Slag Heap

First Education Management Corp. froze wages to avoid layoffs. Then they laid off employees and closed down an online branch in Phoenix. None of those actions, however, could stave off even more layoffs at the downtown for-profit educator.

According to multiple sources inside the company, more than 50 but fewer than 100 employees were laid off Wednesday from various locations in the city. EDMC operates its downtown headquarters, the Art Institute of Pittsburgh and online education facilities in the Strip and in Greentree.

The layoffs came the day before the company's quarterly earnings report. According to filings with the U.S. Seurities and Exchange Commission, the company reported net quarterly revenues of $639.2 million, down more than nine percent from the same time last year. The company says the loss “was primarily driven by a 9.3% decline in April 2012 student enrollment as compared to April 2011.”

For the fiscal year the company reported a smaller loss over the previous year of 5.7 percent. Net revenues were $2.76 billion compared to $2.89 billion in 2011. Even more stark is the company's loss in cash flow. Two years ago there was so much cash on hand that the company started a program to buy back its own stock – at a cost to date of nearly $300 million. On Thursday the company reported it had just $10.9 million cash on hand compared to $399.7 million the year before. According to its filings, EDMC paid out $210 million to issue a letter of credit with the U.S. Department of Education to allow the company continued access to federal financial aid programs.

The company also reported drops in enrollment in the fourth quarter. Overall enrollment at the company's online and brick and mortar schools for the quarter was down nearly 11 percent over the same quarter last year. As of June 30, 2012 total enrollment across all brands – Art Institute, Argosy University, Brown Mackie College and South University was 124,600, down from 139,800 a year ago. 

The online programs, where the bulk of the company's layoffs have taken place this past year is down a whopping 19.4 percent over the same time last year. Part of those numbers are very easily attributed to a steep drop in new student enrollments of slightly more than 20 percent. None of the brands did well attracting new students. Enrollment at the Art Institutes – which has its flagship school here in Pittsburgh – is down more than 18 percent. Enrollment at Argosy is down a whopping 26.7 percent, down 21.2 percent at South and 15.9 percent at Brown Mackie.

“The current environment is unprecedented in the number of challenges that we face but at the same time offers amny positive opportunities,” outgoing CEO Todd Nelson said on Thursday's conference call. “The primary reasons for the decline in enrollment are tuition and concerns about debt.”

Nelson said, however, that he believes EDMC will continue to be an important player in providing post-secondary education because of the quality of the product that the school provides. He pointed to gainful employment data provided by the U.S. Department of education that shows that graduates from EDMC schools earn about five percent more than graduates from similar programs at other schools.

While that can be considered an achievement, it's certainly not one to be taken without a cautious eye. At the end of July, 5,000-page two-year audit of the for-profit education sector led by U.S. Sen. Tom Harkin labeled the for-profit sector “and abject failure.”

According to the Post-Gazette:

Issued Monday, the scathing 5,000-page document blasts the for-profit education industry for recruiting too aggressively, for spending more on marketing than teaching, for producing too few graduates, for charging significantly higher tuition than comparable public schools, for tying salaries to recruitment and for giving prospective students unrealistic impressions of potential post-graduate employment and earnings.

Students are ill-equipped to repay the loans because most fail to complete their degree programs, while others graduate to find low-paying jobs in the fields they studied, the report found.

Default rates are 22.5 percent for students at for-profit schools, compared with 9 percent for students at other schools, and their loans are typically more because tuition is higher.

An associate's degree in web design and interactive media from the Art Institute of Pittsburgh, for example, costs $47,410, according to the report. Community College of Allegheny County offers the same degree for $6,800.

...EDMC is a rare exception, spending more on instruction than it banks as profit, according to the report. It spent $3,460 per student on instruction in 2009, while its for-profit competitors spent between $892 and $3,969. Still, EDMC spent even more on marketing than teaching: $4,158.

The company, which will release it's annual report at the end of August, is in a current state of flux. On Aug. 15, Nelson leaves his post as CEO to become the chairman of the board, replacing longtime chair Jock McKernan, who will remain as a director. Ed West, the current chief financial officer will step into Nelson's role as CEO.

