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Friday, May 6 2011

POLITICO: The Justice Department joins suit against firm chaired by Olympia Snowe's husband

May 06, 2011

On May 6, 2011, POLITICO reported:

The Department of Justice has joined a whistleblower lawsuit against an education company chaired and formerly run by John McKernan, the former GOP governor of Maine and husband of Sen.Olympia Snowe (R-Maine).

The suit, which the Justice Department intervened in this week after a federal investigation, accuses Education Management Corp. of defrauding the government of financial aid funding by illegally paying recruiters bonuses and other compensation based on the number of students they could enroll. So far, 11 states and the District of Columbia have also signed on to the suit.

McKernan has been a top executive at EDMC, the nation’s second largest chain of for-profit colleges, for the last 12 years. He and his wife have done well in that time, with the couple reporting between $6 million and $30 million in assets from EDMC., likely stocks or stock options, according to Snowe’s 2009 personal financial disclosure records.

But the litigation could threaten that fortune — and create a political headache for Snowe, who is seeking a fourth term in 2012 with the threat of a tea party primary challenge looming and Democrats eager to unseat her.

Snowe’s office did not respond to a request for comment. But EDMC spokeswoman Jacquelyn Muller released a statement on behalf of McKernan saying the intervention by the Justice Department and the states “is unwarranted and without merit.”

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Published: May 6, 2011

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