned by Education Management...
– With 25 locations in 14 states, Brown Mackie College provides career preparation courses in health sciences, business, information technology, design, and legal studies. Led by President Danny Finuf, each Brown Mackie College school is licensed by the state. Brown Mackie Colleges are not accredited by their respective regional accreditation bodies. Schools are accredited by the Accrediting Council for Independent Colleges and SchoolsAccrediting Council for Independent Colleges and SchoolsThe Accrediting Council for Independent Colleges and Schools is a non-profit education corporation recognized by both the United States Secretary of Education and Council for Higher Education Accreditation as an independent and autonomous national accrediting body that accredits institutions of...
, a national accrediting body, while some individual programs have additional accreditation. EDMC acquired American Education Centers in 2003 and renamed the schools Brown Mackie College in November 2004. - South UniversitySouth UniversitySouth University is a proprietary university owned by Education Management Corporation with programs in business, health care, design, and legal and criminal justice, operating at locations in Savannah, Georgia; Round Rock, Texas; Columbia, South Carolina; Montgomery, Alabama; Novi, Michigan; Glen...
– Led by Chancellor John South III, South University is accredited by the Commission on Colleges of the Southern Association of Colleges and SchoolsSouthern Association of Colleges and SchoolsThe Southern Association of Colleges and Schools is one of the six regional accreditation organizations recognized by the United States Department of Education and the Council for Higher Education Accreditation...
to award associate, baccalaureate, master’s, and doctorate degrees. The school has eight campuses located in Savannah, GeorgiaSavannah, GeorgiaSavannah is the largest city and the county seat of Chatham County, in the U.S. state of Georgia. Established in 1733, the city of Savannah was the colonial capital of the Province of Georgia and later the first state capital of Georgia. Today Savannah is an industrial center and an important...
; Montgomery, AlabamaMontgomery, AlabamaMontgomery is the capital of the U.S. state of Alabama, and is the county seat of Montgomery County. It is located on the Alabama River southeast of the center of the state, in the Gulf Coastal Plain. As of the 2010 census, Montgomery had a population of 205,764 making it the second-largest city...
; Columbia, South CarolinaColumbia, South CarolinaColumbia is the state capital and largest city in the U.S. state of South Carolina. The population was 129,272 according to the 2010 census. Columbia is the county seat of Richland County, but a portion of the city extends into neighboring Lexington County. The city is the center of a metropolitan...
; West Palm Beach, FloridaWest Palm Beach, FloridaWest Palm Beach, is a city located on the Atlantic coast in southeastern Florida and is the most populous city in and county seat of Palm Beach County, the third most populous county in Florida with a 2010 population of 1,320,134. The city is also the oldest incorporated municipality in South Florida...
; Tampa, FloridaTampa, FloridaTampa is a city in the U.S. state of Florida. It serves as the county seat for Hillsborough County. Tampa is located on the west coast of Florida. The population of Tampa in 2010 was 335,709....
; Richmond, VirginiaRichmond, VirginiaRichmond is the capital of the Commonwealth of Virginia, in the United States. It is an independent city and not part of any county. Richmond is the center of the Richmond Metropolitan Statistical Area and the Greater Richmond area...
; Virginia Beach, VirginiaVirginia Beach, VirginiaVirginia Beach is an independent city located in the Hampton Roads metropolitan area of Virginia, on the Atlantic Ocean at the mouth of the Chesapeake Bay...
; and Novi, MichiganNovi, MichiganNovi is a city in Oakland County in the U.S. state of Michigan. As of the 2010 census, the population was 55,224, an increase over the 2000 census count of 47,386. The city is located approximately northwest of the center of Detroit, and northeast of the center of Ann Arbor. The city is located...
. EDMC acquired South University in April 2003. - Western State University College of LawWestern State University College of LawWestern State University, College of Law is a private, for-profit American law school in Fullerton, California. It was the first law school established in Orange County and has over 11,000 alumni....
in Fullerton, CaliforniaFullerton, CaliforniaFullerton is a city located in northern Orange County, California. As of the 2010 census, the city had a total population of 135,161.It was founded in 1887 by George and Edward Amerige and named for George H. Fullerton, who secured the land on behalf of the Atchison, Topeka and Santa Fe Railway...