McKernan is the former governor of Maine and husband of retiring Maine Sen. Olympia Snowe, a marriage that has also been a point of controversy for the company. Nelson, as often been the lightning rod for critics who have questioned his running of EDMC coming off his tenure as CEO at the University of Phoenix where he and the school were successfully sued for the way the school paid its frecruiters.

Additionally, EDMC is fighting a U.S. Department of Justice lawsuit over the company's student recruiting practices. If EDMC loses the case, it might have to repay billions of dollars in federal financial aid given to its students.

And if things couldn't get much worse, as of thise writing, the company's stock price – which was nearly $30 a share in January – was trading at $3.14 a share.

Despite deliberating for parts of five days, the jury in the Jordan Miles civil lawsuit delivered a partial verdict in favor of officers Michael Saldutte, David Sisak and Richard Ewing but deadlocked on the more serious claims of excessive force and false arrest.

In the high-profile case of a black former honor student who was beaten by three white police officers, the jury found in favor of the officers on a single claim, that of malicious prosecution. But on the other two charges, the jury’s foreman — the lone African American on the jury — told U.S. District Court Judge Gary Lancaster, “We are hopelessly deadlocked.”

Jordan Miles said nothing to reporters as he left the courtroom. He filed the civil lawsuit because, he says, the three officers jumped him on a Homewood street in January 2010, failed to identify themselves and beat him until he was unrecognizable. The trial has taken its toll on Miles, as every aspect of his young life was paraded in front of a jury.

The officers also left without speaking — although Sisak was not in court for the verdict — but their attorneys seemed emboldened by the verdict. Attorney Bryan Campbell, who represented Saldutte and represents the Fraternal Order of Police, was asked what message the verdict sends to the public. His response: “The cops are usually right.”

The three officers claim they saw Miles skulking around a neighbor’s house at 11 p.m. on Jan. 12, 2010. They stopped him and identified themselves, they say. And they say Miles had a bulge in his jacket, acted like he had a gun and ran. They say he later assaulted Sisak and Saldutte and was the aggressor in the altercation, despite being outweighed by the officers’ combined weight of more than 600 pounds. Charges against him, however, were later dropped.

General reaction to this story will be broadcast and written about everywhere in the next 24 hours, but there are some things worth noting. Miles’ legal team intends to retry the case on the claims of excessive force and false arrest. When told of that, Campbell told reporters, “Be our guest. They won’t get a different result.”

That could be a fair assumption, except that on retrial Miles’ attorneys say they intend to try to present a lot of evidence that this jury wasn’t allowed to hear. Particularly about the way the officers have conducted themselves in previous cases. 

Tim O’Brien, one of Miles’ lawyers, said there was evidence of past arrests by the officers when they used similar force on a suspect. They have also, according to O’Brien, been involved in arrests where they have likewise claimed that suspects had a suspicious bulge in their coat, force was used and, again, no weapon was recovered. Miles’ lawyers were barred from presenting such evidence in this trial because the judge ruled, basically, that it would unfairly prejudice a jury against the officers. 

Lancaster would be in charge of a retrial. But, O’Brien says, he believes that things have changed.

“This jury didn’t get to hear this evidence, “ he said, but added that “things happened in this trial” — testimony and facts were presented that could allow the evidence to be admitted at future proceedings.

Even the officers’ one-time supervisor, police Commander Rashall Brackney, had concerns about the three officers in the past.

From City Paper’s most recent trial coverage:

According to court documents, Brackney gave a deposition in which she claimed the trio “had a history of lying and taking action” even if a suspect's behavior had “not ris[en] to [the] level of reasonable suspicion.” Brackney had apparently ordered that Sisak and Ewing “be closely monitored and supervised.” Such claims might have thrown light on the Miles case, in which the officers are accused of chasing down Miles for no good reason, and inventing a justification for it afterward.

If a jury was having trouble believing that three police officers would do something as horrible as Miles claims they did, evidence like that could have pushed them toward a verdict in Miles’ favor. With new evidence or without, though, a second trial — barring a settlement from the city — will happen.

“Mr. Miles is a good guy, he’s a good man,” said Miles attorney J. Kerrington Lewis. “We will go back at it.”

Jurors in the Jordan Miles civil case reported Tuesday afternoon that they are having "difficulty in reaching a unanimous verdict," according to federal judge Gary Lancaster. 

