Fed Case Against EDMC Reveals $6 to $25 Million to McKernan, Wife Sen. Olympia Snowe- in 2009 ALONE

Posted on August 10, 2011. Filed under: Uncategorized | Tags: , , , |

(More from Bloomberg today on the EDMC story: Stripper Finds Degree Profitable for Goldman Wasn’t Worth It)

Which was devalued in 2010, down to $1 to 5 million. Bet that helped the tax forms!

More details have been released, including staggering numbers of profits for the McKernan-Snowe household from EDMC transactions.

From Lewiston Sun Journal:

 

On Monday prosecutors outlined their case in a 122-page complaint alleging that the management corporation and its affiliates paid recruiters commissions as an incentive to enroll more students. That practice violates provisions for colleges that receive government-backed loans and grants.The plaintiffs argue that the chain fostered a “boiler-room” sales culture that encouraged recruiters to enroll students who may have been unqualified to attend one of the company’s more than 100 affiliate schools. Prosecutors assert that the company’s practices led to higher student loan default rates.

McKernan isn’t named as a defendant in the suit. However, he is mentioned in the complaint and the recruiter-compensation allegations stem from his tenure as EDMC’s former chief executive officer.

McKernan, who is married to U.S. Sen. Olympia Snowe, R-Maine, was the CEO between 2003 and 2007.

He currently is EDMC’s board chairman.

The lawsuit has generated national media attention, stemming in part from an ongoing debate about the practices and efficacy of for-profit colleges. And, McKernan’s involvement has mobilized Snowe’s political opponents.

According to the Center for Responsive Politics, Snowe’s reported 2009 assets from EDMC were valued between $6 million and $25 million and divided among her and McKernan’s stock options and common stock holdings.

According to Snowe’s recent asset disclosure, the stock holdings were significantly reduced in 2010, valued between $1 million and $5 million.

For their part, the couple are “frustrated” and deny all allegations of illegal activity:

 

McKernan’s wife, U.S. Sen. Olympia Snowe, was asked about the lawsuit during a walking tour of Saco. Snowe said her husband was frustrated by the lawsuit considering the lengths it went to comply with the law.In his statement, McKernan described the safeguards that were put in place to ensure compliance.

“EDMC has been providing quality education to its students for more than 40 years and has long had a robust compliance program including procedures for employees to report violations of company policy. The company worked rigorously to ensure that the plan was properly implemented companywide, wrote and distributed detailed training manuals, and conducted training sessions on how to implement the compensation plan,” McKernan said. “It maintained an anonymous telephone hot line for employees to report policy violations, and required multiple layers of internal approval and sign-off for each employee compensation review. All of these efforts are consistent with the company’s commitment to full compliance with the law.”

*Related: Justice Department says private college company headed by Snowe’s husband violated rules

*Related: UPDATED: Fed to join lawsuit against EDMC – Sen. Snowe’s husband McKernan Chair of Board

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