, which offers a J.D.Juris DoctorJuris Doctor is a professional doctorate and first professional graduate degree in law.The degree was first awarded by Harvard University in the United States in the late 19th century and was created as a modern version of the old European doctor of law degree Juris Doctor (see etymology and...
program and is accredited by the American Bar AssociationAmerican Bar AssociationThe American Bar Association , founded August 21, 1878, is a voluntary bar association of lawyers and law students, which is not specific to any jurisdiction in the United States. The ABA's most important stated activities are the setting of academic standards for law schools, and the formulation...
.
Political connections
Former Governor, John R. McKernan, Jr.John R. McKernan, Jr.
John Rettie "Jock" McKernan, Jr. is an American politician who served two terms as the 71st Governor of Maine, from 1987 to 1995....
(R-ME) is chairman of the Board of Directors at EDMC and is husband of United States Senator Olympia Snowe
Olympia Snowe
Olympia Jean Snowe , née Bouchles, is the senior United States Senator from Maine and a member of the Republican Party. Snowe has become widely known for her ability to influence the outcome of close votes, including whether to end filibusters. She and her fellow Senator from Maine, Susan Collins,...
. Snowe (R-ME) has publicly declared assets between $5 million and $25 million in EDMC. EDMC Senior Vice President – Regulatory Affairs and Strategic Development, Anthony J. Guida Jr., was appointed to the United States Department of Education’s Advisory Committee on Student Financial Assistance (ACSFA) by the Speaker of the United States House of Representatives in 2009 to serve a term that expires in September 2011. Guida also serves on the Board of Directors
Board of directors
A board of directors is a body of elected or appointed members who jointly oversee the activities of a company or organization. Other names include board of governors, board of managers, board of regents, board of trustees, and board of visitors...
at the Association of Private Colleges and Universities, the chief advocacy organization of the proprietary higher education industry.
Catherine A. Caponi serves as Vice-President, Government Relations for EDMC. Caponi also serves on the Business Board of Advisors—Associate Business Members at the National Hispanic Caucus of State Legislators
National Hispanic Caucus of State Legislators
The National Hispanic Caucus of State Legislators is the non-partisan, 501 organization founded in 1989 by then Colorado State Senator, Larry Trujillo. NHCSL today represents over 320 elected Hispanic State legislators throughout the United States, Puerto Rico and the Virgin Islands...
(NHCSL). The NHCSL has spoken out regarding a proposed "gainful employment" rule which, arrording to the US Department of Education seeks to protect students and taxpayers. The NHCSL has claimed minority students would be harmed if they were prevented from taking on student loan debt for programs that do not lead to gainful employment and provide graduates with a means of repaying their debt.
EMDC's McKernan and Guida have met with the White House.
Illegal recruiting allegation
In August 2011, the Justice Department and the attorneys general of California, Illinois, Florida and Indiana intervened in a lawsuit against Pittsburgh-based Education Management Corp. Their complaint says the school broke a 1992 law prohibiting for-profit colleges from paying recruiters incentive compensation. The complaint says the company repeatedly made false statements to conceal its practices and receive $11 billion in federal and state financial aid – nearly all of the company's revenue.Fraud allegations
EDMC is currently (2010) fighting a qui tamQui tam
In common law, a writ of qui tam is a writ whereby a private individual who assists a prosecution can receive all or part of any penalty imposed...
lawsuit under the False Claims Act
False Claims Act
The False Claims Act is an American federal law that imposes liability on persons and companies who defraud governmental programs. The law includes a "qui tam" provision that allows people who are not affiliated with the government to file actions on behalf of the government...
alleging they fraudulently obtained student loans and other Federal financial aid. The lawsuit filed by a former employee accuses EDMC and its South University Brand of aggressive recruiting tactics and tying recruiter compensation to the number of new student enrollments. EDMC contends the suit is without merit.