The judge gave the jurors further instructions to continue deliberating and told jurors, "each of you should decide for yourself" but they should "be open to other positions."

The jury was still deliberating at 3 p.m. Tuesday and many believe a verdict either way will end the two-and-a-half year old Miles saga. If the jury comes back deadlocked, a second trial would be held.

Civil proceedings aside, however, the Miles case still has one more venue to be heard – The Citizens Police Review Board. Miles filed a complaint with the board in the days following the Jan. 12, 2010, incident when he says he was jumped and beaten by officers David Sisak, Richard Ewing and Michael Saldutte.

That complaint, says Beth Pittinger, CPRB executive director, is still pending. Pittinger spoke to City Paper outside of Lancaster's courtroom Tuesday afternoon about the complaint.

At the board's last meeting Pittinger says CPRB members agreed to wait until after the pending civil case before determining whether full hearing should be held. The board will take that matter up at their next meeting in September.

A CPRB hearing is different than the federal civil trial held the past three weeks. For example, in the civil case, it was ruled that jurors could not hear or consider testimony about the officers' past history including discipline or prior complaints. In a CPRB hearing, however, Pittinger says that information is very much admissible and could be considered.

And there could be some significant testimony in that regard, according to court filings.

 According to a January 2012 CP story:

Only McCauley's report summarizes the contents of a deposition given by Commander Rashall Brackney. According to McCauley's summary, Brackney asserted all three officers "had a history of lying and taking action when not rising to [the] level of reasonable suspicion."

Brackney testified, according to McCauley's report, that officer Ewing was "untruthful regarding [a] police pursuit involving an accident with vehicle damage." In addition, McCauley writes, Brackney "mandated PO Sisak and PO Ewing be closely monitored and supervised."

"The striking difference between the two [opinions] is Miles' expert's inclusion of the facts from the Rashall Brackney interview," says David Harris, a University of Pittsburgh law professor who specializes in police issues. "That's potentially very significant."

When asked if Brackney could testify in a CPRB proceeding, Pittinger said the board had subpoena power to compel any police officer to testify. In fact, the three officers would also likely be subpoenaed, although in the past some police officers haven't always answered questions when appearing before the board, but they must appear.

It's unclear how much longer the jury will deliberate today or how much longer the judge will require them to deliberate without reaching a verdict. It is clear though, Lancaster is hopeful that this case reaches a conclusion, telling the jury, "we try cases to dispense with them."

The jury in the Jordan Miles civil lawsuit began deliberating at about 3 p.m. after a day spent hearing case summations from attorneys representing Miles and Officers Michael Saldutte, David Sisak and Richard Ewing.

We reported some highlights from the officers' attorneys here. They told jurors that common sense would lead them to find for the officers. After lunch, however, Miles' attorney, J. Kerrington Lewis, said common sense was on his side in what he called "a case of great significance."

Here are highlights from Lewis' closing arguments:

On the officers' intentions:

"They came down that street and they thought he was a black, drug-dealing punk and they were going to take him down. Well they took him down for the rest of his life."

On the Mountain Dew bottle:

"Even if he had a pop bottle like they've been telling you for three weeks, is he really going to go for that bottle [during a struggle]. It's delusional. It's ridiculous. It's stupid. It's so ridiculous that it should be dismissed for the story that it is. They thought it would all work out because they thought he was a bad kid, but it didn't work out because he's a good kid."

On the police account of events:

"That report is phony. It was made up two hours later. They knew they had beaten him badly. They've got him as a cat burglar [and acting as a drug dealer would]. That's all boilerplate language. They needed an excuse for what they'd done."

On the subject of damages:

"Is this about money? Yes because it's his only recourse. Should he go out and hire six thugs to go give them what they gave him? That's not our way."

On Jordan Miles:

"[Miles] has led an exemplary life in an environment [Homewood] that [the defense] has graphically given you a picture of. There are kids who grow up in the best neighborhoods in this country that would be lucky to measure up to this kid."

Jordan Miles' version of his January 2010 altercation with three Pittsburgh police officers is based on lies, defense attorneys told jurors Thursday morning during closing arguments. And while they portrayed Miles as "150 pounds of dynamite" at the outset of the trial, a defense attorney today likened him to "the little boy who cried wolf."

