by Chris Kirkham, Huffington Post
Soon after the Goldman buyout, the newly private Education Management LLC embarked on its most ambitious period of growth — one that has recently brought it crosswise with federal prosecutors, who have accused the company of widespread fraud in its recruitment processes. Over the past year, Goldman’s stake in EDMC has increased from 33 percent to more than 41 percent. Together with Providence Equity Partners, the two firms control 80 percent of the company. The Justice Department complaint does not specifically name Goldman or Providence as defendants, but their returns could be significantly affected were EDMC compelled to pay penalties and return prior revenues to the government. “The financial brilliance behind these schools is that unlike the mortgage industry, when this bubble bursts, these loans are guaranteed to these companies,” said Lawrence, the former Argosy University recruiter. “They’re backed by the government, so it’s not them that’s going to go under.”
http://www.huffingtonpost.com/2011/10/14/goldman-sachs-for-profit-college_n_997409.html
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