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June 17, 2014
15:27 EDTEDMCEducation Management settles with San Francisco, makes concessions
Education Management disclosed in a regulatory filing that as previously disclosed in the periodic reports of Education Management Corporation has been cooperating with the City Attorney of the City of San Francisco, California since December 2011 when the company received a letter from the City Attorney requesting information related to student recruitment and indebtedness, including recruiting practices and job placement reporting, among other issues, by The Art Institute of California - San Francisco and all other Art Institute locations in California. On June 17, the company entered into an Assurance of Voluntary Compliance with the City Attorney for the purpose of resolving disputed claims, avoiding the expense of further litigation, and permitting the Company to focus on its education mission with regard to its students. Under the Assurance, without admitting liability, the company has agreed to pay the aggregate amount of approximately $4.4M, consisting of $1.95M to the City Attorney for fees and costs of the investigation and to carry out the purpose of the Assurance, $1.6M to fund a scholarship program for students who enrolled in The Art Institute of California - San Francisco or one of the California Art Institutes diploma or degree programs and did not obtain their diplomas or degrees and $850,000 for an unrestricted scholarship program for students attending one of the California Art Institutes. As part of the Assurance, the California Art Institutes agreed to, among other things: disclosure to be provided, and prescribed calculation methods, for placement rates, actual or average salaries, graduation and completion rates, transfer rates, retention rates, cohort default rates, and percentage of enrollees who finish a diploma or undergraduate degree program earlier than the planned time for completion of the diploma or undergraduate degree program; disclosure to be provided related to financial aid; training of California Art Institutes employees involved in the collection of graduate employment information; provision of appropriate placement representative-to-student ratios at each of its schools and certain placement assistance services; termination of any employee who it is determined provided or attempted to provide materially false graduate employment information for inclusion in the placement data to be published by a California Art Institute; reporting of data to the City Attorney regarding compliance with the Assurance; hiring of an independent auditor to conduct an audit of placement rates; and maintenance of written records regarding compliance with the Assurance.
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