Miles' federal lawsuit against the three officers involved -- Michael Saldutte, David Sisak and Richard Ewing -- has gone on for two weeks. Throughout, Miles has said the officers jumped out of their unmarked police car, failed to identify themselves as police, demanded guns, money and drugs and beat him when he tried to flee and choked him while handcuffed. He says he thought the three men were going to rob him. Officers, meanwhile, say they did identify himself, that Miles was sneaking around a neighbor's house, and that he acted like he had a gun in his pock, which later turned out to be a bottle of pop.

This morning, they got their final chance to make that claim to jurors. So far, two of the three defense attorneys have spoken. Ewing's attorney, Robert Leight, will deliver his closing statements when court resumes this afternoon. That will be followed with a final argument by Miles' attorney, J. Kerrington Lewis.

The judge spent a good chunk of the morning instructing jurors on the law. They should begin deliberating this afternoon and continue tomorrow.

During closing arguments, defense attorney Jim Wymard told jurors that common sense backed up the officers' version of events. The officers followed their training, he said, and they had suspicion to stop Miles on Jan. 12, 2010.

"They see him hiding, concealing himself," Wymard said. "They can't simply drive by and leave it alone. It's their duty."

Wymard said the officers' version of events is supported by the evidence. Sisak says he tackled Miles through the hedges on a neighboring property. That home's owner, Patrica Colman and her son testified that the next morning the hedges were broken down and there were braids hanging on the branches. Doctors also removed a stick from Miles' gums later that night. Miles says, hwever, he never went through hedges.'

"[Miles'] version was to avoid those hedges because then it had to be the officers who pulled his hair out, and not the hedge" Wymard said. "But clearly Jordan Miles went through the hedges even though he says he didn't."

Wymard finished his statement by calling the three officers "heroes, doing the work that no one else wants in the city's toughest zone."

Defense attorney Bryan Campbell also took shots at Miles. Miles' lawyers have attempted to show he was an honor student who suffered cognitive damage after the beating. Testimony showed Miles' academic career at CAPA High School was rough the first two years, but that for most of his junior and senior year, he was an honor student with GPAs. But Campbell took shots at that record in his closing.

"He says he was an honor student," Campbell said. "He was an honor student at CAPA."

Campbell said that while Miles a "gift from God" when it came to music, Miles' performance in academic classes was only average. "Does he really want to go to college?" Campbell asked, referring to the fact that Miles had dropped out.

Campbell wrapped up his remarks by suggesting Miles had come under tremendous public pressure since the case took off. Campbell argued that after being arrested, Miles had made up a story "that he never thought would go beyond his mother and his grandmother. He never thought it would be investigated by the FBI, the police and the Citizens Police Review Board."

"He's a lot like the little boy who cried wolf."

Officers in the Jordan Miles civil suit suffered a setback in federal court today, when a witness called by the defense repeatedly declined to shore up its case.

During Miles' testimony last week, defense attorney Jim Wymard asked him if he ever told Ryan Allen, a former high school friend, that he'd been carrying Mountain Dew back in January 2010, when he encountered Pittsburgh police officers Richard Ewing, Michael Saldutte and David Sisak. Police have contended that they mistook the bottle for a gun; during the resulting encounter, Miles claims to have been beaten by officers -- who he says didn't identify themselves.

On the stand last week, Miles testified that he didn't have a bottle, and that he never told Allen any such thing. This morning, Allen pretty much agreed.

Allen was called to testify by the officers regarding a statement he made to the FBI in February 2011; according to a report made during that investigation, Allen said that Miles told him that he had a bottle. But on Monday morning, Allen repeatedly told Wymard that he didn't remember saying that to the FBI -- and that he didn't recall Miles ever saying that to him.

"I don't remember telling [Special Agent Sonia Bush] that," Allen testified. Wymard appeared frustrated by Allen's response and began asking the same questions in different ways, but Allen continued to say he didn't remember. Wymard insinuated that Allen didn't want to testify to what he heard Miles say because he didn't want to hurt Miles' case.

"I'm not here to hurt or harm," Allen said. "I'm not picking sides."

