Minnesota AG sues over aid to for-profit colleges

ST. PAUL, Minn. (AP) — The Minnesota attorney general has joined a lawsuit against Education Management Corp., alleging that two of its schools in the state illegally collected taxpayer-financed financial aid.

Attorney General Lori Swanson announced the lawsuit Thursday against Education Management and its Argosy University and Art Institutes International schools.

She alleged that the colleges were ineligible to receive the state financial aid because the company paid incentives to its recruiters based on the enrollment of new students, in violation of federal law.

Swanson's office joined the U.S. Department of Justice and five other states in the lawsuit filed this summer against EMC in federal court in Pennsylvania.

Swanson said the lawsuit aims to recoup public aid payments under the Minnesota False Claims Act. She said Minnesota has wrongly paid almost $1.3 million to the two for-profit colleges covering more than 1,200 students since the law took effect in July 2010.

She said the lawsuit probably won't help people like Dustin McIntyre, a 19-year-old from a St. Paul suburb, who said he went online last year to learn more about the Art Institutes International Minnesota, touching off a flood of phone calls from a recruiter.

On a school tour, he said school officials began selling him hard on financial aid plans before he even decided on applying for admission.

"They were talking numbers with me before they even talked about the number on my ACT score," McIntyre said Thursday. He signed up mere days before the academic quarter began and now has regrets.

Less than a year later, he said he's $13,000 in debt and is worried that his class credits wouldn't be recognized if he tried to transfer to another school offering a digital film production degree.

A spokeswoman for EMC didn't immediately respond to a request for comment Thursday. However, when the federal lawsuit was filed in August the company released a statement from Bonnie Campbell, a former Iowa attorney general and member of the state Board of Regents who is an adviser to the college's legal counsel.

Campbell called the federal government's allegations "flat-out wrong," adding that the company's compensation plan "followed the law in both its design and implementation."