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Government Busts Film School Scams by Karl Cohen
The California Art Institute of San Francisco on Market Street, not to be confused with the decidedly uncorporate San Francisco Art Institute. photo: courtesy CAI
ALTHOUGH THE ART INSTITUTE OF
California has settled out of court to pay $4.4 million to resolve one suit, its the parent company, Education Management Corp (EMC), is still being sued for $11 billion (with a "B") by Uncle Sam.
EMC, a Pittsburgh, PA for-profit education company, has agreed to pay $4.4 million to resolve litigation over the Art Institute of California-San Francisco that teaches computer animation and other "Art Institute" schools located in the state, according to a regulatory filing.
Given EMC does not admit any wrongdoing in the settlement, why have they agreed to pay $1.9 million to San Francisco for their legal fees, $1.6 million to the students who withdrew from the schools after 2009 without getting a degree and who now want to get their degree, and $850,000 towards scholarships for new students?
Short answer: The school had been under investigation for fraudulent business practices for a long time.
Uncle Sam’s and California’s state attorneys are also cracking down on other for-profit schools including Corinthian, Everest, Heald and Wyo-Tech. Each has been accused of lying about job placement rates to attract more students and changing grades upward to keep students in school, as well as other malpractice. All of these schools are alleged to have abused the federal student loan programs.
Unfortunately, bringing these for-profit schools to trial has been a slow process, partly due to their friends in Washington. In the article “For-Profit Education Fraud Tied to Political Elite,” (April 20, 2012 TruthOut.org), about the $11 billion lawsuit against EMC, the authors name a bipartisan group of our nation's political leaders that have close ties to for-profit colleges.
It has been known for some time that Sen. Olympia Snowe (R-Maine) and her husband, the former governor of Maine, John McKernan, were involved with EMC. He was the chairman of their board and a former CEO of EMC.
Snowe herself has owned over a million dollars in EMC stock. Although well-respected in other realms, she resigned from the US Senate when her husband’s association with EMC was covered by the press.
“There is a vast network of former and current government officials who actively participate in the for-profit college swindle," according to the 2012 TruthOut.org article.
"Some of the conspirators are well known, and include Mitt Romney, Rep. Virginia Foxx (R-North Carolina), John Kline (R-Minnesota), Alcee Hastings(D-Florida), Trent Lott (R-Mississippi), Lamar Alexander (R-Tennessee), Steve Gunderson (R-Wisconsin), Virginia Democratic Party Chairman Brian Moran, Snowe, Feinstein, Nancy Pelosi (D-California), and John Boehner (R-Ohio). The group also includes Obama administration officials and supporters such as Lanny Davis, Anita Dunn, Hilary Rosen, Anthony Miller and Charles Rose.”
Indeed, when he was running for president, Romney praised, in at least two speeches, a for-profit school in Florida.
“The so-called ruling class of government officials and elected politicians, to which Feinstein and Snowe clearly belong, is little more than a gaggle of white-collar criminals which facilitates and benefits from the diversion of taxpayer money into private coffers," states the TruthOut.org website.
"Unfortunately, this is not a victimless crime. Like Washington, thousands of students who attend these subprime institutions are left with tens of thousands of dollars of non-dischargeable debt which ends up ruining their lives.”
There are several articles on the Internet that link Senators Snowe, Dianne Feinstein and other members of the House and Senate to owning interests in for-profit colleges. Articles have pointed out that by their voting for increase in government loans to students the value of their stocks has gone up.
Is that a serious conflict of interest? In any case, some members of Congress who own stocks in for-profit college companies have remained silent on the student loan crisis as it relates to for-profit schools. Art schools are already extremely expensive and their results debatable, do we need outright corruption as well?
Karl Cohen is an animator, educator and director of the local chapter of the International Animation Society and can be reached .Posted on Jun 26, 2014 - 01:27 AM