Three liberal senators this week sharply criticized the Obama administration, saying it slapped on the wrist the Education Management Corporation, (EDMC) a for-profit college firm that had been the subject of a Justice Department whistleblower lawsuit.
Sens. Elizabeth Warren (D-Mass.), Dick Durbin (D-Ill.) and Richard Blumenthal (D-Conn.) wrote to Attorney General Loretta Lynch and Education Secretary Arne Duncan, asking they explain the terms of the settlement announced last month.
The legislators listed a number of concerns similar to those conveyed by progressives in the aftermath of the 2008 financial crisis, when massive mortgage and foreclosure fraud went lightly punished.
The senators said that the administration “recovered a miniscule fraction of stolen taxpayer funds, held no individuals accountable while failing to even obtain an admission of wrongdoing from EDMC, and now may not even provide relief to thousands of students who owe billions of dollars in student loans because they were illegally recruited by EDMC.” They additionally bemoaned the fact that the company is still eligible for federal aid.
The trio also noted that the deal seems to run counter to a directive issued in September by Lynch as part of a move to ratchet up white collar prosecutions.
“[A] mere two months after announcing this policy, when settling a case that recovered less that one percent of funds that were illegally gained by EDMC, DOJ garnered no admission of wrongdoing and held no individual accountable for the actions that singificantly harmed students and taxpayers,” the senators wrote.
Lynch’s predecessor, Eric Holder, was widely seen as soft on executive criminals–particularly those on Wall Street–at one point saying that he feared holding them criminally liable would destabilize the economy. Research published in October by Syracuse University confirmed this perception, noting that the Justice Department took legal action against only 237 corporate defendants in 2014—a 29 percent drop from 2004, despite a slight increase in referrals in the same time frame.
In the terms of the settlement announced in November, EDMC did agree with states attorneys general to forgive the debt of about 80,000 students.
EDMC operates over 100 online and physical schools in 32 states. Its schools, which include the Art Institute, Argosy University, Brown Mackie College and South University, according to The New York Times, have about 100,000 students enrolled.