Lobbying and campaign contributions
In 2010, Education Management Corporation spent $410,000 on lobbying in the first nine months, an increase from $50,000 a year earlier. In addition to documented lobbying expenditures and EDMC-EDU PAC contributions, corporate officers of EDMC and its subsidiaries have given money to members of Congress including Congressman Jason Altmire (D-PA). Jason Altmire (PA-04) is a member of the House Committee on Education and Labor. Altmire assisted in passing legislation which has increased Federal Funding to for-profit institutions such as those owned by EDMC.Coalition for Educational Success and Lanny J. Davis
Education Management Corporation and other companies have formed a lobbying group known as the "Coalition for Educational Success". The group has retained Lanny J. Davis as their advocate. In June 2011, Education Management Corporation decided not to renew its membership with the Coalition.Senate testimony
On September 30, 2010, a then current EDMC employee, Kathleen A. Bittel testified before the U.S. Senate Health, Education, Labor and Pensions Committee. Bittel also wrote to the committee accusing EDMC of falsifying job placement numbers touted to prospective students.EDMC announced that it has investigated allegations of undue pressure placed upon career services advisors at the company's Online Higher Education division and found no support for these claims.
Florida Attorney General investigation
In October 2010 the Office of the Florida Attorney General announced a civil investigation of EDMC's Argosy University regarding alleged misrepresentations regarding financial aid; alleged unfair/deceptive practices regarding recruitment, enrollment, accreditation, placement, graduation rates, etc.The investigation focuses on consumer complaints received by the Attorney General of Florida regarding EDMC's Argosy University.
Kentucky Attorney General investigation
In December of 2010 the Attorney General of Kentucky issued a subpoena to EDMC. The subpoena requested documents and details related to the operations of Brown Mackie Colleges between Jan. 1, 2008 through the end of the 2010 calendar year.Securities fraud class action lawsuit dismissal
A securities fraud class action lawsuit was filed against EDMC on August 11, 2010 entitled Gaer v. Education Management Corp. et al. The lawsuit alleged that EDMC and its officers violated federal securities fraudSecurities fraud
Securities fraud, also known as stock fraud and investment fraud, is a practice that induces investors to make purchase or sale decisions on the basis of false information, frequently resulting in losses, in violation of the securities laws....
laws by issuing a materially false and misleading registration statement and proxy-prospectus in connection with an October 2, 2009, initial public offering
Initial public offering
An initial public offering or stock market launch, is the first sale of stock by a private company to the public. It can be used by either small or large companies to raise expansion capital and become publicly traded enterprises...
. The lawsuit stated that, among other things, “defendants had propped up Education Management’s results by inducing students to enroll in American Education Management’s scholastic and educational programs and engaged in other allegedly manipulative recruiting tactics” and “defendants had overstated Education Management’s growth prospects by failing to properly disclose that defendants had engaged in allegedly illicit and improper recruiting activities, which artificially inflated Education Management’s reported results.” The Oklahoma Police Pension Fund was the lead plaintiff
Plaintiff
A plaintiff , also known as a claimant or complainant, is the term used in some jurisdictions for the party who initiates a lawsuit before a court...
. On September 29, 2011, a federal court dismissed the lawsuit, determining that "the shareholders had failed to develop any evidence that any company official or underwriter had lied to investors or that the drop in EDMC's stock value in August 2010 was driven by anything other than a general drop in stock value for all for-profit education companies."
External links
- EDMC at Bloomberg Businessweek
- EDMC at NASDAQNASDAQThe NASDAQ Stock Market, also known as the NASDAQ, is an American stock exchange. "NASDAQ" originally stood for "National Association of Securities Dealers Automated Quotations". It is the second-largest stock exchange by market capitalization in the world, after the New York Stock Exchange. As of...
- Collected news and analysis at The New York TimesThe New York TimesThe New York Times is an American daily newspaper founded and continuously published in New York City since 1851. The New York Times has won 106 Pulitzer Prizes, the most of any news organization...