About 200 employees of Education Management Corp.’s online operation in Phoenix, Arizona were laid off this afternoon, according to multiple sources within the company.
A former employee of the facility, known as Cotton Center, told City Paper that the laid-off workers included academic counselors, financial-aid counselors and recruiters. According to that source and others, some of the lost jobs were affiliated with online courses offered through EDMC’s South University branch; those positions have been eliminated. But other positions will remain open, and laid-off employees have been told they can reapply for them.
The move comes two weeks after the company sent an email to employees telling them that raises were not being given this year, in an effort to preserve jobs. In fact, the Arizona employee who contacted CP today said employees there were pulled into a meeting just two weeks ago “and we were told this was so they could avoid layoffs.”
Although laid-off employees were sent home today, they will remain on EDMC’s payroll until Aug. 1, on paid administrative leave. On that date, anyone not rehired will receive an additional one week’s severance.
EDMC has previously given workers an advanced heads up that layoffs would be coming. In January, for example, employees were given a week’s notice they were likely. That did not occur this time, according to sources.
EDMC has had its share of problems this year. Enrollment has lagged, and the company is fighting a U.S. Department of Justice lawsuit over the company’s recruiting practices. EDMC is also contending with legislation being pushing by Illinois Sen. Dick Durbin, to limit the amount that for-profit educators can earn from veterans via the G.I. Bill.
Such problems seem to be taking a toll. Despite a stock buyback and hundreds of layoffs in January and after, EDMC’s stock has fallen from $30 at the beginning of the year, to around $5.12 as of this afternoon.
This article appears in Jul 11-17, 2012.
Yes, NO raises this year for EDMC employees to avoid layoffs, yet 200 were laid off yesterday! All while CEO Nelson and President Edward West took increases of over 200% to bring Nelson’s total comp to over $13 MILLION and West’s to over $5 MILLION. How can they sleep at night?
Nelson and McKernan appear to have the bevy of lawsuits in mind as they whittle the online portions of the company away. Most of the lawsuits do not specifically target the online platform However the hardest and most deceptive selling groups and the most disturbing outcomes have been in this area. The general strategy may be to survive as long as the board of directors awards these obscene salaries.
If the company can maintain some of its ground schools there may be value in these as the company is raided for assets. Mitt can not help much. He is too much alike–with the hidden accounts, the taxes he refuses to reveal, and the long lines of jobless Americans thanks to his investment strategies. He would not likely be of any overt assistance to these thieves, since, after all Full Sail University, another criminal enterprise, was one of his very own.
At best let Goldman sell it for small holdings to try to recover some of its (nearing $1 Billion) losses. The general analysis from the legal field is that the regulatory provisions are so broad that they are meaningless. However, there is still significant criminal activity to explore. It may take every favor and threat that Olympia can recall to spare this group.
Meanwhile Swank of Capella fame is now a player in the regional accreditation business. He made his first fortune in toys before moving into education. In his instance he knows law, finance, management, and education. McKernan and Nelson appear to be only salesmen. Future accreditation committees and inquiries may be better informed by his presence. EDMC has mastered the paperwork and shell games of accreditation. This may bring a whole new set of rules that may land them in foreign territory.
EDMC has been playing the pro-profit school of musical demographics and headquarters. With Bridgepoint glaringly dunked for the same practices Nelson may need to actually run an organization. Swank, who stuck out his educational battles in one building in Minneapolis is likely to spot the con long before it is played.
Thanks to Charlie for continuing to spotlight this!!
The latest EDMC tactic is to hire the Patton Boggs law firm to manage its damage control. Boggs does very little law, on the other hand they are masters at diverting attention. This derailing of the conversation shifts focus from investigation into serious issues and focuses on shallow and obvious reductions.
In this instance EDMC bought copious space from Boggs on its Supra site. The gist of the article is that EDMC is being persecuted because the government regulators are nasty people who have nothing better to do than split hairs with nice companies like EDMC. No kidding, it wants to paint EDMC as the victim. Yep, they even blame the economy, they must have stayed up nights for that one.
It is a slap in the face to investors, consumers, and aware Americans. EDMC reasons that by portraying itself as the victim the investor will not look at the almost endless list of consumer grievances, not the least of which is that the school does not deliver squat and employers know it.
