The complaint alleges student enrollment was the sole focus of its compensation system.
The Obama administration and four states are accusing a private for-profit college corporation of illegally paying recruiters to enroll students, the latest action in an examination of the industry’s recruitment techniques and an allegation the company called “flat-out wrong.”
The Justice Department and attorneys general of California, Illinois, Florida and Indiana on Monday intervened in a whistleblower suit against Pittsburgh-based Education Management Corp. Their complaint says the company broke a 1992 law prohibiting for-profit colleges from paying recruiters incentive compensation.
The law was passed to stop overly aggressive sales procedures.
This is the first time the federal government has intervened in a suit alleging a violation of the ban. The suit originally was brought in 2007 by former Education Management workers Michael Mahoney and Lynntoya Washington.