During cross-examination, Miles attorney Tim O'Brien gave Allen another chance to defend his story: "There is a suggestion here that you would lie to help Jordan."

"I'm trying to give you what I remember," Allen replied.

Allen's testimony comes as a blow to the defense. No Mountain Dew bottle was taken into evidence -- police say they tossed it away at the scene -- and Allen was an independent witness corroborating the officers' version of events. Wymard has mentioned Allen several times throughout the trial, intimating to jurors that he would back up the officers' claims.

Earlier this morning, the defense called Patricia Colman and her son A-Ron Roberts. The pair live in the house next to where Miles' incident with police took place. They both testified that the morning after the event, they found the bushes on the property broken down, and there was blood on the ground and hair in the bushes. The officers claim Miles sustained a lot of his injuries when he was tackled through hedges. Miles says that did not happen.

On cross-examination, though, Miles' attorney introduced a photo that showed there were additional strands of Miles' hair laying on the ground. The officers also claim that Miles was sneaking around a house late at night giving them suspicion that he was up to something. Miles says he was walking down the middle of the street.

Defense attorneys have applied that Miles could have been cutting between the houses to take a shortcut to his grandmother's house on the next street over. But Roberts testified that it was impossible to do that because of a fence and over-grown trees.

Testimony will continue this afternoon.

Allegheny County's paratransit service ACCESS has been spared from significant service reductions, at least for now.

ACCESS had faced a significant service reduction -- the first in its history -- as part of the Port Authority's pending 35 percent reduction in September due to a $64 million budget deficit. The cuts would have reduced the service to the minimal service allowed by federal law -- only offering rides to riders eligible under the American Disabilities Act that start and end within three-quarters of a mile of a fixed bus route.

But at a monthly board meeting this morning, Port Authority CEO Steve Bland said the agency has received funding from the Federal Job Access Reverse Commute and Federal New Freedom Program, as well as matching dollars from the Pennsylvania Department of Transportation. The result: an estimated $6.2 million to keep ACCESS afloat. The authority says it will request to stretch that money out for the next two years.

"This is huge," Bland said following the board's monthly meeting. "We had 2,000 individuals who frankly were thinking 'What am I going to do?'"

The fare increase that went into effect for ACCESS on July 1 will remain in place. But the service will function at its current level, operating door-to-door service between any two points within Allegheny County, and up to 1.5 miles into neighboring counties for those who qualify.

ACCESS ought to be safe at least until September 2013. After that, Bland said, the future is uncertain. The authority plans to use half of the money this year and the remainder the following -- as long as it receives permission from the funding authorities. But if the authority does have to go through with cutting its regular fixed-route bus and light-rail service this fall, that would likely push additional riders to the ACCESS system, which could create other funding challenges.

"There are no guarantees [the funds] will cover a second year," says authority spokesman Jim Ritchie.

Bland praised PennDOT, federal and state officials, Allegheny County Executive Rich Fitzgerald and the county's legislative delegation in Harrisburg. But he noted the agency isn't out of the woods yet; it still faces a massive reduction of bus and light-rail service, as well as massive layoffs, this September.

In his report to the board, Bland said contract negotiations are continuing between the authority, state officials, Amalgamated Transit Union Local 85 and Fitzgerald's office. Bland said the group agreed to stay mum on talks, but did say "everyone at the table ... is working very hard to avoid the 35% service cut."

Time is of the essence. Today was the authority's last board meeting before September, though Bland said the board could reconvene at any time if a funding salutation was presented.

"The cuts can still be avoided," he said. "But we're running very short on precious time."

Today marked the beginning of the defense's case in Miles' civil-rights trial against Pittsburgh police. And Saldutte testified that on the night of Jan. 12, 2010, he and fellow officers Richard Ewing and David Sisak were working in a "99 car" doing a plainclothes detail and patrol out of Zone 5. As the officers patrolled Homewood, Saldutte said, he spotted a figure in dark clothing standing up against the side of 7940 Tioga Street around 11 p.m.

"It was highly suspicious what he was doing: standing around the house late night, it was dark, cold, no one around," Saldutte said.

Saldutte asked his fellow officers "what's that guy doing?" They turned the car around to investigate, and as they got closer to the home, Saldutte testified, the figure walked toward the sidewalk.