It tried this once before by having a hired gun pose as an authoritative critic of an anatomy class. She went down in a hail of responses from professionals, students, and business people alike. In that instance and in this EDMC enrollment, revenues, and stock continued to tank.
Todd Nelson just can’t get his arms around the idea that the folk hero and victim do not take from the poor and give to the rich. They have even deployed a spokesperson to pitch the line that poor people, e.g., people of color, can not compete in the world of higher education and therefore the good guys, EDMC, are in fact performing a major and honorable service by selling them diploma mill courses. Call me overly sensitive, but I do believe that Todd reflects that rather racist tradition and hierarchy that his prosperity driven fraternity perfected until it became unprofitable.
I hate to say this coming as a former employee and one with lot of good friends still working here in town, but it wouldn’t surprise me that this could happen really soon on Penn Avenue. I’ve talked with some people still slaving away in the Strip that being let go would be a reilef. I can certainly relate, it was for me.
Why do they keep hiring admissions reps for the brown mackie college admission department when they are tanking.
Face it, Goldman and Providence are playing with this thing like a half dead mouse. Wall Street is pretty bored with the shenanigans. Watching Todd Nelson and John McKernan is like watching a Willie Loman version of Groundhog Day.
If you think working there is bad. Try finding a job with a piece of paper that every employer in the country thinks is a milled diploma that you bought, and they are right!
Gotta hand it to the Pgh City Paper. Huffington, Higher Ed Watch, Seeking Alpha, and the PCP are either the only ones who have not gone to sleep or the only ones with the cajones to report it.
We knew that BOD members like EDMC were evil, we never envisioned them as stupid, Meredith Whitney. Another article in Daily Finance points out that EDMCs’ regulatory, accreditation, and Title IV woes are dwarfed by the rising tens of thousands of former students who now find a voice in blogs like this. That word of mouth advertising on social media is something.
Thanks Charlie: EDMC at $4.26 is beautiful. Can’t wait until August 9 to see Elder Todd sing and dance. I do believe that old Todd wishes he were back home in Utah with his wives.
So Goldman owns 54,000,000 shares. At 52 week high that was worth about 1.5b. Today: 220mm. Approx numbers. So they have a 1.3b paper loss on this pig. I wonder where this will be buried in their financials?
Open Letter to Todd Nelson
Apollo fired your sorry ass because all you could do is manipulate stock. You were given a golden opportunity in a ready made well funded company to build something of integrity and of monumental value. You can not manage. As it turns out you can not even hustle stock. You are a gutless manipulative weasel and have turned a promising Pittsburgh company that could have brought jobs, revenue, and pride to the Tri State area into a worthless, laughing stock of misdeeds and malfeasance.
You are a racist, class seeking, elitist, divisive punk who needs an ass wipe like McKernan to hold his hand. You exploit people of color, people who are disadvantaged, and people who dare to dream. You steal their time, the very thing that nobody can replace and you strangle their dreams. You are a bully who steals peoples’ hopes, dreams, pride, self-respect, and futures instead of their lunch money. If you sit in a cell next to Maddoff forever it will be too short.
I once had a great sales trainer tell me that the most evil thing that a leader could do is to teach their sales force to lie and swindle. It makes them con artists and anybody can lie.The salamander that you are, you coerced young and desperate employees to twist and destroy their client. You used fear and intimidation to get them to act out your criminal bidding. EDMC was a prison experiment at its best. You did all of this while abusing the trust and sweat of taxpayers and have created a bubble that may cost this and other countries dearly.
This paper deserves exceptional notice for not bowing to your threats and bribes. They are an alternative paper. Like their readers they are maneuverable street fighters who are agile and long on memory. They enjoy watching a hypocrite self destruct. Look forward to the trip Nelson, but start getting used to the orange jumpsuit look.
The late Ann Richards said it best. “You can put lipstick on a pig, dress her up, call her Honey, and dance with her all night long, but in the morning, she is still a pig”.
SO EDMC played the musical chairs game, big deal. They can’t unscrew the tens of thousands of students they have screwed, and they can’t unscrew the three hundred million Americans, whose tax dollars they have stolen.
Where McKernan goes has got to be a good story.