"He stopped, looked up at us and put his hand in his pocket."

That alarmed the officers even more. Saldutte said Miles stopped and turned his body away from the officers. Ewing announced "Pittsburgh police," Saldutte testified, as Saldutte began getting out of the car, then held his badge up and told Miles to take his hands out of his pocket.

"Anytime you're dealing with someone, you want to be able to see their hands," he told jurors, "technically that's what's going to hurt you."

Miles did remove his hands from his pocket, Saldutte said, but when Saldutte asked if that was his house, Miles said he lived down the street and again turned his body away from him. "I was able to see the bulge in his front right pocket," Saldutte said.

"As soon as I asked him, 'Why are you sneaking around someone's house?'" he said, Miles started to walk away without answering. Saldutte testified that as Miles walked, he kept his right arm straight down over his pocket. Saldutte said he commanded him to stop as the police vehicle began to follow him, but Miles began running instead.

Short answer: Not exactly.

There's been a lot of buzz about this Talking Points Memo report, which notes that when Pennsylvania's Voter ID bill is argued before Commonwealth Court tommorrow, the state will not be arguing that in-person voter fraud has been a problem, or that it will be one in the coming November election. The report is based on a "stipulation agreement" -- a legal filing in which both sides spell out things they won't be arguing over in court. And in this case, both the ACLU, which has sued to overturn the law, and state officials agree they won't be arguing over how often voter fraud happens. According to the agreement, the state "will not offer any evidence in this action that in-person voter fraud has in fact occurred in Pennsylvania and elsewhere." Nor will they argue "that in person voter fraud is likely to occur in November 2012 in the absense of the Photo ID law."

But that doesn't necessarily mean that, as the Talking Point Memo headline asserts, "Pennsylvania Admits There's No In-Person Voter Fraud." They're simply choosing not to argue about it, which isn't the same thing.

As the stipulation agreement notes, the state's "sole rationale for the Photo ID law," is contained in a response to written questions filed by the ACLU. And in that answer, the state makes quite clear that it has plenty of suspicions that Voter ID does take place ... and that one purpose of the law is to ferret out such cases.

State officials "are aware of reports indicating that votes have been cast in the name of registered electors who are deceased, who no longer reside in Pennsylvania , or who no longer reside in the jurisdiction where the vote is cast," the state's answer asserts. And without some proof of ID, the state contends, "there is a risk that votes may be cast in the names of registered electors who are dead or who have left [the area] by a person other than the registered voters ... Requiring a photo ID is one way to ensure that every elector who presents himself to vote [is] the person that he purports to be, and to ensure that the public has confidence in the electoral process. The requirement of a photo ID is a tool to detect and deter voter fraud."

Elsewhere in its response, the state cites a smattering of reports, including one by WPXI-TV, alleging outdated voter rolls including dead people, as well as a variety of other irregularities in Philadelphia especially. And it notes that part of the reason state officials lack knowledge of voter fraud is that conducting elections is largely the job of county officials.

"[C]ounty boards of elections, the district boards of elections, and their respective staffs are in the best position to detect and respond directly to election frauds committed in their respective jurisdictions," the response argues.

I can see why skeptics are running with the stipulated agreement, and using it as a basis for criticism. Democrats have understandably seized on the fact that Gov. Tom Corbett himself didn't prosecute any voter fraud cases when he was the state Attorney General. Hell, I made a joking tweet about the stipulation agreement myself last week. What's more, even after reading a fuller explanation of the state's position, it's not as if they have a particularly strong case. Many of the voting irregularities it cites are more than a decade old, took place in other states, or both. Some of them are simply canards: Chris Briem at Null Space, for example, has previously addressed the myth of dead voters showing up at polls.

Still, it's a distortion to say the state has admitted voter fraud never takes place. There are all kinds of reasons why lawyers decide against making an argument in court -- questions of jurisdiction, whether evidence is admissable, and so on. But that doesn't mean state officials can't, or won't, make the case on the courthouse steps.

In fact, I'm now hearing that the secretary of the Commonwealth, Carol Aichele, plans to hold a press conference in about an hour. We'll see how she pleads in the court of public opinion.